Working from home and performance pay: individual or collective payment schemes?

Publication type

Journal Article

Series Number

Authors

Publication date

September 4, 2025

Summary:

Working from home (WFH) reduces real-time visibility of employees within the physical space of the workplace. This makes it difficult to monitor employees’ work behaviour. Employers may instead monitor employees’ outputs and provide incentives through performance pay. The crucial question is what type of performance pay employers provide to incentivize employees who work from home. Using British panel data, we find that WFH decreases the likelihood of solely receiving individual performance pay. It increases the likelihood of receiving collective performance pay—with or without individual performance pay. This pattern also holds in instrumental variable estimations accounting for endogeneity. Our findings fit theoretical considerations. WFH means that employees have less opportunities to socialize at work entailing the tendency that they focus on personal achievement and neglect collaboration. Solely rewarding individual performance may reinforce this tendency. By contrast, employers reward collective performance as it counteracts the adverse effects of WFH by providing incentives for collaboration, helping on the job and information sharing.

Published in

British Journal of Industrial Relations

DOI

https://doi.org/10.1111/bjir.70012

ISSN

00071080

Subjects

Notes

Online Early

© 2025 The Author(s). British Journal of Industrial Relations published by John Wiley & Sons Ltd.

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

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