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Can you pay employees to innovate? Evidence from the C anadian private sector
Author(s) -
Curran Bruce,
Walsworth Scott
Publication year - 2014
Publication title -
human resource management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.44
H-Index - 77
eISSN - 1748-8583
pISSN - 0954-5395
DOI - 10.1111/1748-8583.12036
Subject(s) - salary , incentive , compensation (psychology) , business , private sector , pay for performance , performance related pay , marketing , variable (mathematics) , private information retrieval , labour economics , industrial organization , economics , microeconomics , psychology , computer science , market economy , economic growth , psychoanalysis , mathematical analysis , mathematics , computer security
Using 7 years of data representing the C anadian private sector, we estimate the effects of the major components of compensation on a rarely studied form of employee performance: innovation. Although there are some limitations inherent in the data, our results indicate the complex motivation required for consistent innovation success. Surprisingly, we find that fixed pay (salary) and individual performance pay have no effect on innovation, while variable group pay and indirect pay (employee benefits) have a positive effect. In other words, our results suggest that you can pay employees to innovate, provided that you select the right compensation incentives.