Group-based pay-for-performance plans and firm performance: The moderating role of empowerment practices |
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| Authors: | Hyondong Kim Kyra L Sutton Yaping Gong |
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| Institution: | 1.Department of Management,Dongguk University-Seoul,Seoul,Republic of Korea;2.Department of Management,Auburn College of Business,Auburn,USA;3.Department of Management,The Hong Kong University of Science and Technology,Hong Kong SAR,People’s Republic of China |
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| Abstract: | As the popularity of group-based pay-for-performance plans persists, compensation researchers are exploring the conditions under which these plans contribute to the financial performance of firms. Based on a sample of 1,933 employees from 415 companies in South Korea, we found that group-based pay-for-performance plans enhance both objective and subjective measures of firm performance. Furthermore, consistent with the contingency perspective of fit, we found that empowerment practices positively moderate the relationship between group-based pay-for-performance plans and firm performance. These findings suggest that empowerment can enhance the effectiveness of such pay plans. We discuss implications for research and practice. |
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