Changing Conceptions of Employee Compensation

Abstract

This paper reviews and discusses many differing forms of incentive compensation systems that are being used in today's organizations. The review traces the roots of bonus compensation from individual piece-work plans through the adoption of organization-wide gainsharing plans to the growing recognition of open-book management. Reasons for the shift in units of analysis from the individual employee to the work team or organization as a whole are discussed. Explanations are also given for why many companies are beginning to concentrate on outcomes rather than process measures as indicators of organizational success. Lastly, suggestions for enhancing the research agenda and bridging the gap between science and practice are provided for the scientists and practitioners of organizational behavior management.

Key Words:

• Pay-for-performance
• bonus system
• competition
• cooperation
• open book management
• gainsharing