4. How Do Japanese Employees React to Performance-Related Pay?: The Working of Hybrid Organizations

This chapter discusses the work of performance-related pay (PRP) within hybrid organization. Although a hybrid organization intends to raise employees’ motivation for work by the two measures, stimulating incentives by PRP and providing stable employment by long-term employment (LTE), the two measures may conflict with each other. Thus, the scheme of PRP may be modified and weakened to be compatible with LTE. From these perspectives, the work of PRP is analyzed by specifying the three types of motivation: for achieving individual outcome, contributing to the organization performance, and challenging a new task. It is found that PRP works effectively along expected lines for the motivation to achieve individual outcome, whereas it works restrictively for the second and third motivations. We further discovered that the effect of work satisfaction compensates for the lack of LTE concerning the motivation to achieve individual outcome. Thus, if employees are required to achieve only their own performance, LTE is not needed as long as work satisfaction is achieved. In this way, it can be predicted that hybrid organization shifts to the other structure with strengthened PRP and without LTE. On the contrary, as long as employees are required to contribute to the organization’s performance and challenge a new task, hybrid organization is confirmed to be effective.