Pay enough, don’t pay too much or don’t pay at all? The impact of bonus intensity on job satisfaction

Publication type

Research Paper

Series Number

4713

Series

IZA Discussion Papers

Author

Publication date

January 1, 2010

Abstract:

Using ten waves (1998-2007) of the British Household Panel Survey (BHPS), this paper investigates the ceteris paribus association between the intensity of incentive pay, the dynamic change in bonus status and the utility derived from work. After controlling for individual heterogeneity biases, it is shown that job utility rises only in response to 'generous' bonus payments, primarily in skilled, non-unionized, private sector jobs. Revoking a bonus from one year to the next is found to have a detrimental impact on employee utility, while job satisfaction tends to diminish over time as employees potentially adapt to bonuses. The findings are therefore consistent with previous experimental evidence, suggesting that employers wishing to motivate their staff should indeed 'pay enough or don't pay at all'.

Subjects

Link

- http://EconPapers.repec.org/RePEc:iza:izadps:dp4713

Notes

SSRN search

working paper

#513301

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