Shared Modes of Compensation and Firm Performance: UK Evidence

51 Pages Posted: 26 Aug 2001 Last revised: 23 Oct 2010

See all articles by Martin J. Conyon

Martin J. Conyon

Lancaster University - Management School; Wharton School, Center for Human Resources

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Date Written: August 2001

Abstract

This paper examines the use and consequences of shared compensation plans (profit sharing, profit related pay, SAYE schemes and company stock option plans) in a sample of UK workplaces and firms in the 1990s. The use of these plans has increased over time, in part in response to government programs. The evidence shows that companies and workplaces adopting shared compensation practices have had higher productivity than other firms, but the effects vary among programs, suggesting that the particulars matter a lot in aligning shared compensation and work place activities. Consistent with incentive theory, the evidence also shows that firms and workplaces with shared compensation practices have a higher incidence of shared decision-making / information sharing practices.

Suggested Citation

Conyon, Martin J. and Freeman, Richard B., Shared Modes of Compensation and Firm Performance: UK Evidence (August 2001). NBER Working Paper No. w8448. Available at SSRN: https://ssrn.com/abstract=281079

Martin J. Conyon (Contact Author)

Lancaster University - Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom

Wharton School, Center for Human Resources ( email )

3600 Locust Walk
Philadelphia, PA 19104-6365
United States

Richard B. Freeman

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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617-868-3900 (Phone)
617-868-2742 (Fax)

University of Edinburgh - School of Social and Political Studies ( email )

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Harvard University ( email )

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Cambridge, MA 02138
United States
617-868-3900 (Phone)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE

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