Bonus appraisal : estimating the effects of personality and gender diversity

(1)

An empirical study on:

1. The relationship of the different personality traits on the appraisal of bonuses? and;

2. How is this relationship affected by gender diversity?

University of Amsterdam

By

Quirine (Kiki) Croese

June 2013

Business Studies

Supervisor: dr. M. de Haas Student nr: 5982383

Bonus appraisal;

Estimating the effects of personality

and gender diversity

(2)

Abstract

This research adopts the ‘Big Five’ model of personality to explore whether bonus perception is affected by personality between men and women. A group of 56 persons filled in a

questionnaire that contained both questions on personality and questions on bonus perception. In line with previous research, the 3 traits – agreeableness versus antagonism, neuroticism and openness to experience- were used to test if there was a significant relation between these traits and gender on the perception of bonuses. Both ‘antagonism’ and ‘openness to

experience’ showed no significant relation in both men and women in their perception of bonuses. Agreeableness in women showed no significant relation to the appraisal of bonuses. However, an interaction was found in agreeableness and gender in the attitude towards the support of the limitation to the size of bonuses.

(4)

1. Introduction

With the on-going financial crisis, bonuses have become a heavily discussed topic. Analysis of bonus schemes show that in the years immediately prior to the crisis of 2008 significant changes had been made to the structures of bonuses. While banks were collapsing, at the same time they continued to grant large bonuses to their executives. No wonder that by 2009 bonuses and other executive reward systems were perceived as a cause of the crisis and therefore received massive criticism, and the variable pay system has been under pressure ever since (Bruce et al., 2013; Boyer, 2011). However compensation, including bonuses, is a major tool for influencing work motivation and in the end creating more value for a company. It is therefore important for organizations to look at how employee effort can be motivated through a compensation system (Gagne & Forest, 2008; Larkin et al., 2010).

There are various motives that can be appointed in the variable pay scheme of an organization and they are linked both to measurable and non-measurable performances. It is therefore difficult to obtain one overall standard compensation system, although more and more regulations are being set in order to gain more control on incentive pay. Adams (2012) explains that having a corporate governance becomes very important during times of

financial crisis. Adams (2012) also suggests that firms should have a complete independent compensation system; in a lot of research nowadays the relationship between corporate governance and firm performance appears to be a key issue. But before you can regulate pay and design a variable pay system, you have to look at the effects of monetary incentives. In order to manage organizations as effectively and efficiently as possible, employees require continuous motivation and incentives to at least meet and preferably exceed their personal objectives. Boyer (2011) describes that incentive pay is the most efficient way of making key members of an organization (such as CEOs) responsible for their own actions in contributing – or not - , to the success of the organizations. Also, other prior research states that when high performance results in bonuses, this successful behavior is being reinforced and therefore will more likely be repeated in the future (Jenkins et al.; 1998, Lawler & Jenkins, 1992; Gerhardt & Milkovich, 1992, in Gardner et al., 2004). Financial incentives are not only a potent influence on performance, but also have a symbolic meaning such as recognition (Jenkins et al., 1998). However, previous research also indicates that having a pay-for-performance structure, comes with psychological costs. Larkin et al. (2010) states that psychological costs from overconfidence and social comparison decrease the beneficial effects of having

(5)

incentive pay. Also, other opponents argue that monetary incentives control employee behavior and therefore reduce intrinsic motivation and self-determination (Deci & Ryan, 1985: Kohn, 1993a: in Jenkins et al., 1998). Gagné & Forest (2008) also depict pay-for performance systems on the basis of the self-determination theory which argues that

contingent awards can have detrimental effects on autonomous motivation which then again decreases performance. In evaluating the effectiveness of bonuses it is therefore important to take into account the intrinsic motivation of employees.

But do bonuses have the same effect on different people? People differ from each other in various ways. Numerous studies have been conducted on the differences in personality characteristics. One framework that arose from these studies is called the “Big Five”. This framework consists of five different personality traits which are used to describe a person’s character. The five different traits in this model are Extraversion, Emotional Stability (versus Neuroticism), Agreeableness (versus Antagonism), Conscientiousness, and Openness to Experience. Previous research (Nyhus & Pons, 2005; Barrick & Mount, 1991; Salgado, 1997) showed that there is an effect of personality on earnings. Findings in empirical studies of wage determination suggest that factors other than skills must be

rewarded (Bowles et al., 2001; in Nyhus & Pond, 2005). Compensation influences people in various ways. This subject of the linkage of bonuses and personality is relevant because it adds a new dimension to the effects of bonuses on people. An addition to the existing

literature is to have a look at the appraisal and perception of bonuses and to find out whether these are linked to the different traits of personality. When we learn whether there are in fact differences in the perception and personality we can work towards the development of an efficient pay-for-performance system, which in the end will help organizations in working towards better firm performance. In developing an effective pay-for-performance system, it is therefore important to explore all factors that could be of influence.

But apart from the effects of personality traits on the appraisal and effect of bonuses, gender diversity is also an interesting variable to take into account. Several studies showed that women have slower career advancement than men and here the numbers don’t lie. In 2010 the number of female CEOs listed was at a low two per cent and the joint Economic Committee of the US Congress reported that full-time female employees only earned 77 cents for every dollar their male counterparts earned. This slower career advancement and invisible

(6)

barrier for women to rise to the top management is previously described as the “glass ceiling” (Hymowitz & Schellhardt, 1986; in Bugeja et al., 2012). Because gender diversity in work compensation is the subject of current social and political debate, more research is conducted on this topic. Bugeja, Matolcsy & Spiropoulos (2012), conducted research examining if a gender pay gap exists at the highest level of corporate management. It is interesting to further explore whether this gender pay gap also exists in bonuses. A lot of research has already been conducted in the area of personality variety in gender diversity. There is much prejudice about the differences in characteristics between men and women and it is an interesting topic to further explore the extra dimension of bonus perception.

In further developing a framework with criteria for a successful pay-for-performance system it is useful to take into account the different effects of personality on the perception of bonuses, and to further explore if there is an effect of gender diversity. The gender gap is an interesting topic and many studies have been conducted in further exploring this phenomenon. Bertrand and Hallock (2001) suggested that the already existing pay gap between men and women could be due to the character differences.

