Study of Employee Compensation and its Effect on Productivity
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College of Business & Professional Studies
workers, output, profit, retirement, benefits, incentives
Throughout the 1980s and 1990s, much has occurred to dramatically alter the nature of personnel science. Rapid shifts from the economic recovery and prosperity of the early to mid-1980s, to the painful downsizing and realignment of American industry that occurred in the late 1980s and 1990s, has forced managers to critically examine the way they do business and how they compensate and motivate their employees.
Economics has become increasingly important in understanding personnel issues. While economic analysis is somewhat rougher as a descriptive tool than industrial psychology, it is better as a conceptual framework on which prediction and normative prescription can be based. This thesis will examine ways in which economic analysis has enriched the understanding of personnel practices. While primarily focusing on compensation methods, some interesting labor market phenomena have been examined.
In Part One, the author begins his evaluation by examining different compensation methods and practices, including variable pay schemes such as piece rates, commissions, and the factors of risk and incentives. In addition, upward sloping age-earnings profiles and payment by relative performance will be examined to determine positive or negative effects on worker productivity.
Part Two examines worker incentives and creative methods of compensating employees. Both traditional and non-traditional methods will be evaluated, including profit sharing, partnerships, team incentives, pay equality, and pay for performance.
Parts Three and Four break away from strictly wages and cash—type motivational tools and take an in-depth look at non-cash methods of compensation and employee motivation. Motivational tools such as stock options, efficiency wages, up-or-out promotion rules, tenure, supervision, and the total concept of jobs, are discussed.
This thesis is inspired by the author's personal interest in finding new ways of motivating employees within the highly structured work environment.
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Nebrig, Kenneth J., "Study of Employee Compensation and its Effect on Productivity" (1994). Theses, Dissertations, and Capstone Projects. 249.
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