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http://ssrn.com/abstract=417355
 
 

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The Effects of Performance Measurement and Compensation on Motivation: An Empirical Study


Marco Van Herpen


Boston Consulting Group

Mirjam Van Praag


University of Amsterdam - Department of Economics; Copenhagen Business School; Tinbergen Institute; Institute for the Study of Labor (IZA)

Kees Cools


Boston Consulting Group

June 2003

Tinbergen Institute Discussion Paper No. 03-048/3

Abstract:     
The design and implementation of a performance measurement and compensation system can strongly effect the motivation of employees. Building on economic and psychological theory
this study develops a conceptual model that is used to empirically test this effect. We find that the employee's perception of the compensation system influences the motivation of agents. Our survey results demonstrate a significant positive relationship between the perceived characteristics of the compensation system and extrinsic motivation. Intrinsic motivation is not affected by the design of the monetary compensation system, but is affected by promotion opportunities. The compensation system also significantly affects other indicators of motivation, namely work satisfaction and turnover intent. Further research could extend these results by investigating the relationship between extrinsic and intrinsic motivation on the one hand and individual and company performance on the other.

Number of Pages in PDF File: 36

Keywords: Performance measurement, Compensation, Promotions, Intrinsic Motivation, Extrinsic Motivation

JEL Classification: J41, J33

working papers series


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Date posted: August 19, 2003  

Suggested Citation

van Herpen, Marco and van Praag, Mirjam and Cools, Kees, The Effects of Performance Measurement and Compensation on Motivation: An Empirical Study (June 2003). Tinbergen Institute Discussion Paper No. 03-048/3. Available at SSRN: http://ssrn.com/abstract=417355 or http://dx.doi.org/10.2139/ssrn.417355

Contact Information

Marco Van Herpen
Boston Consulting Group ( email )
J.F. Kennedylaan 100
3741 EH Baarn
Netherlands
Mirjam Van Praag (Contact Author)
University of Amsterdam - Department of Economics ( email )
Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4096 (Phone)
+31 20 525 4182 (Fax)
Copenhagen Business School ( email )
Kilevej 14A
Frederiksberg, 2000
Denmark
Tinbergen Institute
Gustav Mahlerlaan
Amsterdam
Netherlands
Institute for the Study of Labor (IZA)
Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany
Kees Cools
Boston Consulting Group ( email )
J.F. Kennedylaan 100
3741 EH Baarn
Netherlands
+ 31 35 54 868 00 (Phone)
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