Although artificial intelligence (AI) and generative AI (GenAI) are increasingly used to assess and reward employees, their implications for foundational pay-for-performance (PFP) theories remain underexplored. Traditional PFP systems are effective in an era of static evaluations and infrequent feedback, but they lack the intelligence and flexibility needed for today's dynamic work environments. In response, we introduce algorithm-based PFP (APFP) systems-PFP systems that leverage AI and GenAI to enable real-time adaptability, predictive capabilities, customization, automated algorithmic recommending, and measurement sophistication. We then use the APFP framework to assess its implications for three foundational PFP theories (equity theory, expectancy theory, and tournament theory). The APFP framework integrates established PFP principles with AI and GenAI capabilities, reassessing how employees perceive, respond to, and engage with PFP systems. By conceptualizing how AI and GenAI influence the theoretical mechanisms of PFP, we offer a lens for understanding their influence on foundational PFP theories. Our theoretical contributions bridge existing PFP theories with emerging AI- and GenAI-driven environments to advance the literature and lay a foundation for future research that highlights inherent benefits and risks of APFP systems.

Abstract Firms rely on aggregate responses from engagement survey data in order to differentiate between teams of direct reports under specific managers, divisions, business units, etc. In this chapter, the authors show that items vary with respect to being able to differentiate groups and provide concrete and practical information relevant to selecting items used in engagement surveys. Specifically, the authors show how item-level intraclass correlation coefficient type 1 (ICC[1]) values can provide useful information to optimize group differentiation beyond traditional psychometrics. Using multiple examples from applied settings, they provide insights regarding interpreting ICC(1) values, wording of survey items, stability of ICC(1) values, and the difference between ICC(1) values and traditional psychometric values.

We contribute to understanding the previously unrecognized consequences of individualized employment arrangements on the relationship between pay and performance. Increases in the application of pay-for-performance (PFP) idiosyncratic deals (PFP i-deals) raise questions about how individualized PFP arrangements affect the performance of peers who do not receive such customized deals. As pay systems become more individualized, understanding the economic ramifications of how PFP i-deals affect peer performance is essential for understanding the total unit effects of implementing PFP i-deals. To examine these peer effects, we explored peer responses to PFP i-deals and identified boundary conditions on broad theoretical assumptions underlying the conclusion that PFP increases unit performance. We tested our predictions by applying multilevel random-coefficient discontinuous growth models to a sample of 451 peers nested in 117 business units of a for-profit health-care organization. Immediately after PFP i-deal implementation in the unit, the performance level of peers was negatively affected. Additionally, peer performance trends after PFP i-deal implementation were lower than they were before the PFP i-deal implementation. Our study also identified contextual factors that influence peer responses to PFP i-deal implementation. (PsycInfo Database Record (c) 2021 APA, all rights reserved).

This symposium is composed of four 2018 SHRM Foundation Dissertation Award winners’ presentations based on their dissertations. · “Internally Promoted versus Externally Hired Managers” Presented by Dhuha “Dee” Abdulsalam · “What Do You Mean When You Pay for Performance? Effects of Pay-for- Performance on Employees’ Collective Job Satisfaction and Organizational Performance” Presented by Saehee (Sam) Kang · “Post-Employment Relationships: Extending the Exchange Relationship Beyond the Boundaries of Employment” Presented by Rebecca M. Paluch · “Managing Uncertainty: An Examination of Leadership Factors That Increase HRM System Strength” Presented by David Steffensen

Rewarding collective outcomes has become an increasingly important strategic motivational tool for driving collective success, reflecting the insight that paying employees for individual contributions does not always optimize performance in collective endeavors. Research into different types of collective pay for performance (PFP), or pay that is contingent on collective outcomes, has been studied in diverse academic fields (e.g., economics, strategy, psychology), but the compartmentalization between these academic disciplines hinders conceptual coordination. To advance this research and its related insights, this article provides a review of the theory and evidence pertaining to the relationships between different collective PFP types and collective outcomes. We also provide a meta-analysis that shows that collective PFP has desirable outcomes (e.g., meta-analysis shows an overall ρ = 0.11; p < .001), substantiating the value of studying collective PFP separately from individual PFP. The review also reveals a lack of empirical and theoretical development and highlights the need for a comprehensive theory of collective PFP. Our cross-disciplinary review of 106 empirical articles builds a foundation for advancing common pursuits, integrating knowledge, and creating theory. The consolidated perspectives point to promising directions for future research.

This interdisciplinary study integrates economics-and psychology-based explanations to promote a clearer understanding of how employees respond to the pay-for-performance (PFP) system. By examining the combined performance predictions in the common, but rarely studied, situation in which employees do not meet expectations, we can more clearly view how economic rationality and psychological factors combine to explain employee behaviors in response to PFP. We test our hypotheses using unique longitudinal data from the health care industry. The theoretical insights contribute to a PFP theory that explains how and why PFP functions, and in doing so reconciles prior research inconsistencies.

Multilevel pay systems are interdependent pay practices that motivate behavior and performance across levels of an organization. This study develops a multilevel pay theory that emphasizes the micr...

The “Human Capital Resource (HCR) pipeline” is an organizational capacity that involves the internal, external, horizontal, and vertical flow of human capital resources in and out of an organization. The goal of an HCR pipeline is to ensure that the appropriate quality and quantity of HCRs are in place for the ongoing functioning of organizations. In turn, managing the HCR pipeline is the organizational capability to acquire, develop, and align individual or unit-level capacities to match unit-relevant purposes as they arise. It is necessary for organizations to think of managing the HCR pipeline as an ongoing process that involves the horizontal alignment, or congruence, of several human resources (HR) functions. This includes Staffing, through attraction, Selection, and Attrition. Once talent is in place, then it must be developed through Performance Appraisal, Succession Planning, and Training. It is also essential to align that talent with the organization’s objectives. This involves continuously matching talent with the appropriate role, including focusing on Internal Mobility, Fit, and Flexibility. Compensation also affects the HCR pipeline through Sorting (e.g., who is attracted to the pipeline) and its effects on how the HCR pipeline coordinates; however, heretofore, compensation has not been explicitly tied to the HCR pipeline. The HCR pipeline may also need to focus extra and different attention on star employees and executives or other employees who disproportionately contribute to organizational performance. The general idea of considering the HCR pipeline has been growing in importance, including the creation of a special interest group at the Strategic Management Society, and two journal special issues dedicated to the topic. Therefore, the concept of the HCR pipeline is an extension of this literature that highlights the dynamic nature of HCR that has thus far been looked at in a static lens.