This leads to the research question;

1. What is the relationship of the different personality traits on the appraisal of bonuses? And;

In order to test the different effects, several hypotheses are proposed based on findings in previous research. Prior research stated that the largest differences in personality based on the ‘Big Five’, are to be found within the traits agreeableness and neuroticism in women versus antagonism and emotional stability in men. In line with the wage gap, which describes the current differences in wage between men and women, the previously mentioned traits will be proposed in the hypotheses. Also, previous research stated that antagonism and openess to experience are positively related to compensation and neuroticism is negatively related to compensation. Therefore, the following is hypothesized in this research; Among men, antagonism (versus agreeableness), emotional stability and openness to experience are positively related to the appraisal of bonuses; among women, openness to experience is positively related to the appraisal of bonuses. Neuroticism and agreeableness are negatively

(7)

related to the appraisal of bonuses. Furthermore, neuroticism in women is positively related to the support for limitation of the size of bonuses and gender diversity has an effect on the relation between agreeableness and the preference for limitation of the size of bonuses. By exploring the differences in personality and linking these to the appraisal of bonuses, this research may contribute to the existing literature in structuring future research for developing a successful pay-for-performance system. By incorporating the gender differences in the personality traits and in the appraisal of bonuses, this research adds a different dimension, which could be of use and interest for economists in researching the effects of performance-contingent rewards. A better understanding of how bonuses are perceived enhances the possibility to further research how pay affects individual behavior at work and –in the end- working towards the development of an effective framework for performance-contingent rewards.

(8)

2. Theoretical Framework

Several theories have come forward regarding the role of compensation on individuals. Three theories that have come forward and that will be discussed in this chapter are the Agency Theory, the Self-Determination Theory and the Reflection Theory of pay. Each of these theories will be explained and finally a conclusion will follow which will express the link between the theories and its relevance to this research.

2.1 Agency Theory

Since over almost 50 years ago, scholars have observed different conflicts that arose between two or more individuals, organizations or other cooperating parties that have different

attitudes towards risk (e.g., Arrow, 1971; Wilson, 1968; in Eisenhardt, 1989). This problem became known as the ‘risk-sharing’ problem. The theory around this subject extended and evolved in the years and academics continuously associated this particular ‘risk-sharing’ problem with the ‘agency’ problem. The fundamental definition of this concept is when cooperating parties have different interests, objectives and divisions of labor (Jensen & Meckling, 1976). Eventually these two problems grew together to be further known as the ‘agency theory’.

Within every institution or organization, one party (agent) is hired to perform work and to represent another party (principal). The principal-agent relationship is governed by a contract.

We define an agency relationship as a contract under which one or more persons (the principal(s)) engage another person (the agent) to perform some service on their behalf which involves delegating some decision-making authority to the agent. If both parties to the relationship are utility maximizers, there is a good reason to believe that the agent will not always act in the best interests of the principal (Jensen & Meckling, 1976, p. 5).

Given these assumptions about people (e.g., risk aversion, bounded rationality and

self-interest), but also assumptions on the organizational level (e.g., information asymmetry between principal and agent), it is the principal's problem to design a contract that induces the agent to act on behalf of the principal's best interests.

(9)

The agency theory concerns resolving two conflicting matters that can occur in this contractual relationship between a principal and an agent. First of all, there is the agency problem, which also arises in a twofold of situations. First, (i) the problem of the conflict in interest or desired goals between principal and agent, secondly, (ii) the problem of the expenses to verify and monitor what the agent is doing and if the agent is behaving

appropriately on behalf of the principal. These problems are also known as the problem of moral hazard and adverse selection. The second problem that the agency theory concerns is the risk-sharing problem, which arises when the principal and the agent have different

attitudes towards risk. The problem that occurs is that the agent and principal pursue different actions due to uncertainty of the outcomes.

2.2 The Self-Determination Theory

Another theory that can relate to reward systems in organizations is the self-determination theory (SDT; Deci & Ryan, 1985, 2000). This particular motivation theory finds empirical support for the proposition that for the motivation of every human being, three fundamental psychological needs have to be taken in consideration. These fundamental needs are the need for competence, autonomy and relatedness (Deci & Ryan, 2012).

Murray (1938) defines a need as:

A construct (a convenient fiction or hypothetical concept) that stands for a force (the physico-chemical nature of which is unknown) in the brain region, a force that organizes perception, apperception, intellection, conation and action in such a way as to transform in a certain direction an existing, unsatisfying situation. (p. 123–124). People will tend to strive for need satisfaction (Deci & Ryan, 2000). An effective

performance that is wanted by an organisation can be achieved when the agent hired for the job is motivated and when his or her psychological needs are met because it promotes his or her autonomous motivation.

When an individual is autonomous, this means a person is acting with a sense of full endorsement, willingness, volition and congruence. Autonomy in an individual is the quality or state of being self-governing. Autonomy in life is desired for and helps in effectively managing drives and emotions and contributes to intrinsic motivation (Deci & Ryan, 2012). Whether one’s motivation is autonomous and not controlled proves to be more important in

(10)

predicting someone’s quality of engagement, performance and wellbeing than the overall amount of motivation itself. Deci & Ryan (1987), described the motivational precedence of controlling whether and how activities are performed: ‘When autonomous, people experience

themselves as initiators of their own behavior; they select desired outcomes and choose how to achieve them. Regulation through choice is characterized by flexibility and the absence of pressure. By contrast, being controlled is characterized by greater rigidity and the

experience of having to do what one is doing.’ (p.1025)

There are two important meta-theoretical assumptions in the SDT that are concerned with the nature of people. Firstly, there is the assumption that people are, by nature, active beings who continuously seek for engagement with their environment. The fundamental concept for this activity is intrinsic motivation (Deci & Ryan, 2012). The concept of intrinsic motivation is one that has been explored more widely by scholars since the 1970’s.

Intrinsicallymotivated activities are activities that one finds interesting to do for their own sake and what one would do if they did not have to think about wellbeing consequences. White (1959; in Deci & Ryan, 2000) proposed that people undertake activities simply to experience competence or efficacy and Deci (1975) builds upon this proposition by stating that intrinsically-motivated behaviors come forward from people’s desire and need to feel competent and self-determined. Secondly, there is the assumption that people have the

tendency towards the organization and integration of physical material. This concept is called internalization and is an extrinsic motivation. Ryan (1995, p. 405) describes internalization as ‘the active assimilation of behavioral regulations that are originally alien or external to the

self.’ But Deci and Ryan (2005, p. 334), later on define internalization in more detail as

‘people taking in values, attitudes, or regulatory structures, such that the external regulation

of a behavior is transformed into an internal regulation and thus no longer requires the presence of an external contingency.’ And they posit that in the SDT internalization is a

‘controlled-to-autonomous continuum to describe the degree to which an external regulation

has been internalized. The more fully it has been internalized, the more autonomous will be the subsequent, extrinsically motivated behavior.’

