✍ Scribed by Michael Beer; Mark D. Cannon; James N. Baron; Patrick R. Dailey; Barry Gerhart; Herbert G. Heneman III; Thomas Kochan; Gerald E. Ledford Jr.; Edwin A. Locke
No coin nor oath required. For personal study only.
Why would managers abandon pay‐for‐performance plans they initiated with great hopes? Why
would employees celebrate this decision? This article explores why managers made their decisions in 12 of
13 pay‐for‐performance “experiments” at Hewlett‐Packard in the mid‐1990s.
We find that managers thought the costs of these programs to be higher than the benefits. Alternative managerial
practices such as effective leadership, clear objectives, coaching, or training were thought a better investment.
Despite the undisputed instrumentality of pay‐for‐performance to motivate, little attention has
been given to whether the benefits outweigh the costs or the “fit” of these programs with
high‐commitment cultures like Hewlett‐Packard was at the time. © 2004 Wiley Periodicals,
Inc.
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