THE PREVALENCE OF PERFORMANCE-RELATED PAY: A 23-COUNTRY EXAMINATION
Abstract views: 736
/ 
PDF downloads: 613
DOI:
https://doi.org/10.46291/ISPECIJSSHvol4iss2pp111-128Keywords:
Compensation management, Pay for performance, International comparisons, Cluster analysis, Cranet surveyAbstract
This study intends to determine the current situation regarding the prevalence of pay for performance systems established for managers. Examining performance-related pay, we focus on individual, team and organizational performance and explore how widespread several pay components are in 23 countries. The research consists of the firm-level data of 5217 large companies from 23 countries from the Cranfield Network on Comparative Human Resource Management database. The data has been presented descriptively via frequencies and percentages and then analyzed via cluster analysis. In this way, diverging country clusters have been determined regarding the prevalence of pay for performance. Findings show that individual bonus is the most frequently used variable pay component provided to managers in general. Following that, paying for organizational performance is highly prevalent, whereas team-based bonuses are rarely used as a whole. On the other hand, long term incentives are rarely used except profit sharing. The results are descriptive in nature. This study addresses how widespread performance-related pay in various countries. Evidence regarding the use and prevalence of pay for performance systems across countries is quite limited. So this research, reflecting the current scene regarding variable pay in various countries, contributes to current literature by presenting recent comparable data.
References
Adeoye, A. O., & Elegunde, A.F. (2014). Compensation Management and Motivation: Cooking Utensils for Organisational Performance. Mediterranean Journal of Social Sciences, 5(27), 88-97.
https://doi.org/10.5901/mjss.2014.v5n27p88
Agnès, P. T., Isabella, B., Jorge, C., Oscar, V. L., Greet, V., Aleksandra, W., &Mathijn, W. (2012). Fifth European Working Conditions Survey-Overview Report.
Bloom, N.; & Van Reenen, J. (2011). Human Resource Management and Productivity, In Handbook of Labor Economics, Amsterdam Elsevier North-Holland, 1697-1767.
https://doi.org/10.1016/S0169-7218(11)02417-8
Booth, A.L., & Frank, J. (1999). Earnings, Productivity and Performance-Related Pay. Journal of Labor Economics, 17(3), 447-463.
https://doi.org/10.1086/209927
Brewster, C., Mayrhofer, W., & Reichel, A. (2011). Riding the Tiger? Going Along with Cranet for Two Decades-A Relational Perspective. Human Resource Management Review, 21(1), 5-15.
https://doi.org/10.1016/j.hrmr.2010.09.007
Bryson A., Freeman R., Lucifora C., Pellizzari M., & Perotin V. (2012). Paying for Performance: Incentive Pay Schemes and Employees' Financial Participation. CEP Discussion Paper No. 1112, The London School of Economics and Political Science.
Cadsby, C. B., Song, F., & Tapon, F. (2007). Sorting and Incentive Effects of Pay for Performance: An Experimental Investigation. Academy of Management Journal, 50(2), 387-405.
https://doi.org/10.5465/amj.2007.24634448
Carson, T. L. (2003). Self-Interest and Business Ethics: Some Lessons of the Recent Corporate Scandals. Journal of Business Ethics, 43(4), 389-394.
https://doi.org/10.1023/A:1023013128621
Cerasoli, C. P., Nicklin, J. M., & Ford, M. T. (2014). Intrinsic Motivation and Extrinsic Incentives Jointly Predict Performance: A 40-Year Meta-Analysis. Psychological Bulletin, 140(4), 1-29.
https://doi.org/10.1037/a0035661
Chingos, P. T. (2002). Paying for Performance: A Guide to Compensation Management. John Wiley & Sons.
DeCenzo, D. A., Robbins, S. P., & Verhulst, S. L. (2013). Fundamentals of Human Resource Management. (11th ed.). NJ: John Wiley & Sons, Inc.
Delahaie, N., & Duhautois R. (2019). "Profit Sharing and Wages: An Empirical Analysis Using French Data between 2000 and 2007. British Journal of Industrial Relations, 57(1), 107-142.
https://doi.org/10.1111/bjir.12295
Delfgaauw, J., Dur, R., & Souverijn, M. (2018). Team Incentives, Task Assignment, and Performance: A Field Experiment. The Leadership Quarterly.
https://doi.org/10.1016/j.leaqua.2018.03.003
Dessler, G. (2016). Human Resource Management. 15th Ed., Pearson.
Durham C.C., & Bartol, K.M. (2000). Pay for Performance. In E.A. Locke (Ed.) Blackwell Handbook of Principles of Organizational Behavior, Oxford, UK: Blackwell, 150-165.