In SDT there is amotivation (i.e., lack of motivation) or motivation. Autonomous motivation is, in brief, divided into two different types; intrinsic motivation and well-internalized extrinsic motivation. In contrast to intrinsic motivation, extrinsic motivation involves undertaking activities that lead to a goal, such as implicit approval or tangible

(11)

it must be extrinsically motivating and is externally regulated, not within the person itself. An important aspect of extrinsic motivation in the self-determination theory is that it can vary in the degree to which it is controlled or autonomous (Gagné & Deci, 2005). When the extrinsic motivation is autonomous, it means that the value of the activity must be integrated within a person’s goal or values. However, if this is not the case, the motivation will be experienced as controlled by external factors and will make people feel pressured.

Within the range of motivations there are several degrees to which they are internalized. Figure 1 shows the separation of the different types of motivation (Gagné & Deci, 2005).

External regulation. Gagné & Deci (2005), describe this type of motivation as the

prototype of controlled motivation and it is the type of extrinsic motivation which is the opposite of intrinsic motivation. It is the type of motivation that is least autonomous and following this type of motivation, people act with the intention of obtaining a desired consequence or avoiding an undesired consequence (Gagné & Deci, 2005). External

(12)

regulated behavior manifests itself only through motivation external to the person. An example; I work when the boss is watching.

The three other types of extrinsic motivation have been internalized to some extent. Thus; I work even when the boss is not watching. Within SDT internalization is described as one overarching term that refers to three different processes: introjection, identiﬁcation, and integration (Gagné & Deci, 2005).

Introjected regulation. This is the second type of extrinsic motivation and is the

beginning of the regulation. However introjected regulation is the least autonomous form of internal regulation of the three. In this type, the regulation is controlling the person. It is a form of regulation that pushes people in the direction of pleasing their ego and self-esteem or, on the contrary, of avoiding feelings of guilt or fear.

An example; I work because it makes me feel like a worthy person.

Identified regulation. This type of regulation is more autonomous because the

behavior is more in line with a person's own personal goals and identities. The activity becomes important to the person.

An example; A nurse performing a task she finds unpleasant but for the patient’s wellbeing. If the nurse strongly values her patient’s health and wellbeing, then performing those tasks will become important to her as well. She will feel relatively autonomous in performing the task, even though the activities are not intrinsically interesting.

Integrated regulation. This type of regulation is the most internalized of all three

types. It allows extrinsic motivation to be truly autonomous. Integrated regulated behavior is a part of oneself and is thus self-determined. It shows similarity with intrinsic motivation; however it is still a type of extrinsic motivation, because this motivation is characterized not by the person being interested in the activity itself but rather by the activity being

instrumentally important for completing personal goals (Gagné & Deci, 2005).

2.2.1 The Self-Determination Theory and compensation

Perceived self-determination derived from autonomous motivation and intrinsic motivation are important factors for an effective work performance. Various studies in the field and in the laboratory have been conducted on the differences between autonomous versus controlled motivation. Research shows that autonomous motivation is superior for an effective

(13)

much smaller or only short-term for more everyday tasks (Grolnick & Ryan, 1987; McGraw, 1978; in Gagné & Deci, 2005).

But there are more factors that have an influence on effective performance. The effects of extrinsic rewards for reaching a performance standard (performance-contingent rewards), such as bonuses, on intrinsic motivation are also a heavily debated subject with mixed results (Eisenberger, Rhoades & Cameron, 1999). In their research, Deci, Koestner and Ryan (1999), confirm the undermining effects of tangible rewards on intrinsic motivation. Deci and Ryan (1987, p. 1026), argued that ‘rewards tend to be experienced as controlling,

which of course makes sense, as rewards are typically used to induce or pressure people to act in ways different from what they would do freely.’ In evaluating the effectiveness of

bonuses it is therefore important to explore how compensation influences the intrinsic motivation and the work performance. Research showed that students tend to be less interested in performing an activity the more the extrinsic regulation increases, for it

decreases their sense of autonomy (Deci & Ryan, 2000). However, Gagné and Forest (2011), argue that performance-contingent rewards cannot only affect autonomy negatively, but also positively. Changing the causality of the outcome from internal to external causes the

negative effectiveness. They can however also positively affect feelings of competence because f.e. reaching a target and being rewarded for that matter provides information about behavioral effectiveness. The positive effects can compensate for the negative effects.

Gagné and Forest (2011) argue that there are three important warnings concerning the use of performance-contingent rewards. (i) First, it appears that the absolute impact of a performance-contingent reward is dependent on whether the controlling or competence aspect is the most important in the interpersonal context (Ryan, Mims, & Koestner, 1983; in Gagné & Forest, 2011). (ii) The second warning of Gagné and Forest (2011) states that when making use of performance-contingent rewards in real life, extra controlling functions, such as evaluation, surveillance and competition are required. These controlling features decrease the autonomy and thus can have a negative impact on motivation. (iii) And last, the risk of using performance-contingent rewards in real life is that a lot of people fail to receive the reward in the end, because their performance does not meet the criteria stated for that reward. When failing these targets, and missing out on their reward, their motivation is highly

(14)

Taking these warnings into account, pay-for-performance systems can have positive results. Performance-contingent rewards can increase the intrinsic job interest more than a base pay system. In reallife, a pay-for-performance system affects the need satisfaction in a different way than laboratory reward systems. In SDT, there is a positive effect of pay-for-performance for tasks that require more straightforward solutions, but a negative effect for more heuristic tasks (Gagné & Deci, 2005). Taking the warnings of Gagné and Forest into consideration, the latter warning could also be motivational according to Pryor (1985; in Eisenberger, Rhoades & Cameron, 1999). Pryor suggested that people like to have control over their situation. He argued that whenever people have the information on how to get the environment to reinforce them, the people themselves gain in control again. And, individuals like to learn through reinforcement for other reasons than the obvious (e.g. food); they like to be in control. Eisenberger and Cameron (1996; in Eisenberger, Rhoades & Cameron, 1999, p. 1027) continue these predictions by suggesting that when a previously unavailable reward is

made contingent on meeting a specific criterion of performance, greater self-determination is perceived. So the individual is in control whether or not he or she makes the target and this

increases the autonomy and thus the self-determination. 2.3 Reflection Theory of pay

Another theory on pay is the reflection theory and was developed as a way of linking changes in pay to an individual’s self-esteem or identity. Central in this theory is that the development and maintenance of self-identity is an essential characteristic of the human being (Thierry, 2001). Thierry continues, saying that through self-identity; individuals can integrate past experience with current happenings and prepare themselves for the future. An individual is driven and motivated to continuously strengthen or maintain his or her self-identity during changes from the external environment. When an individual is regularly occupied at work, he or she will seek for information within this external work environment for ways to improve his or her self-identity. An example of an influence in the external environment within the workplace is pay. Thierry (2001, p. 151) states that the individual ‘is alert on scanning

work-related information, in particular for signals of change in order to reaffirm his/her self-identity. Compensation constitutes an important domain of information, the meanings of which are considered to be vital to a person’s self-identity.’ Although it is not exclusively

(15)

Pay can vary in the amount, structure, differentials (e.g. pay level in comparison to other people, or over time) and connects to the person’s self-identity through these matters. However it has no informative value by itself, but it refers to other domains that matter to an individual at work. This is why the theory is called the Reflection Theory of pay; ‘pay

“reflects’’ information about what is happening in other fields, the meaning of which connects to the person’s self-identity’ (Thierry, 2001, p. 152).

