Pay-for-performance is a pay system in which employees are compensated based on their individual productivity. Today there are numerous different formats of pay-for-performance currently in place in the private sector. The public sector has adopted different merit pay schemes over the last thirty years but has been slow to adopt pay-for-performance pay systems. The Federal Government, faced with intensive pressure to reform their current General Schedule pay system, has been experimenting to determine the optimum pay for performance system for increasing employee performance. The implementations of experimental pay-for-performance is standard and often do not take into consideration what motivates employees. The purpose of this study is to examine an experimental pay-for-performance pay system in the Federal Government to determine if the variables of intrinsic and extrinsic motivation, job satisfaction, organizational commitment, and goal setting are impacted by the moderators (perception, time, and feedback) to motivate employees for maximum performance. The current research will build upon theory and recent findings by integrating pay system theory into a pay system model in an attempt to explain and predict individual employee productivity. Using the entire population at a Federal Government Research and Development Laboratory, it is expected that the model significantly contributes to explaining pay-for-performance perception. The results of this study should help management focus the predictor to optimize the impact pay for performance can have on employee motivation.
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