A framework for compensation plans with incentive value

Abstract

Although Vroom's expectancy theory and its later application to the workplace by Lawler have significant implications for the development of compensation plans with incentive value, they do not consider at least two critical components of incentive plan design: individuals' initial commitment to their goals and the relative value of rewards individuals receive for accomplishing their goals. This article integrates expectancy theory, goal theory, and equity theory into a comprehensive framework for the effective design of compensation plans with incentive value.