How performance related pay affects productivity and employment

Gielen, Anne C.; Kerkhofs, Marcel; Ours, Jan C. van

doi:10.1007/s00148-009-0252-9

Cited by 91 publications

(75 citation statements)

References 10 publications

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“…This result is also aligned with the literature findings indicating that jobs with PRP attract workers of higher ability and motivate the workers to provide greater effort, leading to higher productivity rates (Booth and Frank, 1999). Gielen et al (2010) claimed that PRP increases productivity at the firm level with 9 percent and employment growth with 5 percent. However, it should be mentioned that although PRP has potentially positive productivity effects, PRP may not always increase the productivity rate.…”

Section: Discussionmentioning

confidence: 99%

“…When employees are required to perform several tasks, they will focus only on those activities being rewarded and neglect other activities. It is thus not always clear that the introduction of a PRP scheme will indeed increase productivity (Gielen et al, 2010). In order to accurately measure the effect of PRP on labor productivity, it is crucial to take into account all the mentioned aspects which might directly or indirectly influence the process.…”

Section: Discussionmentioning

confidence: 99%

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Analyzing electrical installation labor productivity through work sampling

Hajikazemi

Andersen

Langlo

2017

IJPPM

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. The construction industry is a labor-intensive industry, hence, the presence of labor with high productivity at each stage of the project plays a significant role in achieving project success. The main purpose for carrying out this study was to provide real-life empirical data about the current level of construction productivity, in this case electrical installation work, within construction projects in Norway. In addition, it was of interest to identify the areas which have the highest potential for improvement of labor productivity. Design/methodology/approachThis study considers the construction labor productivity through an elaboration on productive vs. unproductive time within construction projects. It is based on a "frequency study" done on eight construction projects in Norway. The "work sampling" method has been used for collection of empirical data. For each project, four electricians were observed an entire working day and the amount of time they spent on performing each activity was recorded every 60 th seconds. The activities observed were based on a predefined set of activities. FindingsThe results of the observations show that on average, 61.1 percent of the time was direct value-added work. This number is significantly better than what is normally discussed as being productive time. However, the findings also show that there is still potential for improvement. The activities that have the highest potential for improvement include "material transfer", "amendments to already executed installation", "personal needs" and "waiting times". Practical implicationsThe study results will be of immense benefit to managers of construction projects as well as managers of construction organizations in enhancing their project performance and productivity. Originality/valueThis paper contributes both theoretically and empirically to the current discussion and findings on labor productivity and its relation to project success. The results presented in this paper have important implications of labor productivity in construction projects and future studies in the area of project performance.

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Section: Discussionmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

Analyzing electrical installation labor productivity through work sampling

Hajikazemi

Andersen

Langlo

2017

IJPPM

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“…This work retains the assumption of constant returns-to-scale because the central issue is the detection of a strategic role for profit sharing in preventing entry, without neither scale, nor efficiency considerations. 3 Chang and Bjornstad (1993) shows that the introduction of the profit sharing scheme alters the choice of the effort level of the workers and, therefore, improves their productivity levels; some recent empirical studies seem to confirm that profit sharing is positively related with labor productivity (D'Art and Turner 2004; Gielen et al 2010). However, to simplify the model and highlight the point that the pay schemes can be used as entry deterrence mechanism, as in Sørensen (1992) the analysis abstracts from this aspect.…”

Section: The Model and The Resultsmentioning

confidence: 99%

Profit sharing as entry deterrence mechanism

Buccella

2016

Port Econ J

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In a right-to-manage framework, this paper analyzes the optimal choice of the pay scheme (profit sharing vs. fixed wage) in a unionized duopoly with potential market entry and decentralized bargaining. The paper shows that, depending on the institutional features, both pay systems can arise as equilibria in Nash strategies. Under duopoly with committed bargaining, the fixed wage is the Nash equilibrium; with flexible bargaining, an agreement between the incumbent firm and its union about profit sharing arises as Nash equilibrium, if the union is not too strong. A monopoly with threat of entry reinforces the selection of profit sharing as a deterrent mechanism.

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“…Individual incentive schemes might involve piece-rate payment and are often referred to as "high-power incentives" [2], [3]. Group incentive schemes can involve teamwork incentives, profit-sharing, and share ownership, and are often referred to as "low-power incentives," due to the presence of "free-riding," where less-productive workers will take advantage of being in a larger group and are therefore less easily monitored [4], [5].…”

Section: Discussion Of Pros and Consmentioning

confidence: 99%

“…when more profitable firms are more likely to introduce PRP. One study using panel data for a sample of Dutch firms reports a substantial increase in productivity (9%) in firms adopting PRP schemes, as well as an effect on worker flows [4]. Another study focused on a large sample of metal-mechanical forms in Italy exploiting a reform in the structure of collective bargaining triggered by a social pact, which induced a switch from fixed wages to collective PRP [5].…”

Section: Group Incentive Schemes and Financial Participationmentioning

confidence: 99%