Eurofound, (2016). Changes in Remuneration and Reward Systems. Publications Office of the European Union, Luxembourg.
Gerhart, B., & Fang, M. (2014). Pay for (Individual) Performance: Issues, Claims, Evidence and the Role of Sorting Effects. Human Resource Management Review, 24(1), 41-52.
https://doi.org/10.1016/j.hrmr.2013.08.010
Gielen, A.C., Kerkhofs, M.J.M., & Von Ours, J.C., (2010). How Performance Related Pay Affects Productivity and Employment. Journal of Population Economics, 23(1), 291-301.
https://doi.org/10.1007/s00148-009-0252-9
Gilbreath, B., & Harris, M. M. (2002). Performance-Based Pay in the Workplace: Magic Potion or Malevolent Poison?. The Behavior Analyst Today, 3(3), 311-322.
https://doi.org/10.1037/h0099987
Gooderham, P., Fenton-O'Creevy, M., Croucher, R., & Brookes, M. (2018). A Multilevel Analysis of the Use of Individual Pay-for-Performance Systems. Journal of Management, 44(4), 1479-1504.
https://doi.org/10.1177/0149206315610634
Floquet, M., Guery, L., Laroche, P., & Stévenot, A. (2016). Profit Sharing in France: Substitute or Complement to Wages. in Fietze, S. and Matiaske, W. (eds.), Dimensions and Perspectives of Financial Participation in Europe, Nomos Publishing, 241-262.
https://doi.org/10.5771/9783845259413-240
Hüttenbrink, A., Oehmichen, J., Rapp, M. S., & Wolff, M. (2014). Pay-for-Performance-Does One Size Fit All? A Multi-Country Study of Europe and the United States. International Business Review, 23(6), 1179-1192.
https://doi.org/10.1016/j.ibusrev.2014.04.002
James Jr, H. S. (2005). Why Did You Do That? An - Economic Examination of the Effect of Extrinsic Compensation on Intrinsic Motivation and Performance. Journal of Economic Psychology, 26(4), 549-566.
https://doi.org/10.1016/j.joep.2004.11.002
Jenkins Jr, G. D., Mitra, A., Gupta, N., & Shaw, J. D. (1998). Are Financial Incentives Related to Performance? A Meta-Analytic Review of Empirical Research. Journal of Applied Psychology, 83(5), 777-787.
https://doi.org/10.1037/0021-9010.83.5.777
Kraizberg, E., Tziner, A., & Weisberg, J. (2002). Employee Stock Options: Are They Indeed Superior to Other Incentive Compensation Schemes? Journal of Business and Psychology, 16(3), 383-390.
https://doi.org/10.1023/A:1012820923455
Kruse, D. (1993). Profit Sharing: Does it Make a Difference? The Productivity and Stability Effects of Employee Profit-Sharing Plans. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.
https://doi.org/10.17848/9780585261614
Larkin, I., Pierce, L., & Gino, F. (2012). The Psychological Costs of Pay‐for‐Performance: Implications for the Strategic Compensation of Employees. Strategic Management Journal, 33(10), 1194-1214.
https://doi.org/10.1002/smj.1974
Long, R. J., & Shields, J. L. (2005). Performance Pay in Canadian and Australian Firms: A Comparative -Study. The International Journal of Human Resource Management, 16(10), 1783-1811.
https://doi.org/10.1080/09585190500298370
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human Resource Management: Gaining a Competitive Advantage. New York, NY: McGraw-Hill Education.
Oyer, P., & Schaefer S., (2005). Why Do Some Firms Give Stock Options to All Employees?: An Empirical Examination of Alternative Theories. Journal of Financial Economics, 76(1), 99-133.
https://doi.org/10.1016/j.jfineco.2004.03.004
Pendleton, A., Poutsma, E., Ommeren J., & Brewster, C. (2001). Employee Share Ownership and Profit-sharing in the European Union. European Foundation for the Improvement of Living and Working Conditions, Luxembourg.
Poutsma, E., Blasi, J.R., & Kruse D.L. (2012). Employee Share Ownership and Profit Sharing in Different Institutional Contexts. The International Journal of Human Resource Management, 23(8), 1513-1518.
https://doi.org/10.1080/09585192.2012.661994
Sadullah, Ö.Z., (2018). İnsan Kaynakları Yönetimine Giriş: İnsan Kaynakları Yönetiminin Tanımı, Önemi ve Çevresel Faktörler. In Özçelik, A.O. et al. İnsan Kaynakları Yönetimi, 8. Ed. Beta Basım, İstanbul.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2020 ISPEC International Journal of Social Sciences & Humanities
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
