Multiple effects of performance-contingent pay for wait-persons

The owners of three restaurants requested help with the pay of waitpersons who were paid by the hour. The waitpersons asked for raises which the owners said they could not afford. This research changed the method of compensating waitpersons by making their pay contingent on dollars of food sold. Increased productivity and increased earnings per hour of work for all of the waitpersons followed the beginning of the performance-contingent pay. Most of the waitpersons also earned increased take-home pay when the performance-contingent pay began. There was little improvement in labor costs per dollar of food sold, a measure of benefit to the owners. The fact that benefits to workers occurred without benefits to owners is contrary to common views about the effects of performance-contingent pay