Why is group-based pay perceived as meaningful,meaningless or negative? Exploring the meanings of pay suggested by reflection theory

This study explored the propositions of the reflection theory of pay [Thierry (2001), Work Motivation in the Context of a Globalizing Economy, Mahwah, NJ: Lawrence Erlbaum Associates, pp. 149–166]. The theory is grounded in theories of individual motivation. However, in a group-based pay context more socially oriented motivational factors may also play a role. In addition, the theory does not take into account that pay may have negative meanings. In this study, we have adopted a qualitative approach to improve the understanding of what meanings group-based pay may have. The research questions were the following: (1) why is group-based result-oriented pay perceived as meaningful, (2) why is group-based result-oriented pay perceived as meaningless and (3) why is group-based result-oriented pay perceived to have a negative meaning. To study the meanings attached to group-based pay, we conducted 29 focus group interviews (88 employees) in six municipal organizations in Finland. The results showed that the reasons for perceiving group-based pay as meaningful were related to the value of money, compensation for performance, the positive messages signalled by the pay and positive outcomes. On the other hand, when pay was perceived as meaningless, the arguments were related to the weak instrumentality of money, weak links between performance and pay, incompatibility and lack of knowledge. The negative meanings were related to negative message conveyed by the pay and its outcomes. When these results were compared with four meanings proposed by reflection theory, all four categories were found in the speech of the interviewees. In addition, two new categories were found and designated as ‘messages’ and ‘outcomes’. These new categories were theoretically linked to social identity theory.     

Channels of employee voice: complementary or competing for space?

This article identifies the existence of employee voice channels and examines how they interact within the context of an overall organisational voice system. In so doing, we can better appreciate the disparities between the micro‐level reality and macro‐level rhetoric of employee voice for highly skilled employees in the knowledge intensive sector. Drawing on an instrumental, inductive case study involving managers and, most notably, employees, the research finds that the plurality of mechanisms provided for voice appears to cause some confusion that leads to a neglect of certain channels and others competing for attention. This raises the issue, which has not received attention thus far, as to whether the availability of multiple voice channels can have counter‐productive effects whereby they start to compete with rather than complement each other.     

A social exchange theory framework for understanding the job characteristics–job outcomes relationship: the mediating role of psychological contract fulfillment

This study integrated the Job Demands-Resources (JD-R) model and concept of psychological contract fulfillment into a social exchange theory process framework to improve our understanding how and when job characteristics interact to influence job outcomes. Using survey data (n = 334), we found evidence to support our hypothesized relationships between job characteristics (job demands and job resources) and job outcomes (job satisfaction and organizational commitment); and the mediating role of psychological contract fulfillment (transactional and relational), such that when job resources (job control and support) were high, the negative effects of high job demands on psychological contract fulfillment were attenuated. Theoretical and managerial implications are discussed.     

Does contingent pay encourage positive employee attitudes and intensify work?

This article explores the relationships between three dimensions of contingent pay – performance‐related pay, profit‐related pay and employee share‐ownership – and positive employee attitudes (job satisfaction, employee commitment and trust in management). The article also examines a conflicting argument that contingent pay may intensify work, and this can detract from its positive impact on employee attitudes. Of the three contingent pay dimensions, only performance‐related pay had direct positive relationships with all three employee attitudes. Profit‐related pay and employee share‐ownership had a mix of negative and no significant direct relationships with employee attitudes, but profit‐related pay showed U‐shaped curvilinear relationships with all three employee attitudes. The results also indicated that performance‐related pay is associated with work intensification, and this offsets some of its positive impact on employee attitudes.     

Simply the best? A systematic literature review on the predictive validity of employee performance for leader performance

Meritocratic promotion—promoting the best performing employees—is a pervasive strategy to fill leader positions. However, the predictive validity of this strategy is unclear due to diverging theoretical predictions from different research disciplines and due to inconsistent empirical results. Further, the different disciplines rarely acknowledge and refer to each other, thereby impeding a cumulative understanding of meritocratic promotion. With our systematic review, we intend to initiate an interdisciplinary dialogue by (i) providing an overview of pertinent theoretical approaches including their deviating predictions, (ii) proposing mediators and moderators of the relationship of employee performance and leader performance to improve future research on meritocratic promotion, (iii) assessing the study quality, and (iv) summarizing and discussing empirical findings to advance the understanding of the predictive validity of meritocratic promotion. We conclude by presenting theoretical conclusions, point towards future research directions, and provide guidance for future research, including a checklist. We also discuss practical implications for human resource management.     

