Determinants of Performance Measure Choices in Worker Incentive Plans | Zendy

Christopher D. Ittner | Zendy; David F. Larcker | Zendy

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Determinants of Performance Measure Choices in Worker Incentive Plans

Author(s) -

Christopher D. Ittner,

David F. Larcker

Publication year - 2002

Publication title -

journal of labor economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 8.184

H-Index - 109

eISSN - 1537-5307

pISSN - 0734-306X

DOI - 10.1086/338674

Subject(s) - incentive , measure (data warehouse) , compensation (psychology) , workforce , economics , representation (politics) , performance related pay , performance measurement , incentive program , labour economics , public economics , business , microeconomics , marketing , computer science , psychology , social psychology , politics , political science , law , database , economic growth

This study examines the determinants of performance measure choices in worker incentive plans. The results indicate that informativeness issues such as those addressed in economic theories have a significant effect on measurement choices. However, other reasons for adopting the plans, such as upgrading the workforce and linking bonuses to the firm’s ability to pay, also influence measurement choices, as do union representation and management participation in plan design. Moreover, the factors influencing the use of specific measures vary, suggesting that the aggregate performance measure classifications commonly used in compensation research provide somewhat misleading inferences regarding performance measurement choices.

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