Talking about Performance Pay: Context, Commentary

workspan: The Magazine of WorldatWork
Thursday, December 3, 2015

The call for increased transparency about why employees are paid what they are continues to draw more and more attention. This spotlight intensifies as companies approach the end of the calendar year, a time for many managers to conduct annual or semi-annual performance reviews and bonus conversations with employees.

In her new workspan column, “It’s Not Just the Money that Matters,” ICS’ Stephanie R. Thomas discusses a recent study that uses creative techniques to shed some light on why in some cases performance pay works well and other times it may appear that performance pay crowds out worker’ intrinsic motivations.

Factoring in an employee’s understanding of a task’s value, the character or motivational capabilities of their supervisor, or even their own abilities, it has been found that monetary incentives alone have a significant negative effect on performance. In fact, what is needed for a significant positive effect on performance, according to the study, is a combination of inspired motivation and performance pay.

See: Stephanie R. Thomas, Nov. 2015: It’s Not Just the Money that Matters, workspan, the professional magazine of WorldatWork.

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Learn more about Optimizing Pay for Performance and Managing Compensation Change, June 9 – 10, 2015, and other performance pay topics.  Start exploring here.