The Effects of Performance Measurement and Compensation on Motivation

Marco van Herpen (), Mirjam Praag and Kees Cools ()
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Marco van Herpen: University of Groningen, and The Boston Consulting Group
Kees Cools: University of Groningen, and The Boston Consulting Group

No 03-048/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper analyzes empirically the relationship between pay and performance. Economic and psychological theories predict that the design and implementation of a performance measurement and compensation system affect the motivation of employees. Our survey results demonstrate a positive relationship between the perceived characteristics of the complete compensation system and extrinsic motivation. Intrinsic motivation is not affected by the design of monetary compensation, but by promotion opportunities. The compensation system also significantly affects work satisfaction and turnover intent. Our results have both managerial as well as policy implications.

This discussion paper has resulted in a publication in De Economist , 2005, 153(3), 303-29.

Keywords: Performance measurement; Compensation; Promotions; Intrinsic Motivation; Extrinsic Motivation. (search for similar items in EconPapers)
JEL-codes: J33 J41 (search for similar items in EconPapers)
Date: 2003-06-13
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20030048

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