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Incentive Effects of Bonus Payments : Evidence from an International Company

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dc.creator Engellandt, Axel
dc.creator Riphahn, Regina T.
dc.date 2004
dc.date.accessioned 2013-10-16T07:10:47Z
dc.date.available 2013-10-16T07:10:47Z
dc.date.issued 2013-10-16
dc.identifier http://hdl.handle.net/10419/20492
dc.identifier ppn:393548724
dc.identifier.uri http://koha.mediu.edu.my:8181/xmlui/handle/10419/20492
dc.description This study uses panel data describing about 6,500 employees in a large international company to study the incentive effects of performance related pay. The company uses two performance related remuneration mechanisms. One is an individual "surprise" bonus payment. The other is a more structured system, where part of the salary is determined by individual performance evaluations. We hypothesize that effort is higher in departments where (i) performance evaluation results are more spread out, (ii) person-specific performance evaluations are more flexible over time, (iii) surprise bonuses are used more frequently. These hypotheses are tested using days of absence and overtime work as effort indicators. The tests yield that hypotheses (ii) and (iii) are supported, and that (i) cannot be tested reliably due to possible simultaneity bias in our data. We investigate and confirm the robustness of these findings. They suggest that surprise bonus payments and flexibility in the evaluation of individual performances over time provide effective incentives for employee effort.
dc.language eng
dc.relation IZA Discussion paper series 1229
dc.rights http://www.econstor.eu/dspace/Nutzungsbedingungen
dc.subject C25
dc.subject J33
dc.subject M50
dc.subject J41
dc.subject J24
dc.subject M12
dc.subject ddc:330
dc.subject bonus
dc.subject merit pay
dc.subject pay for performance
dc.subject worker effort
dc.subject social status
dc.subject mobility
dc.subject absenteeism
dc.subject overtime
dc.subject Leistungsorientierte Vergütung
dc.subject Leistungsanreiz
dc.subject Vergütungssystem
dc.subject Multinationales Unternehmen
dc.subject Schätzung
dc.subject Schweiz
dc.title Incentive Effects of Bonus Payments : Evidence from an International Company
dc.type doc-type:workingPaper

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