Pay for performance versus non-financial incentives in small and medium-sized enterprises
by Rainer Baule; Christian Soost
International Journal of Entrepreneurial Venturing (IJEV), Vol. 8, No. 1, 2016

Abstract: The use of pay for performance (PFP) in organisations has come to be a standard tool in human resource management within the past three decades. However, economic-psychological literature questions the effectiveness of PFP plans, as they might crowd out intrinsic motivation, leading to reduced labour efforts of employees. This paper discusses the situation of PFP in relation to non-financial incentives in German small and medium-sized enterprises (SMEs). We find that variable pay is well-established in German SME and discuss the effects of financial and non-financial incentives on intrinsic motivation. We identify three key factors for the success of SME: social environment, non-financial incentives, and intrinsic motivation. These factors are strongly connected and can be used to offer employees a different kind of workplace in contrast to big companies. We point out that PFP in SME can be hazardous and the use of this kind of compensation must be implemented implemented.

Online publication date: Thu, 28-Jan-2016

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Entrepreneurial Venturing (IJEV):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?


Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com