ABSTRACT
The aim of this contribution is to examine the effectiveness of performance-based pay by discussing the relationship between performance-based pay and job performance in a HRM context. Because any compensation agreement must be based on organizational justice and, as it is interfered with by cultural attributes, we also examined how and to what degree perceived procedural justice affects the effectiveness of performance-based pay by using both the research results in non-Confucian-influenced societies and the possible guidelines of organizational justice in a non-influenced societies. In our sample of 258 R&D professionals in Taiwanese high-tech organizations, we found that performance-based pay could be positively related to job performance. In addition, this study also provided evidence that procedural justice is positively related to task performance and moderated the relationship between performance-based pay and job performance. We identify HRM implications for applying our findings in organizational settings and also in benefiting future research on the effects of procedural justice in the employee-organization exchange relationship.