Equal or equitable pay? Individual differences in pay fairness perceptions

This study examined how social comparison (i.e., comparing one's pay to similar others' pay) and deserved comparison (i.e., comparing one's pay to one's deserved pay) affect pay fairness perceptions, and the individual differences in the comparison processes. Results based on a field study with a sample of 167 employees showed pay fairness was low when employees received lower pay than a similar other (or what they deserved), increased as their pay exceeded that of a similar other (or deserved pay) to some extent, and then decreased when overpayment was considerable. Second, pay fairness increased as one's actual and similar others' pay levels both increased while pay fairness remained the same as one's actual and the deserved pay levels both increased. In addition, the “threshold” that people start to perceive overpayment as less fair occurred more quickly for those with higher preference for consistency in social comparison and for those with higher preference for the merit principle in deserved comparison. We also conducted experiments, and the results generally replicated the findings in the field study. These findings offer theoretical implications regarding organizational justice, as well as practical implications for designing and executing a compensation system.     

Innovative work behaviour and performance-related pay: rewarding the individual or the collective?

In order to change employee behaviour, companies frequently turn to forms of performance-related pay (PRP). At the same time, there is a clear imperative to encourage employee innovation. In this study we focus on the relation between PRP, organizational and job-level task resources and innovative work behaviour (IWB). In doing so, we distinguish between individual and collective PRP and build on insights from high-performance work systems and employee creativity literature. Using survey data of 927 employees from five Belgian industries, we find that individual PRP weakens the important positive relation of task-level job resources like learning opportunities on IWB. The combination of both individual and collective PRP, on the contrary, strengthens the positive relationship between organizational resources like upward communication and IWB.     

Searching for injustice and finding solidarity? A contribution to the mobilisation theory debate

This article, using empirical data from cases of mobilisation in 1996 in Argentina, offers new evidence to build on the theory of mobilisation as recently proposed by John Kelly. The use of injustice as the basis of mobilisation raises some doubts for both its intrinsic subjective nature and in the light of cases of spontaneous mobilisations. A reformulation of the theory is suggested, less attached to a mechanical sequence and more rooted in the contradictions of the capitalist labour process.     

Impact of asset preferences on firm performance over its life cycle: Is agency theory or neo-classical theory more relevant?

This study extends Dickinson's (2011) firm life cycle classification approach by linking it with the asset preferences and firm performance. This study also resolves the contention between agency theory and neo-classical theory. Based on the data of S&P 500 firms from 2000 to 2019, our results show: First, the effect of current assets on basic earnings per share (BEPS), return on assets (ROA) and Tobin's Q ratio (TQR) decreases from the introduction to decline stage. Second, the influence of fixed assets on TQR increases from the introduction to the declining stage. Our findings suggest that both theories are relevant, and asset acquisition influences the productivity and performance of the firms.     

Which work characteristics predict employee outcomes for the public-sector employee? An examination of generic and occupation-specific characteristics

The wide-ranging changes that have occurred in the public sector over recent years have placed increasing demands on public-sector employees. A survey of employees within a relatively commercially-oriented public-sector organization in Australia was used to test a demand-oriented generic model of employee well-being and a variety of situation-specific variables. The presence of support at work and the amount of control an employee had over their job were found to be key predictors of employee-level outcomes. Perceptions of pay and the perception of a lack of human resources (HR) were also found to predict employee outcome variables. The results emphasize the impact that middle managers and HR managers can have in terms of reducing the detrimental employee effects that can be caused by the introduction of new public management (NPM) and the potential for a positive impact on employees. In particular, public-sector managers can use the design of jobs and the development of social support mechanisms, such as employee assistance programmes, to maintain, if not improve, the quality of working life experienced by their employees. More broadly, this study has found that the job strain model is a useful tool in a public-sector environment and is likely to be of increasing utility with the continuing introduction or consolidation of NPM over time. Managing these issues in the new public sector could be a key means of protecting the key resource of the Australian public sector – the employees.     

To the victor belong the spoils? A theoretical investigation of star employee hierarchies

Star employees are characterized by their high-status position in organizations. Yet, important distinctions in stardom are likely to exist among stars within an organization. These distinctions, in turn, may have important implications for not only the organization but also the stars themselves. Examining star employees via a resource perspective, we integrate conservation of resources theory and the theory of self-control strength to examine the risks and benefits associated with different levels of stardom. In this work we introduce and investigate two unique star profiles identified as the “superstar” and the “understudy.” Specifically, we examine both the potentially unforeseen risks associated with superstar status and the unanticipated benefits associated with understudy status. We further consider how characteristics of stars and contextual factors may serve as important contingencies. Given the extent to which stars guide organizational success and the intention of many employees to reach various levels of stardom, this work has important theoretical and practical implications.     

From pay to praise? Non-cash employee recognition in Canadian and Australian firms

Despite deep theoretical roots, a prominent place in the practitioner literature, and increasing use by organizations, non-cash employee recognition plans have thus far received relatively little empirical study by academic researchers. Drawing on survey data from 349 Canadian and Australian firms, this study examines the incidence of individually based and group-based non-cash recognition (NCR) programmes, ascertains whether there are relationships between use of non-cash and cash-based reward practices, and identifies possible predictors of NCR programmes. Results indicate that non-cash plans are indeed common in both countries, but do not appear to substitute for cash-based performance plans, contrary to enthusiasts' suggestions. The most important predictor of non-cash programmes is unionization, which is negatively related to both individually based and group-based NCR programs in Canada, and to group-based programmes in Australia.     

