Title: Variable pay: its impact on motivation and organisation performance

Authors: Mary Jo Ducharme, Mark Podolsky

Addresses: Human Resources Management, School of Administrative Studies, York University, Toronto, Ontario, Canada. ' DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada

Abstract: Variable pay is commonly associated with many positive individual and organisation level outcomes, and yet the literature suggests that variable pay plans in general are failing to provide individual performance results. Improved organisation level measures may be more attributable to the inherent financial changes that accompany variable pay plans than to human resources principles. It is suggested that the true strategic advantage that can be derived from motivating employees through variable pay has yet to be fully realised or measured. Implications for theoretical and empirical study are discussed.

Keywords: variable pay; performance; organisation performance; motivation; reinforcement theory; pay-for-performance; incentive compensation; firm performance; strategic compensation.

DOI: 10.1504/IJHRDM.2006.009749

International Journal of Human Resources Development and Management, 2006 Vol.6 No.1, pp.68 - 76

Published online: 09 May 2006 *

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