pay and motivation bruno s. frey university of zurich and crema – center for research in...
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PAY and MOTIVATIONBruno S. Frey
University of Zurichand
CREMA – Center for Research in Economics, Management
and the Arts, Switzerland
Why
PAY FOR PERFORMANCE is a bad idea
Problem 1
Performance is
difficultimpossible
to measure
Problem 2
Performance Pay
undermines
Intrinsic motivation
Problem 3
Performance Pay:
self-selectionattraction
persons with mainly/solely monetary interests
Problem 4
Performance Pay
leads to
− conflicts− disappointment
There ARE
Alternatives to
Performance Pay
Fixed Wages
− adjustment AFTER performance
− 360° considerations
Awards
− raise performance loyalty
− are desired.
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