In the Reflection Theory, Thierry identifies four categories of meaning to which pay may refer.

1. Motivational properties. Pay can be meaningful when a person considers it as a valuable instrument for achieving his or her personal goals.

2. Relative position. The first aspect of the relative position is that pay informs the agent or principal whether the task performance is on the right track. ‘It compares task performance

with a standard or goal’ (Greller & Parsons, 1995; in Thierry, 2001, p. 155). The second

aspect is that pay informs individuals on their position compared to others. ‘Pay is the

evaluation (s)he got relative to significant social others’( Thierry, 2001, p.155).

3. Control. The control meaning of pay reflects to which degree an individual can regulate its own behavior or can influence the behavior of others. ‘In other words, pay mirrors a

manager’s or employee’s rate of dependence’ (Thierry, 2001, p.155). In the matter of control

three aspects have to be taken into consideration; hierarchy (i.e. pay reflects the

organizational position), role set (i.e. the members or groups within the organization that the person in dependant on in order to perform), autonomy and self-regulation.

4. Spending. Pay reflects the amount of goods and services that can be purchased. In this way it reflects to which extent the goals have been achieved.

The Reflection Theory of pay states that any pay system affects a person’s behavior and self-identity. The more pay is perceived as valuable in order to achieve goals, the more pay is assumed to affect job performance and overall satisfaction.

(16)

(Thierry, 2001, p.159)

2.4 Conclusion Literature

There is a large amount of literature on compensation. There are various angles that have been enlightened in this literature, but still there is not yet one best solution on how to develop a durable pay-for-performance system. Previous research about compensation addressed several problems that have to be taken into consideration. The Agency Theory addresses the difficulties in finding an appropriate contract between principal and agent. Although the Agency Theory is the basis for many other theories on compensation, it is not very extensive and only looks at the variable of extrinsic motivation on work performance. The reward is a controlling mechanism for the principal. The expectancy is that an increased pay would lead to higher commitment and thus higher performance. However in this theory, the impact on intrinsic motivation is not addressed. Moreover, Agency Theory does not include personality at any level nor the differences in attitude that might come with the variation amongst individuals. There are reasons for supposing that different personality traits have different influences on the perception of compensation. The second problem addressed in the Agency Theory is the risk-sharing problem. It is probable that different individuals amongst the agents –with different personalities- also have different attitudes towards risk. The problem formulated in the theory states that different people have- in fact- different attitudes towards risk. People differ from each other in their characteristics. Thus it is likely to say that different personality traits correspond with different attitudes towards risk. It

(17)

would be very useful in comprehending what the influence of personality is in further research on compensation and maybe exploring if there is a linkage between risk-taking and personality. This study will therefore contribute by investigating the effects of personality on the appraisal of performance-contingent rewards. By also integrating the variable of gender diversity the existing wage-gap between men and women can be further explored.

Another theory discussed in this research is the Self-Determination Theory. This theory is more extensive for it looks beyond merely the extrinsic motivation, but also

includes the intrinsic motivation. SDT acknowledges that need satisfaction is very important for individuals. In the literature, many causes of decreases of motivation are mentioned. Scholars emphasize the importance for individuals to feel autonomous rather than controlled. SDT goes beyond the Agency Theory as it includes the individual and looks more to the effects of pay within oneself. The theory argues that rewards, such as bonuses, can be experienced as controlling and thereby decreasing the perceived intrinsic motivation and job performance. However, the theory also argues that extrinsic rewards can have beneficial effects because they can increase the need satisfaction whenever the desired goals are met. Again, this theory is limited by not including the effects of personality. Personality might be linked to the differentiations in the perception of bonuses, which may help towards a better understanding of how bonuses influence people in their actions. Different personalities may have different reactions in their behavior and motivation due to compensation. If the

perception differs in individuals, this could also be of influence on the changes in the perceived intrinsic motivation. If there are indeed differences found in the effects of compensation on the motivation of employees with different personalities, further research can explore how to successfully manage these effects.

Lastly, the Reflection Theory of pay was described. Similarly to the

Self-Determination Theory, this theory again looks beyond merely the extrinsic motivation, but also includes an individual’s self-identity. The theory identifies four categories of meaning of pay. It is useful to further explore a person’s self-identity and how this corresponds with the different traits of personality. The theory acknowledges the importance of the individual so this theory is more in line with this current research. The perceived self-identity could very much stand in relation to a person’s personality. Neuroticism is linked to anxiety, shyness and being not self-confident. When people score high on neuroticism, they will most likely have a lower perceived self-identity. This effect can be linked to lower appraisal of bonuses.

(18)

Although some theories include the individual’s self and the influences of compensation, not a lot of research has been conducted in investigating the differences between men and women and their personalities in the compensation literature. Also the differences in bonus perception have not been investigated thoroughly before. Therefore, this research will try and fill this gap and provide a basis for future research. If there is a better understanding of how a pay system is perceived by employees, then it is possible to find out if and to what degree this pay system can be managed and an efficient bonus system can be designed.

As previously mentioned, this research will link the appraisal of bonuses to

personality. Personality can be examined and measured in many ways. There are numerous theories that have derived from conceptualizing personality at various levels of abstraction or breadth (John, Hampson & Goldberg, 1991; McAdams, 1995; in John & Srivastava, 1999). For my research I would like to design a survey making use of the Big Five (Goldberg, 1981) model for personality. In psychology, the Big Five is the most widely accepted personality taxonomy. This is a model based on questions to test on the following characteristics; Extraversion, Emotional Stability, Agreeableness, Conscientiousness, and Openness to Experience. The Big Five is one of the most profound models to measure these different traits in personality. The five dimensions are not originated from a theoretical perspective, but are lexical in nature. The dimensions described in this model derived after long ongoing analyses of the terms people use to describe themselves. The model does not imply that a person’s character can be narrowed down to only these five factors, however they represent

personality at the broadest level of abstraction and every dimension of the model summarizes a large numbers of more specific personality characteristics (John & Srivastava, 1999). The five dimensions used in this model can be further described as the following characteristics:

I. Extraversion (talkative, energetic, assertive)

II. Agreeableness (good-natured, cooperative and trustful) III. Conscientiousness (orderly, responsible and dependable)

IV. Emotional stability, versus neuroticism (calm, not neurotic, not easily upset) V. Openness to experience (intellectual, imaginative and independent-minded)

(19)

Every one of these five dimensions is bipolar, which mean it’s outcome can either be positive or negative ( extraversion versus introversion) and is a summary of more specific facets of personality (for example, kindness) (Gosling, Rentfro & Swann, 2003).

