- 2-Determinants and Effects of Subjectivity in Incentives

  title={- 2-Determinants and Effects of Subjectivity in Incentives},
  author={Michael Gibbs and E. Vargus},
This study examines two questions: when do firms make greater use of subjectivity in awarding bonuses, and what are the effects of subjectivity on employee pay satisfaction and firm performance? We examine these questions using data from a sample of 526 department managers in 250 car dealerships. First, the findings suggest that subjective bonuses are used to complement perceived weaknesses in quantitative performance measures and to provide employees insurance against downside risk in their… CONTINUE READING

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