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Evaluating Form and Functionality of Pay-For-Performance Plans: The Relative Incentive and Sorting Effects of Merit Pay, Bonuses, and Long-Term Incentives

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dc.contributor.authorPark, Sanghee
dc.contributor.authorSturman, Michael C.
dc.date.accessioned2020-09-12T21:03:24Z
dc.date.available2020-09-12T21:03:24Z
dc.date.issued2016-07-01
dc.description.abstractUsing two-year longitudinal data from a large sample of US employees from a service-related organization, the present study investigates the relative effects of three forms of pay-for-performance plans on employees’ job performance (incentive effects) and voluntary turnover (sorting effects). The study differentiates between three forms of pay: merit pay, individual-based bonuses, and long-term incentives. By definition, these PFP plans have different structural elements that distinguish them from each other (i.e., pay plan form) and different characteristics (functionality), such as the degree to which pay and performance are linked and the size of the rewards, which can vary both within and across plan types. Our results provide evidence that merit raises have larger incentive and sorting effects than bonuses and long-term incentives in multi-PFP plan environments where the three PFP plans are operating simultaneously. Only merit pay has both incentive and sorting effects among the three PFP plans. The implications for the PFP-related theory, as well as for the design and implementation of PFP plans, are discussed.
dc.description.legacydownloadsSturman152_Evaluating_form.pdf: 1988 downloads, before Aug. 1, 2020.
dc.identifier.other9285441
dc.identifier.urihttps://hdl.handle.net/1813/71560
dc.language.isoen_US
dc.relation.doihttps://doi.org/10.1002/hrm.21740
dc.rightsRequired Publisher Statement: © Wiley. Final version published as: Park, S., & Sturman, M. C. (2016). Evaluating form and functionality of pay-for-performance 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.21740 Reprinted with permission. All rights reserved.
dc.subjectpay-for-performance plans
dc.subjectincentive effect
dc.subjectsorting effect
dc.subjectcompensation
dc.titleEvaluating Form and Functionality of Pay-For-Performance Plans: The Relative Incentive and Sorting Effects of Merit Pay, Bonuses, and Long-Term Incentives
dc.typearticle
local.authorAffiliationPark, Sanghee: Rutgers University
local.authorAffiliationSturman, Michael C.: mcs5@cornell.edu Cornell University School of Hotel Administration

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