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The effect of performance-based pay systems on job satisfaction and stress
Karlstad University, Faculty of Economic Sciences, Communication and IT, Department of Business Administration.
2013 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Previous investigations regarding the health- and wellbeing-related outcomes of performance-based pay systems have been scarce and ambiguous so far. Considering the huge economic and organizational impact of stress-related health problems, it is important to further investigate this relation, including the impact of different variables that can help to explain the variation in the relationship between performance-based pay and job strain.

The main purpose of this study is to challenge the research gap and to understand the effect of organizational justice and job control on the relation between performance-based pay and job satisfaction and stress.

A quantitative research method in form of a survey is applied. To test the structural model and its hypotheses, the study uses an approach to partial least squares path modeling (PLS).

The main results have shown that organizational justice moderates the relation between performance-based pay and stress. Moreover, performance-based pay increases job satisfaction when employees perceive high job control. It is furthermore revealed that gender, family responsibilities, experience and the type of performance evaluation can have an impact on the relationship as well.

The study has contributed to fill the research gap above and has provided new, theoretical insight. Managers are recommended to provide organizational justice and to ensure high autonomy for employees. Instead of applying “one size fits all” solutions, managers should take demographic, organizational and situational factors into account when designing the compensation scheme.

Place, publisher, year, edition, pages
Keyword [en]
Performance-based pay, stress, job satisfaction, organizational justice, job control
National Category
Business Administration
URN: urn:nbn:se:kau:diva-28044Local ID: FE:4OAI: diva2:630330
Subject / course
Business Administration
Available from: 2013-07-02 Created: 2013-06-18 Last updated: 2013-07-02Bibliographically approved

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Master Thesis Hornbach(2450 kB)713 downloads
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