Effects of wage and promotion incentives on the motivation levels of Japanese employees

Purpose This study aims to focus on the incentive effects in Japanese organizations where job security is valued. In particular, the study seeks to investigate the relative strengths of the effects of wage and promotion incentives on employees' motivation. Design/methodology/approach A survey was conducted involving 1,823 Japanese employees working at the group companies of Toyota Motors. Multiple regression analyses were performed to separately analyze the effects on white‐collar ( n =928) and blue‐collar ( n =818) workers. Findings The results showed that both promotion and wages positively influence employees' work motivation. A comparison of the relative strengths of the effects reveals that fair promotion was a more powerful motivator than wage level and wage increase. Originality/value The reason why fairness in promotion was more effective than wage to motivate employees was discussed in light of the unique career system existing in Japanese companies and the agency problems between companies and their supervisors.