Bonuses and performance evaluations : individual bonuses do not always raise performance : it depends on the characteristics of the job

Dirk Sliwka

Economists have for a long time argued that performance-based bonuses raise performance. Indeed, many firms use bonuses tied to individual performance to motivate their employees. However, there has been heated debate among human resources professionals recently, and some firms have moved away from individual performance bonuses toward fixed wages only or collective performance incentive schemes such as profit-sharing or team incentives. The appropriate approach depends on each company's unique situation, and managers need to realize that individual bonus plans are not a panacea to motivate employees.

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Year of publication:	2020
Authors:	Sliwka, Dirk
Publisher:	Bonn : Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA)
Subject:	bonus \| compensation \| variable pay \| incentives \| performance evaluation \| evidence-based bonus design \| Leistungsentgelt \| Performance pay \| Prinzipal-Agent-Theorie \| Agency theory \| Führungskräfte \| Managers \| Vergütungssystem \| Compensation system \| Leistungsanreiz \| Performance incentive \| Performance-Messung \| Performance measurement \| Managervergütung \| Executive compensation \| Provision \| Commission payments