Should I stay or should I go? A latent threshold approach to large‐scale mixture innovation models

We propose a straightforward algorithm to estimate large Bayesian time‐varying parameter vector autoregressions with mixture innovation components for each coefficient in the system. The computational burden becomes manageable by approximating the mixture indicators driving the time‐variation in the coefficients with a latent threshold process that depends on the absolute size of the shocks. Two applications illustrate the merits of our approach. First, we forecast the US term structure of interest rates and demonstrate forecast gains relative to benchmark models. Second, we apply our approach to US macroeconomic data and find significant evidence for time‐varying effects of a monetary policy tightening.     

Does pay for performance diminish intrinsic interest?

One concern with pay for individual performance (PFIP) is that it may undermine intrinsic interest, thus having little or no positive net influence on performance. A major basis for this concern is cognitive evaluation theory [CET; Deci and Ryan (1985), Intrinsic Motivation and Self-Determination in Human Behavior, New York: Plenum Press]. Most evidence on CET, however, comes from non-work settings and, even in that arena, there is debate regarding the undermining effect of PFIP. There is little workplace-based evidence on the validity of the undermining hypothesis and none that makes use of data on between-employer differences in PFIP. Also, a close reading of CET, reinforced by recent developments, suggests that PFIP plans could, under common workplace conditions, have a positive, rather than negative, influence on intrinsic interest. To our knowledge, there is no research that examines between-organization differences in PFIP and how they relate to employee intrinsic interest. There is also no research on whether employees having a preference for PFIP plans are likely to gravitate to organizations using such plans. To the extent such attraction–selection–attrition or sorting processes take place, the likelihood of detrimental consequences (e.g. diminished intrinsic interest) of PFIP plans due to mismatches between how the organization pays and how the employees are motivated should be less likely. We find no evidence of a detrimental effect of PFIP plans on intrinsic interest. Instead, intrinsic interest is actually higher under PFIP. We also find that organizations placing greater emphasis on PFIP plans tend to have employees with motivation orientations matching their PFIP plans, which may reduce the probability of a detrimental effect of PFIP.     

Does pay for individual performance truly undermine employee creativity? The different moderating roles of vertical and horizontal collectivist orientations

The extant literature has generated inconclusive findings concerning the effect of pay for individual performance (PFIP) on creativity. Supplementing self-determination theory with compensation-activation theory, we theorized and tested the moderating roles of individual cultural values of vertical and horizontal collectivist orientations on the relationship between PFIP and employee creativity as mediated by intrinsic motivation. The empirical results of two field studies provided convergent support for the intrinsic motivation mechanism underlying the positive relationship between PFIP and employee creativity among individuals with high vertical (but not horizontal) collectivist orientations. These findings highlight the importance of considering individual differences in cultural values in understanding how extrinsic rewards affect creativity.     

Do social media enhance constructive employee voice all of the time or just some of the time?

Social media are becoming widely adopted by organisations to encourage collaboration and communication. We seek to understand how social media can enhance employee voice and employees' willingness to engage in constructive dialogue with both colleagues and managers. By drawing on literature on employee voice, signalling theory and personal control to analyse qualitative data from research into three strategic business units in a major global telecommunications corporation, we find that (a) employee perceptions of personal control and autonomy influence whether and how employees' exercise voice through social media, and (b) these perceptions vary according to different organisational/field‐level contexts evident in the corporation.     

What model for entry in first-price auctions? A nonparametric approach

We develop a selective entry model for first-price auctions that nests two polar models often estimated in the empirical literature on auctions, Levin and Smith (1994), and Samuelson (1985). The selective entry model features a pro-competitive selection effect. The selection effect is shown to be nonparametrically identifiable, and a nonparametric test for its presence is proposed. This test can be used to discriminate between the two polar models.     

Related variety and firm heterogeneity. What really matters for short-run firm growth?

ABSTRACT

In recent years, two concepts have become key elements in economic geography: related variety and firm heterogeneity. The first one predicts that knowledge spillovers within a region/local system occur among firms operating in ‘different but related’ sectors. The second one assumes that knowledge spillovers can occur among ‘different’ firms belonging to the same localised sector/industrial cluster. Using a sample of 27,817 Italian manufacturing firms observed during the period 2010–2013, this paper analyses the role played by related variety and within-sector firm heterogeneity on short-run employment growth. The results suggest that both related variety and within-sector firm heterogeneity have a positive effect, although the latter has a higher impact than the former. These results confirm the role played by related variety, but identify firm heterogeneity as a potential additional source of local knowledge spillovers.