Employee Satisfaction in Agencies with Merit-Based Pay: Differential Effects for Three Measures
40 Pages Posted: 23 Jan 2015 Last revised: 24 Jan 2015
Date Written: January 21, 2015
While many studies have examined the association between merit-based pay and organizational performance, few have assessed the psychological well-being of employees in agencies with such financial incentive schemes. We show that employees in agencies with merit-based pay are less satisfied with their organization than those in agencies that do not implement the incentive systems. We also show that this negative effect is larger in the case of organizational satisfaction than for pay satisfaction or employee satisfaction with the job itself.
Keywords: merit-based pay, job satisfaction, fair appraisal
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