Merit pay - being paid according to how you perform - is growing in popularity across the globe. It is accompanied by significant criticism questioning its effectiveness. IMPACT aims at Investigating Merit Pay Across Countries and Territories (hence the abbreviation) and is the first study of its kind to gather large amounts of data from around the world on employees' reaction to merit pay raises. Once the global data is collected, synthesized, and analyzed in a final database, it will push existing theory further and guide practical application.
Generating new practical insights
IMPACT is a project that creates insight and adds value for the participating organizations. By being part of the Danish branch of IMPACT, organizations will receive a feedback report compiled by faculty at Human Capital Analytics Group. There are several useful outcomes of the organization-specific analysis, including:
- a better understanding of how employees react to their pay increases
- greater knowledge about optimal distribution patterns
- hands on feedback to the organization about ways to effectively design its pay system
- recommendations for improvement
- national and international benchmarking
Generating new knowledge
The overall IMPACT project will be answering important questions regarding merit pay. These include:
- What is the minimum incentive size that elicits behavioral reations from employees?
- What is the optimal size of merit pay increases in terms of eliciting greater employee satisfaction and future effort?
- How should managers most effectively distribute limit funds to maximize positive outcomes?
- How can decision makers best manage employee expectations about the incentives they receive in order to facilitate satisfaction and performance?
- What role do employee perceptions about the fairness of the pay system play in terms of employee reactions to pay changes?
- What role does culture play in employee reactions to pay changes?
Prof. Jason D. Shaw
Co-director of the Centre for Leadership and Innovation
The Hong Kong Polytechnic University
|Project leader, Denmark
Dana Minbaeva, PhD
Professor in Strategic and Global HRM
Founder and Director, Human Capital Analytics Group
Copenhagen Business School