Publication Type

Journal Article

Version

Postprint

Publication Date

5-2012

Abstract

Compensation decisions have important consequences for employees and organizations and affect factors such as retention, motivation, and recruitment. Past research has primarily focused on mean performance as a predictor of compensation, promoting the implicit assumption that alternative aspects of dynamic performance are not relevant. To address this gap in the literature, we examined the influence of dynamic performance characteristics on compensation decisions in the National Basketball Association (NBA). We predicted that, in addition to performance mean, performance trend and variability would also affect compensation decisions. Results revealed that performance mean and trend, but not variability, were significantly and positively related to changes in compensation levels of NBA players. Moreover, trend (but not mean or variability) predicted compensation when controlling for future performance, suggesting that organizations overweighted trend in their compensation decisions. Theoretical and practical implications are discussed.

Keywords

compensation, dynamic performance, pay for performance, performance trend

Discipline

Human Resources Management | Organizational Behavior and Theory

Research Areas

Organisational Behaviour and Human Resources

Publication

Journal of Applied Psychology

Volume

97

Issue

3

First Page

711

Last Page

718

ISSN

0021-9010

Identifier

10.1037/a0026927

Publisher

American Psychological Association

City or Country

USA

Share

COinS