Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82567
Authors: 
Holmlund, Bertil
Year of Publication: 
2009
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 2009:9
Abstract: 
This paper discusses some issues of compensation policy in business and academia from the perspectives of incentive theory, other theories, and empirical research. The main conclusion is that mechanical rules for performance-related pay are likely to be inferior to more subjective performance evaluation criteria. Formalized performance pay, where pay is directly linked to measures of output, can easily have dysfunctional effects, especially when some dimensions of performance are easier to observe than others. Subjective performance evaluation is not perfect, but it is probably the best method to obtain a holistic assessment of multidimensional performance indicators.
Subjects: 
compensation policy
performance-based pay
incentive theory
JEL: 
J30
J33
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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