Chapter 25: Case Study: Using Employee Attitude Surveys to Evaluate a New Incentive Pay Program

Source: Heneman, R.L., Eskew, D., & Fox, J. Compensation and Benefits Review, 28(1), 40-44, copyright #x00A9; 1988 by Sage Publications, Inc. Reprinted by Permission of Sage Publications, Inc.

It is becoming increasingly common for senior managers to ask compensation professionals to provide economic data to justify the need for new pay systems. Such requests are certainly not unexpected, given the large direct and indirect costs of compensation to organizations. Ideally, management would like to see how the investment in pay systems directly translates to the bottom line in terms of productivity and economic value added.

Making this link, however, can be very difficult—for several reasons. First, some jobs (e.g., support staff) lack objective measures of profitability because they do not directly touch the final service or product. Second, profitability is often subject to external forces, such as the state of the economy, that are outside the control of individual employees. Third, most organizations are undergoing massive change and restructuring, and it is very difficult to disentangle the impact of a new pay system on organizational performance from the impact of other changes taking place simultaneously.