Merit Pay Practices: Implications for Pay-Performance Relationships.

Schwab, Donald P.; Olson, Craig A.

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Peer reviewed

ERIC Number: EJ401976

Record Type: CIJE

Publication Date: 1990

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Merit Pay Practices: Implications for Pay-Performance Relationships.

Schwab, Donald P.; Olson, Craig A.

Industrial and Labor Relations Review, v43 n3 spec iss p237S-55S Feb 1990

A Monte Carlo simulation was used to examine pay-performance relationships. Conventional merit systems achieved a better link between pay and performance than bonus systems, because merit systems benefit from consistency of performance over time. Even very substantial errors in measurement of performance have only a modest effect on pay-performance relationships. (SK)

Descriptors: Compensation (Remuneration), Error of Measurement, Job Performance, Merit Pay, Merit Rating, Monte Carlo Methods, Personnel Evaluation, Promotion (Occupational), Rewards

Publication Type: Journal Articles; Reports - Research

Education Level: N/A

Audience: N/A

Language: English

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Note: Paper presented at the symposium, "Do Compensation Policies Matter?" (Ithaca, NY, May 23-25, 1989).