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This study examines the varied effects of individual-based pay for performance and group-based pay for performance on three measures of employee satisfaction: pay satisfaction, organizational satisfaction, and job satisfaction in the public sector. Examining a twelve-year panel data set, this study finds that individual-based pay for performance has a significantly positive relationship with organizational and job satisfaction, but group-based pay for performance has a significantly negative relationship with pay satisfaction. Meanwhile, the results show that the perceived fairness of performance evaluations has significantly positive relationships with pay satisfaction, organizational satisfaction, and job satisfaction.

public management review

The differing effects of individual- and group-based pay for performance on employee satisfaction: the role of the perceived fairness of performance evaluations