(20)

After having explored some of the theories on compensation in the previous chapter, this chapter will define the conceptual framework, which is the basis of this research. Based on previous research some hypotheses are proposed.

Various theories around compensation and how it affects people have been written. However there is still a lot of uncertainty in how pay – and bonuses - can be used to influence people’s behaviour. If we learn more about how bonuses are perceived, we might grow closer towards developing effective guidelines for managing bonuses.

Therefore this research will try to find an answer to the following question;

1. What is the relationship of the different personality traits on the appraisal of bonuses? And;

Prior research has shown that there are several differences to be found in personality between men and women. Within the framework of the Big Five there are two fundamental differences in personality between men and women. One of them being the trait

agreeableness in women, versus antagonism in men. Also, previous research stated that antagonism has a positive effect on compensation. Agreeableness incorporates a person’s willingness to act in accordance with another person’s interests. This is one of the conflicts in the Agency Theory. Although it might seem logical to reward this trait with higher

compensation, there is also a chance that agreeable people are less likely to claim higher wages and are less likely to stand their ground. Taking this into consideration and in line with other research, where positive relations between antagonism (the opposite of agreeableness) and compensation was found, this research hypothesizes a positive relationship between antagonism and bonus appraisal. Furthermore, in line with previous findings of a positive relation between antagonism and male gender, and the presence of the existing wage gap, this research hypothesizes a positively moderating effect of male gender on the relationship between antagonism and bonus appraisal.

The other trait with the largest difference between men and women is neuroticism in women versus emotional stability in men. Taking the existing wage gap into consideration, the two traits with the biggest differences between men and women, will most likely have the

(21)

largest impact on the differences in compensation. Neuroticism incorporates a person’s dependence, insecurities and anxiousness. Previous research also stated for this trait that neuroticism has a negative effect on compensation. For this research, not the amount of the bonus, but the appreciation towards bonuses is explored, therefore, the following is

hypothesized;

H1: Antagonism has a positive effect on the appraisal of bonuses

H1b: Male gender has a positive moderating effect on the relationship between antagonism and the appreciation of bonuses.

H2: Neuroticism has a negative effect on the appraisal of bonuses

H2b: Female gender has a negative moderating effect on the relationship between neuroticism and the appraisal of bonuses.

In previous literature, the trait openness to experience was related to positively affect compensation in both men and women (Mueller & Plug, 2006). Therefore, the following is hypothesized with a control hypothesis where no effect is expected (H3b).

H3: Openness to experience has a positive effect on the appraisal of bonuses

H3b: Female gender has a negative moderating effect on the relationship between openness to experience and the appraisal of bonuses.

As stated earlier in this section, the most fundamental differences between men and women within the model of the ‘Big Five’ are to be found in agreeableness in women versus antagonism in men, and in neuroticism in women versus emotional stability in men. Also because previous research has shown that antagonism has a positive effect on compensation whereas neuroticism has a negative effect on compensation (Mueller & Plug, 2006).

Therefore the final four hypotheses are proposed;

H4: Agreeableness has a positive effect on the limitation of the height of bonuses H4b: Female gender has a positively moderating effect on the relationship between agreeableness and the limitation of the height of bonuses.

(22)

H5b: Female gender has a positive moderating effect on the relationship between neuroticism and the limitation of the height of bonuses.

Although it is interesting and useful to test all the different factors of personality and gender, and their relation to the appraisal of bonuses, this goes beyond the scope of this paper and could be investigated in further research.

4. Methodology

Gender

diversity

(23)

Previous chapters discussed some of the existing literature on reward systems and the conceptual framework which is the basis for this research. This section will discuss the research design and method which are used to test the propositions of this thesis. Firstly, the research design, a survey, of this thesis is described, followed by a description of the sample. Lastly, the measures used in the survey will be discussed.

4.1 Research design

In order to collect the data to test the hypotheses of this research, a questionnaire-based survey is used. Within a limited time frame and monetary limitations, a survey-based research is considered the most efficient way of data collection (Saunders et al., 2009). A survey makes it easy to have a quick overview in comparing the answers of a large number of people. For this research a random sampling technique was used, using an online survey, which means it is self-administered. In this research the hypotheses are based on differences in personality and their valued perception towards bonuses. In order to test the different hypotheses, a relatively large number of people with different personality characteristics was required. A survey is an efficient tool to collect a random sample of people with different characteristics. Moreover, most previous research on differences in characteristics also used a survey. Another benefit of using a survey is that it guarantees the consistency of the questions. Another major advantage of using a survey is the guarantee of anonymity for the participants. To limit participant bias, anonymity in research is important. When anonymity is ensured, participants are more likely to answer more honestly which will increase the reliability of the collected data.

But there are also some limitations in using a survey for this research. One major disadvantage is the number of questions of the questionnaire. In general, people are not willing to spend a lot of time to fill in a survey. It increases the barrier to participate when a large number of questions need to be answered (Saunders et al., 2009). For this particular reason, a short version of the Big-Five was chosen in this study. This mini-version consists of only two questions per personality trait which saves a lot of time for the participants and lowers the bar of entering this research. Another disadvantage of using a questionnaire is that there is no room for changing the questions. The survey must be consistent amongst all the

(24)

participants. This means that the questionnaire has to be well-thought out, for there is no room for errors without having to begin all over again.

4.2 Sample

A total of 90 respondents started this survey. Eventually the selected sample consisted of 56 respondents who participated in this research. Of them, 23 were male and 27 female. 6 respondents didn’t provide their gender. The sample was collected within the time frame of 6th June-13th June.

For this research, a minimum of 30 participants was necessary in order for the data to be useable for statistical research Saunders, 2009). So 56 participants may be considered sufficient for completing this research.

4.3 Data collection

The sample needed for this research needed to be random and of people with different gender and different personality traits. An easy and time-saving method in order to collect these data is the internet-mediated method.

For this method, the website www.qualtrics.com was used.

An easy and convenient way of reaching a large number of people is via social media. For this research my personal network was used. By uploading the survey on Facebook and sending out an appeal, a lot of respondents were reached at a relatively short amount of time. The questions in the survey were translated into the Dutch language to eliminate language barriers.

