How does the size of a person’s salary affect performance in a mixed compensation scheme? | The Oxford Review

How does the size of a person’s salary affect performance in a mixed compensation scheme?

Research Briefing

Keywords: compensation, mixed compensation, reward, pay, performance -related pay, psychology, salary

Imagine that there are two people doing the same job

Person A receives a fixed salary and a fixed amount for doing a task (performance related pay)

Person B receives a higher fixed salary than person A and the same amount as person A for doing each task (same performance related pay?)

Who is likely to make the most effort, and complete more tasks, person A or B?

At the heart of this question is whether or not people tend to engage in relative thinking in their judgement and decision-making around pay and reward.

If relative thinking is the process that people tend to use, then we would expect that person A would complete more tasks. This is because, when person A looks at the relative amount that completing the task is worth compared to their salary, it is higher than the relative amount person B receives for completing the same task.

Get the full research briefing including all references

 

About our research briefings

 

Disclaimer: This is a research review, expert interpretation and briefing. As such it contains other studies, expert comment and practitioner advice. It is not a copy of the original study – which is referenced. The original study should be consulted and referenced in all cases. This research briefing is for informational and educational purposes only. We do not accept any liability for the use to which this review and briefing is put or for it or the research accuracy, reliability or validity. This briefing as an original work in its own right and is copyright © Oxford Review Enterprises Ltd 2016-2019. Any use made of this briefing is entirely at your own risk.