Why does performance pay de-motivate: financial incentives versus performance appraisal

French, Stephen, Kubo, Katsuyuki and Marsden, David (2000) Why does performance pay de-motivate: financial incentives versus performance appraisal. 476. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

The sheer scale and speed of the shift of payment system from time-based salaries to performance-related pay, PRP, in the British public services provides a unique opportunity to test the effects of incentive pay schemes. This study is based on the first large scale survey designed to measure the effects of performance related pay on employee motivation and work behaviour across the British public services. While there is evidence of a clear incentive effect for those gaining above average PRP, it is likely that it is offset by a more widespread demotivating effect arising from difficulties of measuring performance fairly. Organisational commitment appears to offset some of the negative effects of PRP.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/
Additional Information:	© 2000 David Marsden, Stephen French and Katsuyuki Kubo
Library of Congress subject classification:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor
Sets:	Research centres and groups > Employment Relations and Organisational Behaviour Group Collections > Economists Online Research centres and groups > Centre for Economic Performance (CEP)
Identification Number:	476
Date Deposited:	29 Feb 2008
URL:	http://eprints.lse.ac.uk/3639/

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