The Effect of Compensation System on Employees’ Performance
Date Issued
2007
Date
2007
Author(s)
Yu, Chih-Hsin
DOI
zh-TW
Abstract
This study investigates whether paying higher wages motivates employees to have better performance and whether performance-based incentive scheme (piece rate vs. fixed pay) moderates this relation. Prior researches (Hannan 2005、Kocher and Sutter 2007 ) document that workers provided more effort when they were paid higher wages even though there was no ex post financial reward for doing so. Therefore, instead of the level of effort, this study uses actual worker’s task performance to examine whether this effect exists. In addition, this study takes account of incentive scheme to investigate whether this effect exists.
A computerized experiment between-subject design is conducted to test the following hypotheses:
H1: Workers have better task performance when they are paid higher wages.
H2: Workers have better task performance when they are paid higher piece rates.
H3: Compared to workers receiving a fixed pay, workers receiving an incentive-based pay (piece rate) perform better on the task.
The experimental results suggest that H1 is supported. Namely, workers who were paid higher wages will perform better than workers who were paid lower wages. However, the relation between piece rates and employees’ task performance is not significant. Finally, H3 is supported, which suggest that incentive scheme can affect worker’s task performance. In other words, there is an interactive effect between incentive scheme and the amount of wages on performance.
Subjects
效率工資理論
互惠理論v獎酬制度
薪資
工作績效
Efficiency wage theory
reciprocity
gift-exchange model
wage
incentive scheme
task performance
Type
other
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