Section FiveIncentive-Based Compensation
The previous discussion on contingent compensation linked to
firm performance overlaps with incentive-based compensation.
Nonetheless, because incentives can be unrelated to
organizational performance, this form of compensation will be
discussed separately. For example, incentives can include
commissions based on sales, individual sales goals, and
the like.
John Delaney and Mark Huselid have addressed the
question of the performance impact of incentive-based
compensation with an analysis of data on 590 for-profit and
nonprofit organizations from the National Organizations Survey.
The study used perceptual measures of organizational
performance framed in the context of how other organizations
in the industry had performed during the past three years. The
study found that incentive-based compensation was
significantly related to organizational performance for the entire
sample of companies.^13 As with other studies of firm or
organizational performance, a number of control variables were
employed in multiple regression analysis.