The Effects of the Superior's Subjective Discretion on Bonus Allocation on the Subordinates' Perceived Justice, Job Satisfaction, and Job Performance: An Experimental Study
Date Issued
2011
Date
2011
Author(s)
Hsiao, Chu-Hsin
Abstract
This study examines the effects of the superior’s subjective discretion on bonus allocation on the subordinates’ perceived justice, job satisfaction, and job performance. This study recruits 70 undergraduates and graduates as the participants in an experiment in which they are paired to form a two-person team to perform the decoding task independently for eight periods. Adopting a 3x1 between-subjects design by which the participants are randomly assigned to one of three bonus allocation methods: compensation based on actual individual-performance, compensation based on equal share of the actual team performance, and compensation based on the superior’s subjective judgment which deviates from actual individual-performance.
Using structural equation modeling to test the hypotheses, this study finds that the superior’s subjective discretion has a direct effect on the subordinate’s perceived justice as well as job performance, but does not has a direct effect on job satisfaction. Perceived justice has a direct effect on job satisfaction but not job performance. Job satisfaction has a direct effect on job performance. In terms of mediating effects, the superior’s subjective discretion has an indirect effect on job satisfaction via perceived justice. Also, perceived justice has an indirect effect on job performance via job satisfaction. Implications for performance evaluation and incentive contracts are discussed.
Subjects
subjectivity
perceived justice
job satisfaction
job performance
structural equation modeling
Type
thesis
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