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Executive Remuneration and Employee Performance-Related PayA Transatlantic Perspective$
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Tito Boeri, Claudio Lucifora, and Kevin J. Murphy

Print publication date: 2013

Print ISBN-13: 9780199669806

Published to Oxford Scholarship Online: May 2013

DOI: 10.1093/acprof:oso/9780199669806.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 02 December 2020

Empirical Literature

Empirical Literature

(p.181) 8 Empirical Literature
Executive Remuneration and Employee Performance-Related Pay

Alex Bryson

Richard Freeman

Claudio Lucifora

Michele Pellizzari

Virginie Pérotin

Oxford University Press

Most studies suggest that when firms have good performance measures, performance-related pay is associated with improved employee productivity and better worker–firm match. If all firms that would benefit from performance-related pay have introduced it, subsidizing other firms to switch through tax breaks and other forms of state assistance will yield lower returns than estimated for current users. But it is also possible that many firms retain existing pay systems when they could do better with performance systems, which would justify state promotion of some schemes. Making pay dependent on company performance may also be a way for firms to share risk with workers through cost adjustments, which could preserve jobs in difficult times. But there is also evidence that incentive schemes do not necessarily improve performance in all contexts and situations. For example, firms often introduce financial participation schemes for reasons that have little or nothing to do with incentives.

Keywords:   company performance, performance-related pay systems, cost adjustments, share risk, employees, financial participation schemes

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