If You Pay for Skills, Will They Learn? Skill Change and Maintenance Under a Skill-Based Pay System
Erich C. Dierdorff, Eric A. Surface
Journal of Management · 2008 · Volume 34 · Issue 4
Abstract
Although the use of skill-based pay has increased in popularity, empirical investigations of the effectiveness of this compensation strategy have been scarce. The fundamental premise of skill-based pay is that contingent monetary reward will promote individual learning. The authors empirically examine this essential principle with data spanning 5 years, using latent growth analysis. Results demonstrate that skill-based pay is related to individual skill change and maintenance. Whether or not individuals earn skill-based pay on their initial attempt is associated with subsequent rates of learning. In addition, the frequency with which skill-based pay is received and the total amount earned are both associated with skill development and maintenance.
Keywords
skill-based pay, person-based pay, skill change, latent growth analysis
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