Performance-related pay and productivity

Artikel

A growing number of firms offer compensation packages that link pay to performance. The aim is to motivate workers to be more efficient while also increasing their attachment to the company, thereby reducing turnover and absenteeism. The effects of performance-related pay on productivity depend on the scheme type and design, with individual incentives showing the largest effect. Governments often offer tax breaks and financial incentives to promote performance-related pay, though their desirability has been questioned due to large deadweight losses involved. The diffusion of remote work will increase the relevance of performance-related pay.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: IZA World of Labor ; ISSN: 2054-9571 ; Year: 2022 ; Bonn: Institute of Labor Economics (IZA)

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Compensation Packages; Payment Methods ; Dispute Resolution: Strikes, Arbitration, and Mediation; Collective Bargaining ; Metals and Metal Products; Cement; Glass; Ceramics
• Subject: performance-related pay ; productivity ; pay incentives ; financial participation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lucifora, Claudio ; Origo, Federica
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2022

Further information

• DOI: doi:10.15185/izawol.152.v2
• Handle: http://hdl.handle.net/10419/260682
• Last update: 10.03.2025, 11:44 AM CET