The Relative Effects of Merit Pay, Bonuses, and Long-Term Incentives on Future Job Performance (CRI 2009-009)
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Park, Sanghee; Sturman, Michael C.
Extant compensation literature has indicated that pay-for-performance can influence employee performance. There is little research, however, that differentiates the effects of certain forms of pay-for-performance plans on future performance. By applying the precepts of expectancy theory to specific components of the pay-for-performance plans and using longitudinal data from a sample of 739 US employees in a service-related organization, this study demonstrates different effects for merit pay, bonuses, and long-term incentives.
compensation; pay-for-performance; future performance; expectancy theory; incentives
Required Publisher Statement: © Wiley. Final version published as: Park, S., & Sturman, M. C. (2016). Evaluating form and functionality of pay-for-perfomance plans: The relative incentive and sorting effects of merit pay, bonuses, and long-term incentives. Human Resource Management, 55(4), 697-719. doi: 10.1002/hrm.21740Reprinted with permission. All rights reserved.