Date of Award

Summer 1999

Document Type

Dissertation

Degree Name

Doctor of Business Administration (DBA)

Department

Management

First Advisor

Gene Johnson

Abstract

The principal objective of this study is the explication of the impact of incentives on measures of performance. The effects of contingent compensation (commissions and bonuses) on role stress, job attitudes, and performance outcomes were studied in a multi-industry sample of 255 employees.

It was hypothesized that as compensation contingency increases, role conflict and financial anxiety also increase and the increase in stress would be negatively related to in-role performance, organizational commitment, and job satisfaction. Finally, it was hypothesized that as organizational commitment and job satisfaction are reduced, intent-to-leave will be increased and extra-role performance will be reduced. The sum of these relationships, i.e., the hypothesized negative impact of compensation contingency on in-role and extra-role performance and its positive impact on turnover, is counter to the results predicted by expectancy theory. Understanding these relationships can add to the ability of managers to evaluate alternate compensation plans.

Data was collected by means of a self-report questionnaire administered to individuals who receive some element of their compensation based on performance contingencies. The isomorphism of single-industry compensation plans was avoided by incorporating individuals from various industries. The compensation of individuals included in the sample ranged of from 100% performance based to 100% salary. Expressing compensation as a continuous variable allowed the model relationships to be evaluated using regression analysis. Path coefficients were developed for model variables.

The analysis revealed that reduced income and increased compensation contingency result in increased levels of financial anxiety. The only significant model link to in-role performance was financial anxiety (negative). Other model paths supported earlier research (e.g. MacKenzie, et al., 1998).

A secondary objective was to differentiate between the relationships for the dimensions of job satisfaction (intrinsic and extrinsic) and those for the combined job satisfaction construct. One result was that the MacKenzie, et al. (1998) job satisfaction—extra-role performance path proved to be significant only for intrinsic job satisfaction when using IJS and EJS. Also, the job satisfaction—organizational commitment—extra-role performance linkages were replaced by an intrinsic job satisfaction—extra-role performance path when IJS and EJS were substituted for the combined JS measure.

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