(25)

The survey consisted of two sections. Firstly, the respondents were asked to answer ten different questions about their personality. Secondly, the participants were asked to answer six questions about their attitudes towards bonuses. Also, the participants were asked to fill in their gender. A copy of the survey (in Dutch) can be found in the appendices section (9.1).

4.4.1 The Big Five

For this research, a survey will be designed making use of the Big Five (Goldberg, 1981) model for personality. The five dimensions used in this model can be further described as the following characteristics:

VI. Extraversion (talkative, energetic, assertive)

VII. Agreeableness (good-natured, cooperative and trustful) VIII. Conscientiousness (orderly, responsible and dependable)

IX. Emotional stability, versus neuroticism (calm, not neurotic, not easily upset) X. Openness to experience (intellectual, imaginative and independent-minded)

(26)

4.4.2 Bonus appraisal

The second part of the survey started with a brief explanation of the term bonus. Afterward, six questions were asked concerning the participant’s attitude and perception towards

bonuses. These survey included questions on motivation, the desire of working with a bonus system (in the future). Also one question concerned the support for limitation of the size of bonuses.

Since there were no existing questionnaires that were statistically tested and developed, the questions for this survey were devised by asking people in my own

(27)

environment how they would design the questions on this matter. After completing this part of the survey it was tested on five different people and afterward they were asked if they thought the questions were a good representation of their perception towards bonuses.

Both sections had to be answered on a 5-point Likert scale varying from; 1= Disagree strongly

2= Disagree a little

3= Neither agree, nor disagree 4= Agree a little

(28)

5. Results

In the following chapter, the results for this research will be presented. The results were computed using SPSS. First, the scales that were proposed in this research were checked for reliability using Chronbach’s Alpha. Afterward, interaction variables were created in order to test the moderation effects. Then numerous regression analyses were computed.

5.1 Sample Statistics and Conceptualization

A total of 56 respondents participated in this research. Of them, 23 were male and 27 female. 6 respondents didn’t provide their gender and were later excluded from the analysis.

Frequency Percent Valid Percent Cumulative Percent Valid Male 23 41,1 46,0 46,0 Female 27 48,2 54,0 100,0 Total 50 89,3 100,0 Missing System 6 10,7 Total 56 100

To test the hypotheses, several independent variables had to be computed out of the provided items. These variables were ‘agreeableness’ (the reverse is ‘antagonism’), ‘openness’ and ‘neuroticism’. Each of these variables consisted of two items, of which one was reversed-scored. For each variable the reversed-scored item was recoded and then combined with the other item to see if they could form a reliable scale together. For this, Chronbach’s Alpha was used. New items are reliable when Chronbach’s Alpha exceeds 0.007 (Field, 2009). For ‘neuroticism’ there appeared to be a reliable scale, as the Chronbach’s Alpha was 0.745. Both ‘agreeableness’ (CA = 0.433) and ‘openness to experience’ (CA = 0.484) failed to form a reliable scale. The choice was made to include only one item for ‘agreeableness’ (I see myself

as someone who tends to find fault with others) and one for ‘openness’ (I see myself as someone who has an active imagination). In other mini tests of the ‘Big Five’, these

questions were most often included for these two personality traits. ‘Antagonism’ was composed by reversing agreeableness. Gender was coded as male (0) and female (1).

(29)

Table 1: Testing Chronbach’s Alpha for reliability

Scale Chronbach’s Alpha Nr. Of items

Appreciation of bonuses 0.810 5 Agreeableness (vs. Antagonism) 0.433 2 Neuroticism 0.745 2 Openness to experience 0.484 2

The two dependent variables in this research are the ‘appreciation of bonuses’, which was composed of five items which turned out to be a reliable scale as the Chronbach’s Alpha was 0.810, and the ‘support for limitation to the size of bonuses’ (only one item). The descriptive statistics of all variables are described in the table below.

Table 2: Descriptive statistics

N Mean

Value

Std. Deviation Minimum Maximum

Support for the limitation to the size of bonuses

56 3.59 1.290 1 5 Appreciation of bonuses 56 3.5607 0.67519 2 5 Neuroticism 56 2.5893 0.90507 1 5 Antagonism 56 3.1429 0.98033 1 5 Agreeableness 56 2.86 0.980 1 5 Openness to experience 56 3.7 1.043 1 5 Valid N (listwise) 56 5.1.1 Tests of Hypotheses

(30)

The first hypothesis 1 proposed a positive effect of antagonism on the appreciation of bonuses. As table 3 shows, no significant effect of antagonism on the appreciation was found (beta=0.23, t(48)=1.63, p>0.05). For hypothesis 1b, regarding the positively moderating effect of male gender on the relationship between antagonism and the appreciation of bonuses, no significant differences were found either (beta = -0.09, t(46) = -0.18, p>0.05). So no

support was found for both hypotheses.

Table 3: Regression analysis for the effect of antagonism on bonus appreciation and the moderation effect of gender

N= 50 Unstandardized Coefficients Standardized Coefficients

Model B Std. Error Beta t-value p-value

1 (Constant) Antagonism Gender 3.110 0.354 8.783 0.000 0.151 0.098 0.223 1.532 0.132 -0.29 0.195 -0.022 -1.150 0.881 2 (Constant) Antagonism Gender IntGender_Antagonism 3.033 0.563 5.391 0.000 0.174 0.165 0.258 1.057 0.296 0.086 0.678 0.064 0.127 0.900 -0.037 0.207 -0.089 -0.177 0.860 a.Dependent Variable: Appreciation_Bonus

Hypothesis 2 proposed a positive effect of neuroticism on the appreciation of bonuses. As table 4 shows, no significant effect of neuroticism on the appreciation was found

(beta=0.05, t(48)=0.36, p>0.05). For hypothesis 2b, regarding the negatively moderating effect of female gender on the relationship between neuroticism and the appreciation of bonuses, no significant differences were found either (beta = -0.34, t(46) = -0.61, p>0.05). So no support was found for both hypotheses.

Table 4: Regression analysis for the effect of neuroticism on bonus appreciation and the moderation effect of gender

Unstandardized Coefficients Standardized Coefficients

1 (Constant) Neuroticism Gender 3.477 0.304 11.418 0.000 0.055 0.111 0.073 0.490 0.626 -0.122 0.200 -0.091 -0.670 0.547 2 (Constant) Neuroticism Gender IntGender_ Neuroticism 3.248 0.486 6.681 0.000 0.149 0.192 0.201 0.777 0.441 0.247 0.640 0.184 0.386 0.702 -0.144 0.237 -0.342 -0.607 0.547 a.Dependent Variable: Appreciation_Bonus

(31)

Hypothesis 3 proposed a positive effect of openness to experience on the appreciation of bonuses. As table 5 shows, no significant effect of openness to experience on the

appreciation was found (beta=-0.00, t(48)=0.02, p>0.05). For hypothesis 3b, regarding the negatively moderating effect of female gender on the relationship between openness to experience and the appreciation of bonuses, no significant differences were found either (beta = -0.48, t(46) = -0.73, p>0.05). So no support was found for both hypotheses.

