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The paradox of performance related pay systems: ‘why do we keep adopting them in the face of evidence that they fail to motivate?’

Marsden, David (2009) The paradox of performance related pay systems: ‘why do we keep adopting them in the face of evidence that they fail to motivate?’. CEP Discussion Papers, 946. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

This paper considers one of the paradoxes of incentive pay used in Britain’s public services, namely that despite much evidence that it does not motivate employees, it continues to be widely used. It is argued that behind this evidence, there are significant examples in which its use has been associated with improved performance. A good part of this is to be explained by the way performance pay links pay and appraisal, and the pressure this puts on line managers to set clearer goals for their staff. There is also some evidence that the goal setting is the outcome of a form of integrative, or positive sum, negotiation between individual employees and their managers, and that it is not just ‘top down’

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2009 David Marsden
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Journal of Economic Literature Classification System: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J33 - Compensation Packages; Payment Methods
M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs, seniority issues)
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 946
Date Deposited: 12 Oct 2009 15:42
URL: http://eprints.lse.ac.uk/25357/

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