Effectiveness of Individual and Aggregate Compensation Strategies

Abstract

Based on a sample of 175 scientists and engineers, this study shows that individual‐based rewards (either in the form of merit pay or individual bonuses) are perceived as less effective than aggregate incentive strategies for R & D workers. The pay effectiveness measures used here include pay satisfaction, propensity to leave, project performance, and individual performance. All things considered, team‐based bonuses are perceived as the most effective rewards in an R & D setting. The findings also indicate that employees with a low willingness to take risks are more likely to experience withdrawal cognition if they work for a firm that relies on variable compensation.

Mobility norms, risk aversion, and career satisfaction of Chinese employees

“…Past research demonstrated that risk aversion serves as an important moderator in employment relationship. For example, Gomez-Mejia and Balkin (1989) found that risk-averse individuals experienced greater withdrawal intention in response to variable compensation system. Deckop, Merriman, and Blau (2004) also found that risk aversion moderated the effects of pay for performance on employees' withdrawal cognition and pay satisfaction.…”

Fostering Creativity and Innovation without Encouraging Unethical Behavior

“…The literature offers a set of prescriptions. First, organizations can rely on measures of risktaking propensity that have been validated in prior research (see, for example, Gomez-Mejia and Balkin, 1989). Assessments of individuals' predisposition to take risks can facilitate formation of teams charged with creativity and innovation; individuals can self select based on low-or high-risk tolerance.…”

Performance Pay Remuneration for Consultants in the NHS: is the Current System Fair and Fit for Purpose?

“…Some research suggests that team-based pay can be effective in motivating staff. 47 However, such team-based schemes must also be introduced with sensitivity to avoid the pitfalls of individual PRP schemes and, as Reilly notes, 'In case of relating pay to team performance, you have to have an embedded team structure first. And it may be that it is teamwork and goal setting that has a positive effect rather than the team pay scheme itself.'…”