When it comes to performance related pay, commentary often focuses on the positive effects it can have on employee and organizational performance. But is there a downside? A Finnish study sought to investigate the role that pay for performance can have on employee innovation. The results indicated that reward for innovation related behaviours can stunt radical innovation, while it can have a moderate positive effect on incremental innovation.
Key Topics: Performance related pay; Innovation
When it comes to eliciting the best from their employees, companies are increasingly moving toward pay for performance reward strategies, which focus on rewarding employees’ job skills, knowledge, competencies and productivity. A recent Malaysian study sought to understand factors influencing perceived unfairness of such reward practices and found that elements such as effective communication, participation, and performance appraisals can have a significant impact on perceived fairness by employees.
Key Topics: Job satisfaction, Performance appraisal, Performance based reward
Barcelona and Real Madrid are dominant forces in world soccer as well as domestically in Spain, but what role does reward management play in their success and what can organizations learn from their successful team reward strategies? With organizations increasingly utilizing team work in order to increase company performance and competitive advantage there are some key lessons that they can learn from two of the most successful teams in world sport today.
Key Topics: Team performance; Pay-for-performance; Pay dispersion, Merit pay; Bonuses
Given the importance of innovation to many companies, the optimal performance of Research & Development employees can be critical to business success. While past research indicates that there is a strong link between monetary rewards and employee performance, this relationship is less clear when it comes to generating employee innovation. A multi-year study in Japan assessed the effect of rewards on the innovation outcomes of Research & Development employees. The study found that, while the relationship differed depending on company size, generally financial reward had a negative impact on employee innovation.
Key Topics: Innovation; Pay-for-performance; Extrinsic reward; R&D employees
CEO compensation packages are becoming increasingly standardized, for various reasons, including the growing influence of external bodies on company boards of directors. A study of US CEOs over a 7-year period, which examined the relationship between CEO compensation effectiveness and their tenure, found that the motivation inducing effects of different compensation components differed depending on how long CEOs had been in their role. The results suggest that standardization of CEO compensation is not an optimal compensation strategy for companies to follow.
Key Topics: CEO tenure; CEO compensation; Shareholder returns; Performance-based compensation
What motivates employees most? Is it status or money? A recent Dutch study looked to address these very questions by examining the impact of team sales contests on sales growth in the retail sector and found that under specific conditions employees were motivated by both financial incentives and status amongst peers, but most predominantly by status. The style of manager leadership was also found to increase employee performance, with a transformational leadership style having the greatest impact.
Key Topics: Sales contests; Employee performance; Status; Incentives; Leadership style
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