The model of relationships between pay for individual performance and work engagement

Abstract

Purpose Research on the relationship between pay for individual performance (PFIP) and work engagement (WE) is limited. The purpose of this paper is to present a model outlining a threefold association between PFIP and WE: a direct association, an indirect association via pay satisfaction and a joint indirect association via pay level and pay satisfaction. Design/methodology/approach Structural equation modeling and bootstrapping procedures were used to test hypotheses with regard to these associations based on data obtained from two independent studies: the author’s own research project, and the European Work Conditions Survey 2015. Findings In both studies, the author found the hypothesized direct association between PFIP and WE; indirect association between PFIP and WE via pay satisfaction; and a joint indirect association between PFIP and WE via pay level and pay satisfaction. Research limitations/implications Given its limited cross-sectional design, future longitudinal research in this area is needed to test the model of relations presented in this paper. Practical implications The association between PFIP and WE is weak, and partially mediated by pay satisfaction; thus, it seems that to promote WE, it is not solely sufficient to introduce PFIP into remuneration systems, but that, in addition, PFIP should be aligned with employee pay expectations. Originality/value This study contributes to the career development literature by proposing and initially testing a model describing the three ways PFIP may be related to WE, one of the most crucial factors in achieving career success.