What Makes Performance-Related Pay Schemes Work? Finnish Evidence

Antti Kauhanen () and Hannu Piekkola

Journal of Management & Governance, 2006, vol. 10, issue 2, 149-177

Abstract: We analyze how features of performance-related pay (PRP) schemes affect their perceived motivational effects using a Finnish survey for upper white-collar employees from 1999. The results show that the following features are important for a successful PRP scheme: (i) the employees have to feel they are able to affect the outcomes; (ii) the organizational level of the performance measurement should be close to the employee: individual and team level performance measurement increase the probability that the scheme is perceived to be motivating; (iii) employees should be familiar with the performance measures; (iv) the level of payments should be high enough and rewards frequent enough. Levels below the median do not generate positive effects; (v) employees should participate in the design of the PRP scheme. Copyright Springer 2006

Keywords: design of incentive schemes; effort provision; employee involvement; motivation; performance-related pay (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (3)

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Working Paper: What Makes Performance-related Pay Schemes Work? Finnish Evidence (2004)
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DOI: 10.1007/s10997-006-0005-z

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