Performance-related pay : an investigation of factors influencing its effective implementation

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Performance-related pay : an investigation of factors influencing its effective implementation


Author: Fung, Kit-lin Stella
Title: Performance-related pay : an investigation of factors influencing its effective implementation
Degree: M.Sc.
Year: 1998
Subject: Merit pay
Performance awards
Hong Kong Polytechnic University -- Dissertations
Department: Multi-disciplinary Studies
Dept. of Management
Pages: vi, 91, [5] leaves : ill. ; 30 cm
Language: English
InnoPac Record:
Abstract: Performance-related pay (PRP) is a reward system which has been extensively used as a means to improve staff performance. While it is generally believed that people will perform better if rewards are more closely attached to their performance, the effectiveness of PRP remains controversial. Rather than being another evaluative study on the effectiveness of PRP, this study tries to identify the factors that affect its successful implementation. Considering that PRP is an organizational intervention that involves both goal setting and monetary incentives, investigation is made in the light of the expectancy theory and goal setting theory. It is hypothesized that ones reward expectancies in terms of performance expectancy, reward contingency and reward valence; which will be positively moderated by ones ability and the quality of the management's goal setting and feedback giving; will determine ones performance. A survey is conducted on the entire supervisory/managerial staff in a local public-listed company. Multiple regression analysis is used to test the hypothesized relationships. The results indicate that reward valence is the only significant expectancy variable in influencing performance, and goal quality is exerting a positive moderating effect on the impacts of reward valence on performance. The results also reflect that goal quality, reward valence, and the interaction of reward valence and goal quality are crucial factors in effecting good performance. In summary, the study finds that the driving force generated by rewards as well as directions provided by goal setting are required to effect good performance in a performance-related pay system.

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