This paper describes a performance-based pay program implemented in a large public utility. Mixed results were obtained concerning the impact of the plan upon job satisfaction, satisfaction with pay, individual performance, and organizational and departmental level performance. A relationship between job level and employee perceptions of the program was found.
Get full access to this article
View all access options for this article.
References
1.
PeckC.A. (1984). Pay and Performance: The Interaction of Compensation and Performance Appraisal. New York: The Conference Board.
2.
LawlerE.E. (1987). The design of effective reward systems, In LorschJ.W. (ed.), Handbook of Organizational Behavior (p. 255), Englewood Cliffs, NJ: Prentice-Hall.
3.
AlpanderG.G. (1982). Human Resources Management Planning, Third Edition. New York: American Management Association.
4.
MeyerH.H. (1975). The pay for performance dilemma, Organizational Dynamics, 3 (1), 39–50.
5.
CowenP. (1978) How Blue-Cross put pay-for-performance to work, Personnel Journal, 59 (5), 250–269.
6.
CookF.W. (1986). Contaminants of pay for performance, Personnel, 63 (7), 8–10.
7.
ThayerF. (1990). Performance appraisal and merit pay: Thayer's rejoinder, Review of Public Personnel Administration, 10 (2), 72–76.
SmithM.L.O'DowdE.J.ChristG.M. (1987). Pay for performance — One company's experience. Compensation and Benefits Review, 19 (3), 19–27.
12.
GeskeL.D. (1989). Pay for performance in the natural gas industry. Public Utilities Fortnightly, 124 (4), 27–30.
13.
AllanP.RosenbergS. (1986). An assessment of merit pay administration under New York City's managerial performance evaluation system: Three years of experience. Public Personnel Management, 15 (3), 297–309.
14.
GreeneC.N. (1973). Causal connections among managers merit pay, job satisfaction, and performance. Journal of Applied Psychology, 58 (1), 95–100.
15.
MarkhamS.E. (1988). Pay-for-performance dilemma revisited: Empirical example of the importance of group effects. Journal of Applied Psychology, 73 (2), 172–180.
16.
KahnL.M.ShererP.D. (1990). Contingent Pay and Managerial Performance,”Industrial and Labor Relations Review, 43 (special issue), 107s–120s.
17.
Gomez-MejiaL.R.BalkinD.B. (1989). Effectiveness of individual and aggregate compensation strategies. Industrial Relations, 28 (3), 431–445.
18.
GreeneC.N.PodsakoffP.M. (1978). Effects of removal of a pay incentive: A field experiment. Academy of Management Proceedings, 38, 206–210.
19.
KahnSherer, “Contingent Pay.”
20.
Markham, “Pay-For-Performance.”
21.
PearceJ.L.StevensonW.B.PerryJ.L. (1985). Managerial compensation based on organizational performance: A time series analysis of the effects of merit pay. Academy of Management Journal, 28 (2), 261–278.
22.
Greene, “Causal Connections.”
23.
GreenePodsakoff, “Effects.”
24.
SchayB.W. (1988). Effects of performance-contingent pay on employee attitudes. Public Personnel Management, 17 (2), 237–250.
VroomV.H. (1964). Work and Motivation. New York: Wiley.
31.
LawlerE.E. (1973). Motivation in Work Organizations. Belmont CA: Wadsworth Publishing Company.
32.
Vroom, Work and Motivation.
33.
AdamsJ.S. (1965) Inequity in social exchange, in BerkowitzLeonard (ed.) Advances in Experimental Social Psychology Volume 2 (pp. 267–299). New York: Academic Press
34.
Ibid.
35.
LawlerE.E. (1990). Strategic Pay. San Francisco: Jossey-Bass Inc., Publishers.
36.
WisdomB.PatzigD. (1987). Does your organization have the right climate for merit?Public Personnel Management, 16 (2), 127–133.
37.
See, for example, AllenP.RosenbergS.An assessment of merit pay administration under New York City's managerial performance evaluation system: Three years of experience, Public Personnel Management, 15 (3), 297–309.
38.
WisdomPatzig, “Does Your Organization.”
39.
Heneman, Merit Pay.
40.
SAS Institute, Inc. (1985). SASR User's Guide: Statistics, Version 5 Edition. Cary, NC: SAS Institute, Inc.
41.
ByarsL.L.RueL.W. (1991). Human Resource Management. Homewood, IL: Irwin.
42.
HenemanH.G. (1974). Comparisons of self and superior ratings of managerial performance, Journal of Applied Psychology, 59, 638–642.
43.
CherringtonD.J.ReitzH.J.ScottW.E.Jr. (1971). Effects of contingent and noncontingent reward on the relationship between satisfaction and task performance, Journal of Applied Psychology, 55 (6), 531–536.
44.
McGintyR.L.HankeJ. (1989). Compensation management in practice—merit pay plans: Are they truly tied to performance?Compensation and Benefits Review, 21 (5), 12–16.
45.
KahnSherer, “Contingent Pay.”
46.
LockeE.A. (1968). Toward a theory of task motivation and incentives. Organizational Behavior and Human Performance, 3, 157–189.
47.
LathamG.P.YuklG.A. (1975). A review of research on the application of goal setting in organizations. Academy of Management Journal, 18 (4), 824–845.
48.
ScarpelloV.HuberV.VandenbergR.J. (1988). Compensation satisfaction: Its measurement and dimensionality. Journal of Applied Psychology, 75, 163–171.
49.
NigroL.G. (1981). Attitudes of federal employees toward performance appraisal and merit pay: Implications for CSRA implementation, Public Administration Review, 41, 84–86.
50.
PearceJ.L.PerryJ.L. (1983). Federal merit pay: A longitudinal analysis, Public Administration Review, 43, 315–325.
51.
ScottD.W.HillsF.S.MarkhamS.E.VestM.J. (1987). Evaluating a pay for performance program at a transit authority, Paper presented at the National Academy of Management Meetings, New Orleans, LA.