Performance Pay and Applicant Screening

Abstract

Using German establishment data, we show that the relationship between intensity of individual-based performance pay and intensity of applicant screening depends on the nature of production. In establishments with increased multitasking, performance pay is positively associated with applicant screening. By contrast, in establishments without increased multitasking, performance pay is negatively associated with applicant screening. We do not find a similar pattern of results for group-based performance pay or profit-sharing. Our findings fit the hypothesis that individual-based performance pay induces a positive self-sorting of employees if jobs are less multifaceted. In this case, employers with a high intensity of performance pay do not need intensive applicant screening to ensure a high quality of matches between workers and jobs. However, if jobs are more multifaceted, individual-based performance pay can entail problems of adverse self-sorting. In order to mitigate or overcome these problems, employers making intensive use of performance pay also screen applicants more intensively.

Works councils and workplace health promotion in Germany

“…Technological change appears to entail an intensification of work as new technologies such as information and communication technologies afford greater facility to management to monitor the pace of work and to determine workflows(Green 2004). Moreover, technological change and innovativeness are accompanied by a reorganization of work toward greater flexibility and multitasking(Campaner et al 2018, Jirjahn andMohrenweiser 2019). The reorganization of work additionally contributes to the intensification of work involving an increase in mental health problems(Askenazy and Caroli 2010, Brenner et al 2004, Cottini and Lucifora 2013.…”

Variable Payment Schemes and Productivity: Do Individual-Based Schemes Really Have a Stronger Influence than Collective Ones?

“…1 However, this presupposes a comprehensive measurement of individual performance so that performance pay adequately rewards every employee characteristics that is relevant for production. If the measurement of employee performance is only available for a limited set of dimensions, individual-based pay schemes induce a distorted sorting process, as they do not reward all the worker attributes needed for production (Jirjahn and Mohrenweiser 2019). Individual performance pay may attract employees who are strong in the measured performance dimensions, but are weak in the non-measured dimensions.…”

Performance Pay and Alcohol Use in Germany

“…4 See Cornelissen et al (2011 and Jirjahn and Mohrenweiser (2019) for theoretical models of performance pay and multi-dimensional sorting.…”