Payment by results systems : British evidence

John S. HEYWOOD, W. S. SIEBERT, Xiangdong WEI

Research output: Journal PublicationsJournal Article (refereed)peer-review

47 Citations (Scopus)


A model of the firm's decision to adopt a payment by results system is developed and tested with British establishment data. The model maintains that payment by results systems have larger set-up costs but lower supervision costs than time rates, particularly for short-tenure workers who are not well motivated by deferred compensation. The evidence confirms the model's predictions by showing that payment by results systems substitute for supervision, and that larger establishments and those with shorter-tenure workers are more likely to adopt payment by results. In addition, both the presence of a payment by results system and the new adoption of such a system are shown to exert a positive influence on measures of establishment performance.
Original languageEnglish
Pages (from-to)1-22
Number of pages22
JournalBritish Journal of Industrial Relations
Issue number1
Publication statusPublished - 1 Mar 1997


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