Some are punished and some are rewarded

A study of the impact of performance pay on job satisfaction

Research output: Working paperDiscussion paper

Abstract

Using an econometric procedure that corrects for both self-selection of individuals into their preferred compensation scheme and wage endogeneity, this study investigates whether significant differences exist in the job satisfaction of individuals receiving performance-related pay (PRP) compared to those on alternative compensation plans. Using data from four waves of the British Household Panel Survey (BHPS), it is found that PRP exerts a positive effect on the mean job satisfaction of (very) high-paid workers only. A potential explanation for this pattern could be that for lower-paid employees PRP is perceived to be controlling, whereas higher-paid workers derive a utility benefit from what they regard as supportive reward schemes. Using PRP as an incentive device in the UK could therefore be counterproductive in the long run for certain low-paid occupations.
Original languageEnglish
PublisherCentre for European Labour Market Research
Number of pages42
Publication statusPublished - Jan 2007

Publication series

NameUniversity of Aberdeen Business School Working Paper Series
No.06
Volume2007
ISSN (Print)0143-4543

Fingerprint

Performance pay
Performance related pay
Job satisfaction
Workers
Employee performance
Econometrics
Individual performance
British Household Panel Survey
Incentives
Reward
Self-selection
Wages
Endogeneity

Cite this

McCausland, W. D., Pouliakas, K., & Theodossiou, I. (2007). Some are punished and some are rewarded: A study of the impact of performance pay on job satisfaction. (University of Aberdeen Business School Working Paper Series; Vol. 2007, No. 06). Centre for European Labour Market Research.

Some are punished and some are rewarded : A study of the impact of performance pay on job satisfaction. / McCausland, W David; Pouliakas, Kostas ; Theodossiou, Ioannis.

Centre for European Labour Market Research, 2007. (University of Aberdeen Business School Working Paper Series; Vol. 2007, No. 06).

Research output: Working paperDiscussion paper

McCausland, WD, Pouliakas, K & Theodossiou, I 2007 'Some are punished and some are rewarded: A study of the impact of performance pay on job satisfaction' University of Aberdeen Business School Working Paper Series, no. 06, vol. 2007, Centre for European Labour Market Research.
McCausland WD, Pouliakas K, Theodossiou I. Some are punished and some are rewarded: A study of the impact of performance pay on job satisfaction. Centre for European Labour Market Research. 2007 Jan. (University of Aberdeen Business School Working Paper Series; 06).
McCausland, W David ; Pouliakas, Kostas ; Theodossiou, Ioannis. / Some are punished and some are rewarded : A study of the impact of performance pay on job satisfaction. Centre for European Labour Market Research, 2007. (University of Aberdeen Business School Working Paper Series; 06).
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