Performance Pay as an Incentive for Lower Absence Rates in Britain

Konstantinos Pouliakas and Nikolaos Theodoropoulos

MPRA Paper from University Library of Munich, Germany

Abstract: Using two cross-sections of a representative dataset of British establishments, the effect of various forms of incentive pay (e.g. performance-related pay (PRP), profit-sharing, share ownership, cash bonuses) on the absence rates of firms is investigated. Incentives that are tightly linked to individual or group merit are found to be significantly related to lower absenteeism. Important disparities in the effect of PRP on absenteeism are detected, which depend on the extent of monitoring, private-public status, teamwork, and other organizational changes. The findings are robust to the potential endogenous relation between monitoring, PRP and absenteeism, and have important implications for the design of optimal compensation policies by firms.

Keywords: performance-related pay; incentives; absenteeism (search for similar items in EconPapers)
JEL-codes: C21 J22 J33 (search for similar items in EconPapers)
Date: 2009-10-29
New Economics Papers: this item is included in nep-bec, nep-cta and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/18820/4/MPRA_paper_18820.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18238

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