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Emphasizes the need for coherence between the reward structure and the organizational culture of effective schools. Provides a framework for discussion which includes a typology of rewards, including pecuniary, non‐pecuniary extrinsic and intrinsic rewards. Analyses several pay‐for‐performance strategies, classified by permanency of increases (merit or incentive) and mode of distribution (individual or group). Explores the perceived advantages and disadvantages of various merit and incentive plans in support of effective schools. Suggests that more attention to a closer fit between compensation strategies, organizational strategies, and workforce behaviours is required to increase the positive effects of reward structures.

Employee dissatisfaction with merit pay is a long‐standing problem. This study introduces four explanatory constructs, based on decisional and interactional fairness notions, that describe how supervisors implement merit pay and predict merit pay satisfaction. Multigroup confirmatory factor analyses, applied to a sample of American employees (N = 415) and a sample of Venezuelan employees (N = 239), show that the five constructs introduced here are distinct from each other and that their measures generalize across countries (cultures and languages).

Merit pay plans are often used by companies as a way to motivate and reward employees. While several theories of motivation suggest that rewarding employees for individual accomplishments will produce positive results, there are potential threats that may lead to negative outcomes. Research in psychology and organizational behavior suggests that personal involvement in a decision‐making process can influence current and future behavior. This paper reports the results of an experiment examining individuals’ tendencies to overcommit to a previous decision. Results show that when an individual is personally involved in both the hiring and subsequent merit allocation process for an employee, this prior commitment has a significant effect on the amount of money allocated relative to an individual participating in the merit allocation decision but not the hiring process. Personal involvement with an employee leads to an increase in the merit allocation despite evidence that the individual did not meet the standards for merit pay.

This paper aims to look into employee perceptions of politics and fairness in a work setting where a new merit pay system had recently been implemented.

The results are based on employee survey responses from three governmental organizations (n=367) that had implemented analogous merit pay systems.

Hierarchical moderated regression results indicated that perceptions of politics and fairness distinctively and interactively predicted whether the pay system was perceived effective in achieving its objectives. The results suggest that some forms of politics in performance appraisals (e.g. compression) might be perceived less detrimental than others (e.g. favoritism). In a high politics environment, the pay system effectiveness varied as a function of the level of distributive justice. Voice in the pay system development only mattered in a situation where there was a low level of organizational politics.

One of the main limitations of this study is its reliance on cross‐sectional data. Future research should complement employee perceptions about pay system effectiveness with objective data from the organizations studied. Research on the effect of contextual factors, such as national culture on the motives, in and reactions to, organizational politics, is desired.

The result suggests that the adopted merit pay systems were not ineffective or detrimental per se, but that the effectiveness varied as a function of the established political and fairness climates at different levels of the organization.

This study contributes to the discussion on what are the conditions under which politics and fairness are antithetical, and when they are interactively associated with outcomes.

Compensation influences applicants' perceptions of a position's attractiveness, but there has been limited analysis of how different compensation systems might reflect organizational cultures and influence organizational attractiveness. This article seeks to explore these issues.

An experiment was conducted in which 288 undergraduates reacted to scenarios describing a company that distributed salaries and benefits based on either merit or on seniority. Individual differences were also measured and analyzed. Analysis of variance and moderated regression were used to test the hypotheses.

Relative to seniority‐based compensation systems, the cultures of organizations relying on merit were perceived to be more aggressive, reward‐oriented, and less decisive. Unexpectedly, the psychological contracts of organizations using merit systems were generally perceived to be more relational and less transactional than those using seniority‐based systems. Individual differences were not related to attraction to the organization regardless of its compensation systems. Finally, individuals were least attracted to organizations that distributed both salaries and benefits based on seniority relative to those using a mixed compensation distribution system or one based entirely on merit.

The sample was composed of undergraduates who responded to a hypothetical job scenario. The scenario only included information about how salary and benefits are allocated. Future research should use more experienced samples that are considering actual positions.

Findings indicate how information about compensation systems might be used in job descriptions to encourage applicants.

This study was the first to find that merit/seniority‐based compensation systems for determining salary and benefits reflect different organizational cultures to job applicants and influence job applicants' attraction to organizations.

Decentralisation of pay bargaining in the UK is well known. Other countries in Europe have not gone so far but a clear trend towards decentralisation is perceptible, although national or industry‐wide bargaining is still widely used. There is an accompanying increase in the devolvement of responsibility for pay issues from personnel specialists to line management. These trends have been accompanied by a steady rise in variable pay across Europe. Proportionate growth varies between the public and private sectors.

Decentralization of pay bargaining in the UK is well known. Other countries in Europe have not gone so far but a clear trend towards decentralization is perceptible, although national or industry‐wide bargaining is still widely used. There is an accompanying increase in the devolvement of responsibility for pay issues from personnel specialists to line management. These trends have been accompanied by a steady rise in variable pay across Europe. Proportionate growth varies between the public and private sectors.

This paper reports two studies involving data collected from 583 participants in Hong Kong and 121 participants in the People’s Republic of China (PRC), and examines the most popular compensation components offered by organizations to employees and participants’ perceptions regarding the five most important compensation components to retain and motivate people in Hong Kong and PRC, respectively. Results suggested that in Hong Kong, base salary, merit pay, year‐end bonus, annual leave, mortgage loan, and profit sharing were the most important factors to retain and motivate employees. In China, base salary, merit pay, year‐end bonus, housing provision, cash allowance, overtime allowance, and individual bonus were the most important factors to retain and motivate employees. Results are discussed in light of economic, geographic, and culture‐related factors.

Provides a framework for understanding the motivational influences on behaviour and discusses a way forward for reward systems that will encourage behaviour consistent with a quality organization. Explores a shift in thinking away from pay being associated with status towards pay being associated with contribution. Outlines such concepts as merit pay, profit sharing, performance bonus and pay for competence. Suggests that with an understanding of people and work, high levels of effective behaviour can be encouraged by imaginative recognition/pay systems reinforced by the appropriate management style.

A relationship between pay increases and performance ratings may reflect differences between individuals, between groups, or both. An empirical study of a firm’s compensation program, demonstrating what proportion of pay raise is attributable to individual performances and to group influences, is presented. The results show how concealed effects of groups pose difficult problems in examining pay‐for‐performance relationships in compensation systems. Policy implications for incentive programs, pay secrecy, differencies in pay for performance within and between work units, substitutability of pay components, and problems in associating individual performance with pay raises are discussed.