Title: Pay Innovations in Japan : Do They Lead to High Performance Organizations?
Abstract: Japanese innovations in pay practices are most accurately described as a shift away from basing employee evaluation and rewards on seniority and ability development, to a practice of placing more emphasis on employees’ performance and output. As a result, new pay-for-practices including performance-based evaluation and management-by-objectives are being implemented in Japanese firms. Yet, we have surprisingly little knowledge about how this shift may affect organizational effectiveness. This study examines this issue by focusing on the effects of the changes in compensation and evaluation practices on workplace effectiveness. Workplace effectiveness is examined because of its critical role in influencing such important outcomes as employee motivation, skill development, fairness in employment relations and knowledge creation. The empirical results presented in this paper show that simple introduction of “pay-for-performance” practices may have serious implications for workplace and organizational effectiveness. More specifically, pay-for-performance practices in Japanese organizations are likely to have negative impacts on the effectiveness of Japanese high performance workplaces, unless these changes are also accompanied by a practice encouraging or requiring performance feedback, providing employees with their evaluation results and the reasons for these results. In conclusion, It is proposed that Japanese employers must introduce both performance-based compensation practices and performance feedback to obtain full benefits of these pay innovations.
Publication Year: 2000
Publication Date: 2000-10-01
Language: en
Type: article
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Cited By Count: 1
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