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Abstract:

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CEP Discussion Paper
Incentive Pay Systems and the Management of Human Resources in France and Great Britain
Richard Belfield, Salima Benhamou and David Marsden May 2007
Paper No' CEPDP0796:
Full Paper (pdf)

JEL Classification: J3; J5; M5; M52


Tags: incentive systems; merit pay; profit-sharing; employer organisation

Incentive pay systems have undergone major changes in recent decades. This paper investigates use of incentive pay systems in British and French private sector establishments in 2004, focusing on payment-by-results, merit pay, and profit sharing, using British and French workplace surveys: WERS and Réponse. Despite the stereotypes of Britain as a deregulated economy and France as a more coordinated social-market economy, French firms make considerably greater use of incentive pay, and particularly, merit pay. The paper explores the organisational and institutional determinants of this. It finds that personnel economics and management theories explain a significant share of the within country variation in use of incentive pay systems.