Table 5: Regression analysis for the effect of openness to experience on bonus appreciation and the moderation effect of gender

1 (Constant) Openness Gender 3.636 0.380 9.571 0.000 -0.007 0.094 -0.011 -0.078 0.938 -0.099 0.196 -0.074 -0.507 0.615 2 (Constant) Openness Gender IntGender_ Openness 3.172 0.746 4.255 0.000 0.117 0.196 0.182 0.597 0.553 0.497 0.846 0.371 0.587 0.560 -0.162 0.224 -0.475 -0.725 0.472 a.Dependent Variable: Appreciation_Bonus

Hypothesis 4 proposed a positive effect of agreeableness on the support for limitation of the size of bonuses. As table 6 shows, no significant effect of agreeableness on the support for limitation of the size of bonuses was found (beta=0.09, t(48)=0.63, p>0.05). (Notice:

p=0.055) For hypothesis 4b, regarding the positively moderating effect of female gender on

the relationship between agreeableness and the support for limitation to the size of bonuses, significant differences were found. However the significant relation was found in the

reversed direction of the initially stated hypotheses. (beta = -1.15, t(46) = -2.23, p<0.05). The results show that there is a significant interaction of gender and agreeableness on the support for limitation of the size of bonuses. Being female negatively affects this relationship. Figure 2 illustrates this effect.

(32)

Table 6: Regression analysis for the effect of agreeableness on the support for limitation of the size of bonuses and the moderation effect of gender

1 (Constant) Agreeableness Gender 3.146 0.585 5.381 0.000 0.059 0.192 0.045 0.307 0.761 0.521 0.381 0.200 1.369 0.178 2 (Constant) Agreeableness Gender IntGender_ Agreeableness 1.686 0.864 1.952 0.057 0.601 0.305 0.458 1.967 0.055 2.959 1.155 1.138 2.562 0.014 -0.852 0.383 -1.149 -2.226 0.031

a.Dependent Variable: There should be a limit to the size of bonuses

Figure 2

Hypothesis 5 proposed a positive effect of neuroticism on the support for limitation of the size of bonuses. As table 7 shows, no significant effect of neuroticism on the support for limitation of the size of bonuses was found (beta=-0.02, t(48)=-0.12, p>0.05). For hypothesis 5b, regarding the positively moderating effect of female gender on the relationship between neuroticism and the support for limitation of the size of bonuses, no significant differences were found. (beta = -0.50, t(46) = -0.91, p>0.05). So no support was found for both

hypotheses. 1 1,5 2 2,5 3 3,5 4 4,5 5

Low Agreeableness High Agreeableness

D epe nde nt v a ri a bl e Men

(33)

Table 7: Regression analysis for the effect of neuroticism onsupport for the limitation of the size of bonuses and the moderation effect of gender

1 (Constant) Neuroticism Gender 3.559 0.580 6.139 0.000 -0.106 0.212 -0.073 -0.498 0.621 0.594 0.381 0.228 1.557 0.126 2 (Constant) Neuroticism Gender IntGender_ Neuroticism 2.908 0.921 3.157 0.003 0.164 0.365 0.114 0.451 0.654 1.642 1.212 0.631 1.355 0.182 -0.409 0.449 0.114-0.501 -0.911 0.367 a.Dependent Variable: There should be a limit to the size of bonuses

Table 8 shows the different correlation coefficients among all variables used in the analysis.

App_B Limit_B Antag Neurot Agree Openn Gender

App_B Pearson Correlation −

Sig. (1-tailed)

Limit_B Pearson Correlation -,390** ₋

Sig. (1-tailed) ,001

Antag Pearson Correlation ,201 -,097 −

Sig. (1-tailed) ,069 ,240

Neurot Pearson Correlation -,021 ,016 -,230* −

Sig. (1-tailed) ,439 ,452 ,044

Agree Pearson Correlation -,201 ,097 -1,000** ,230* −

Sig. (1-tailed) ,069 ,240 ,000 ,044

Openn Pearson Correlation -,033 ,095 ,061 ,058 -,061 −

Sig. (1-tailed) ,405 ,243 ,328 ,335 ,328

Gender Pearson Correlation -,073 ,211 -,228 ,244* ,228 -,124 −

Sig. (1-tailed) ,307 ,071 ,055 ,044 ,055 ,196

**. Correlation is significant at the 0.01 level (1-tailed). Table 8 *. Correlation is significant at the 0.05 level (1-tailed).

(34)

6. Discussion

This chapter will discuss the findings of this research which were presented in the previous section. These findings will be compared to the results of other research. The hypotheses that were supported and the ones that were not supported will be further discussed. Finally the limitations of this study will be discussed and suggestions for further research will be proposed.

6.1 Scales

This research uses different scales to measure all the different variables. To measure the appreciation of bonuses, five questions from the survey were taken together and checked to see whether these constructed a reliable scale. This scale appeared to be reliable, so it was used for further analyses. Another three scales were constructed to measure agreeableness, or reversed-coded, antagonism, openness to experience and neuroticism. For each of these scales two questions from the first part of the survey were taken together. Some questions had to be reversed-coded. The first two scales (agreeableness and openness to experience) however appeared to be unreliable, so the choice was made to only use one question of the survey in further measuring these personality traits.

6.2 Personality and gender effects

After the scales were constructed, the interaction variables between gender and the independent variables (the scales) could be constructed. With each of these interaction variables it was now possible to test the different hypotheses stated in this research.

6.2.1 Agreeableness vs. antagonism and gender on bonus appraisal

No significant differences in the relation of antagonism on the appreciation of bonuses were found. In this research, in seems that antagonism does not have an influence on the

perception of bonuses. Also, no significant differences between men and women were found in the relationship of antagonism on the appreciation of bonuses.

For the relation of agreeableness and the support for limitation of the size of bonuses we could not find any significant differences. However, a significant difference between gender

(35)

diversity was found in the relationship of agreeableness and the support for limitation of the size of bonuses. The female gender negatively affects this relationship. So agreeableness per se does not affect the opinion towards bonuses, but when gender interacts, there is a

significant change visible. The results however are surprising. Initially a positive relation of female gender on the support for limitation to the size of bonuses was proposed. However when computing the analysis with the interaction variables with gender, we see a reversed effect. We see that in men, the support for limitation to bonuses increases, when the scale of agreeableness increases. This is the effect we expected to see in women. However in women, it is quite the opposite. In women, the support for limitation to bonuses decreases when the scale of agreeableness increases. This means there is an interaction with gender. Again, initially no interaction was found with agreeableness and support for the limitation to the size of bonuses. It could be useful to further expand this research with more participants in order to obtain more support for this proposition.

