New research claims that pay based on performance goes further than improving productivity; it actually boosts levels of employee happiness.
These are the findings of Lancaster University Management School which looked for the first time at the impact of performance pay not on productivity but other elements of satisfaction.
Research authors found that people with the opportunity of receiving profit share and bonuses had higher job satisfaction, were happier about their working hours and felt they had more job security.
There were also interesting differences in the experiences of men and women, with performance pay making men more satisfied with every aspect of their working life overall, whereas women were only more satisfied with pay, not their hours worked or with levels of job security.
Colin Green, the author said: “Our research has shown that performance pay, as well as improving levels of satisfaction, can also improve attitudes towards job security. Performance related pay would be expected to have a negative effect on job security, in so far as it is indicative of a culture of monitoring of work effort.”
Linking pay to productivity, he said, may also increase job security as wages fluctuate positively with the output of the firm, reducing the need for firms to lay-off workers in periods of weak product demand.
“It may also attract workers who are willing to tolerate risk and so are more likely to be satisfied with their degree of security,” he added.
