Generation X and Millennials: Perception Toward Pay for Individual Performance

Abstract

Generational differences will cause different effects on the way employees view and perceive the policies designed by their organizations to motivate them, one of which is performance pay. The study aims to examine the differing perceptions of pay for performance between employees from Generations X and Millennials. This study was conducted by using a survey of which the respondents were from private and public sector organizations. The total number of respondents in this research is 355 employees, which are made up of 156 respondents from Generation X and 199 Millennial respondents. In this study, t-test and Linear regression models were used for hypotheses testing. Results of the t-test showed that there are differences in perceptions of pay for performance between Generations X and Millennials (p < 0.05). Generation X gives a higher positive evaluation on pay for performance compared with Generation Millennials. Results of the regression test showed that pay for performance had a significant effect on employee work motivation for both Generations X and Y (p < 0.05). The results of this study provide insights to organizations into designing appropriate compensation programs based on the demographics of their employees. Keywords: generation differences, motivation, external regulation, performancecontingent rewards