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Group Effects on a Merit Pay System

Group Effects on a Merit Pay System A relationship between pay increases and performance ratings may reflect differences between individuals, between groups, or both. An empirical study of a firm’s compensation program, demonstrating what proportion of pay raise is attributable to individual performances and to group influences, is presented. The results show how concealed effects of groups pose difficult problems in examining pay‐for‐performance relationships in compensation systems. Policy implications for incentive programs, pay secrecy, differencies in pay for performance within and between work units, substitutability of pay components, and problems in associating individual performance with pay raises are discussed. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Journal of Business Emerald Publishing

Group Effects on a Merit Pay System

American Journal of Business , Volume 1 (2): 6 – Jan 1, 1986

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Publisher
Emerald Publishing
Copyright
Copyright © 1986 MCB UP Ltd. All rights reserved.
ISSN
1935-5181
DOI
10.1108/19355181198600012
Publisher site
See Article on Publisher Site

Abstract

A relationship between pay increases and performance ratings may reflect differences between individuals, between groups, or both. An empirical study of a firm’s compensation program, demonstrating what proportion of pay raise is attributable to individual performances and to group influences, is presented. The results show how concealed effects of groups pose difficult problems in examining pay‐for‐performance relationships in compensation systems. Policy implications for incentive programs, pay secrecy, differencies in pay for performance within and between work units, substitutability of pay components, and problems in associating individual performance with pay raises are discussed.

Journal

American Journal of BusinessEmerald Publishing

Published: Jan 1, 1986

Keywords: Merit pay system; Performance ratings; Compensation programme; Pay‐for‐performance

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