6.2.2 Neuroticism and gender on bonus appraisal

No significant differences in the relation of neuroticism on the appreciation of bonuses were found. In this research, it seems that neuroticism does not have an influence on the perception of bonuses. Also, no significant differences between men and women were found in the relationship of neuroticism on the appreciation of bonuses, nor could we find any significant differences in the relation of neuroticism and the support of limitation to the size of bonuses. Also, no significant differences between men and women were found in the relationship of neuroticism and the support of limitation of the size of bonuses.

Although previous research found significant differences between neuroticism and gender and compensation, no such differences were found in their relation to the perception of bonuses.

6.2.3 Openness to experience and gender on bonus appraisal

No significant differences in the relation of openness to experience on the appreciation of bonuses were found. In this research, in seems that openness to experience does not have an influence on the perception of bonuses. Also, no significant differences between men and

(36)

women were found in the relationship of openness to experience on the appreciation of bonuses, nor could we find any significant differences in the relation of openness to experience and the support of limitation to the size of bonuses. Also, no significant differences between men and women were found in the relationship of openness to experience and the support of limitation of the size of bonuses.

6.2.4 Conclusion results

This research tried to find a link between different personality traits and the appraisal of bonuses. No empirical evidence was found for a relation between openness to experience and bonus appraisal. Nor was there any support found for the hypotheses linking neuroticism to bonus appraisal. However, one significant relation was found between the trait agreeableness and gender to the preference of a support for the limitation of the size of bonuses. These results were surprisingly the opposite direction of the effect that was expected. There was no main effect of agreeableness found to the support for the limitation of the size of bonuses. However when gender operated as a moderator, men appeared to have significant higher support for the size of bonuses when scoring high on agreeableness. Initially, this effect was expected to be found in women, in line with the previous research, which stated that women score higher on agreeableness than men. The results suggest that there is indeed a relation between agreeableness and the support for the limitation of the size of bonuses but only when gender is a moderating factor. When comparing these results to prior research it would be useful to expand this research and decreasing the participant bias. Because the results are not in line with previous research, we cannot safely conclude that there is no main effect of agreeableness and support for the limitation of the size of bonuses or that these effects only arise for the male gender. Therefore, further research is recommended.

6.2.5 Limitations and suggestions for further research

As mentioned earlier in this section, no empirical evidence was found in the traits antagonism, neuroticism and openness to experience. There was however one significant association found between the trait agreeableness and gender to the preference of a support for the limitation of the size of bonuses. These results however are not in line with previous research and literature. There are some limitations to this research due to the limited time that was set for implementing it. First of all, the second part of the survey was not a statistically-tested questionnaire so there is a possibility that the questions are not a good representation of the

(37)

perception of bonuses. Also, the limited number of questions used to test the different personality traits could have caused a bias in this research. Although the first part of the survey was used in previous research with significant results, the results here show that for two traits the scales did not appear to be reliable. The choice was made to include only two questions per trait in order for the survey to be as short as possible. However, in the future it might be useful to include more questions per trait in order to make reliable scales. Also the number of participants in this research could have caused a bias. Although 50 participants exceeds the number of 30 is which stated by Saunders (2009) for the basis of empirical research, outliers have larger effects on the results and therefore a bigger group of participants would have been useful.

Further research should resolve these problems in testing whether there is an association between personality traits in men and woman and their perception of bonuses. When we learn more about how bonuses are perceived by individuals, we can then look further into the effects that bonuses have on different people. If there is a better

understanding of how a pay system is perceived by different employees, then it is possible to find out if and to what degree this pay system can be managed and an efficient bonus system can be designed.

(38)

7. Conclusion

Bonuses are a heavily discussed subject. With the ongoing financial crisis it is useful to further explore all the different variables that come along with implementing a successful pay-for-performance system. Various theories have been proposed on the influences of compensation and how it affects people. This research tried to find linkages between the different personality traits in men and women and their perception of bonuses. Although only one significant effect- which was surprisingly the reverse of our initial expectation- was found in this empirical research, we cannot conclude that there are no further interactions of personality and gender on the perception of bonuses. There were several limitations to this research and these ought to be reconsidered in designing further research. It is important to further explore how pay is perceived by individuals, so we can work towards a better understanding of how a pay-for-performance system can be successfully managed.

(39)

8. References

Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291-309. Bertrand, M., & Hallock, K. F. (2000). The Gender Gap in Top Corporate Jobs, Boyer, M. (2011). The twelve principles of incentive pay. Revue d'Économie

Politique, 121(3), 285-306.

Bruce, A., & Skovoroda, R. (2012). Bankers’ bonuses and the financial crisis: Context, evidence and the rhetoric–policy gap. Business History, (ahead-of-print), 1-22. Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments

examining the effects of extrinsic rewards on intrinsic motivation. Psychological

Bulletin, 125(6), 627.

Deci, E. L., & Ryan, R. M. (1987). The support of autonomy and the control of behavior. Journal of Personality and Social Psychology, 53(6), 1024-1037. Deci, E. L., & Ryan, R. M. (2012). Overview of self-determination theory. The Oxford

Handbook of Human Motivation, , 85.

Eisenberger, R., Rhoades, L., & Cameron, J. (1999). Does pay for performance increase or decrease perceived self-determination and intrinsic motivation? Journal of Personality

and Social Psychology,77, 1026-1040.

Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of

Management Review, , 57-74.

Field, A. (2009). Discovering statistics using SPSS Sage publications.

Forest, J., & Gagné, M. (2011). The study of compensation systems through the lens of self-determination theory: Reconciling 35 years of debate. CIRANO-Scientific

Publication, (2011s-54)

Gagné, M., & Deci, E. L. (2005). Self‐determination theory and work motivation. Journal of

Organizational Behavior, 26(4), 331-362.

Gardner, D. G., Dyne, L., & Pierce, J. L. (2004). The effects of pay level on organization‐ based self‐esteem and performance: A field study. Journal of Occupational and

Organizational Psychology, 77(3), 307-322.

Hölmstrom, B. (1979). Moral hazard and observability. The Bell Journal of Economics, , 74-91.

Jenkins Jr, G. D., Mitra, A., Gupta, N., & Shaw, J. D. (1998). Are financial incentives related to performance? A meta-analytic review of empirical research. Journal of Applied