Personnel systems and incentive

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The purpose of this study is to investigate the impact of change in firm behavior and personnel systems on employees incentive and motivation in Japanese firm. Our investigation methods are questionnaire survey and micro-econometric analysis by using data from our survey and financial data. Firstly, our econometric analysis on determinants of adoption of pay-for-performance wage system shows that firms adopt this system in order to reduce their wage costs in the near future, rather than to boost their employees motivation. Secondly, our analysis on the impact of adoption of that system on corporate performance indicates that it has positive impact only if there is sufficient wage dispersion within a firm and/or relative evaluation. Finally, we analyze the impact of adoption of personnel system which provides larger financial incentives on their intrinsic motivation. It reveals that the higher the impact of personal performance on their wage, the higher job enjoyment they feel. This means that financial incentive has positive impact on non-financial incentive at first glance. But job enjoyment is positively correlated with the evaluation of job whose performance is difficult to be measure and the small difference in speed of promotion between employees.