Are firms paying more for performance?

John Forth, Alex Bryson and Lucy Stokes

International Journal of Manpower, 2016, vol. 37, issue 2, 323-343

Abstract: Purpose - – The purpose of this paper is to investigate changes in the economic importance of performance-related-pay (PRP) in Britain through the 2000s using firm-level data. Design/methodology/approach - – The authors utilise nationally representative, monthly data on the total wage bill and employment of around 8,500 firms. Using these data, the authors decompose the share of the total economy-wide wage bill accounted for by bonuses into the shares of employment in the PRP and non-PRP sectors, the ratio of base pay between the two sectors, and the gearing of bonus payments to base pay within the PRP sector. Findings - – The growth in the economic importance of bonuses in Britain in the mid-2000s – and subsequent fluctuations since the onset of recession in 2008 – can be almost entirely explained by changes in the gearing of bonus to base pay within the PRP sector. There has been no substantial change in the percentage of employment accounted for by PRP firms; if anything it has fallen over time. Furthermore, movements in the gearing of bonuses to base pay in the economy are heavily influenced by changes in Finance: a sector which accounts for a large proportion of all bonus payments in Britain. Research limitations/implications - – The paper demonstrates the importance of understanding further how firms decide the size of bonus payments in a given period. Originality/value - – This is the first paper to present monthly firm-level data for Britain on the incidence and size of bonus payments in the 2000s.

Keywords: Finance; Surveys; Earnings; Recession; Bonuses; Pay structures; Performance pay (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
Working Paper: Are Firms Paying More For Performance? (2014)
Working Paper: Are firms paying more for performance? (2014)
Working Paper: Are firms paying more for performance? (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:v:37:y:2016:i:2:p:323-343

DOI: 10.1108/IJM-01-2015-0006

Access Statistics for this article

International Journal of Manpower is currently edited by Professor Adrian Ziderman

More articles in International Journal of Manpower from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().