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Linking Pay to Performance: Conflicting Views and Conficting Evidence
Author(s) -
O'Neill Graham L.
Publication year - 1995
Publication title -
asia pacific journal of human resources
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.825
H-Index - 33
eISSN - 1744-7941
pISSN - 1038-4111
DOI - 10.1177/103841119503300203
Subject(s) - incentive , pay for performance , empirical evidence , performance related pay , conceptual framework , work (physics) , performance management , empirical research , reward system , economics , marketing , public economics , business , public relations , positive economics , psychology , microeconomics , sociology , political science , mechanical engineering , social science , philosophy , epistemology , engineering , psychotherapist
The past few decades have seen significant economic and business changes. These changes have bad a direct impact on the structure of organizations, the design of work and the performance levels expected of all employees. This environment has encouraged experimentation in the design and management of employee pay, particularly the adoption of performance‐based reward systems. Kohn (1993) raises significant criticisms of incentive‐style pay systems. Specifically, he argues that performance‐based pay does not gain enduring change in behaviour; it treats symptoms rather than causes; it reduces risk‐taking; and, there is no empirical evidence for its effectiveness. Kohn's criticisms are reviewed in terms of his conceptual framework and interpretation of evidence. While the empirical data relating to performance‐based pay systems is equivocal, much of Kohn's conceptual framework can be questioned in the light of alternative findings. Incentive reward schemes are a growing reality, despite the lack of clear empirical support linking pay and performance. This paper concludes with suggested guidelines for the design of performance‐based pay systems.