Variable pay and job performance of shop-floor workers in lean production

Purpose – The purpose of this paper is to investigate design features of variable pay plans adopted for shop-floor workers engaged in manufacturing firms that had implemented lean production systems, and the effects of design features on their job performance. Design/methodology/approach – In total, 892 shop-floor workers attached to lean implemented manufacturing firms in Sri Lanka responded for the study. Structural equation modelling was used for the data analysis. Findings – It was found that the performance evaluation-base for variable payments, variable pay calculation-base and goal setting for variable pay significantly predict job performance of the shop-floor workers. Originality/value – It could be expected that the academics and practitioners alike are motivated by their desire to clearly apprehend the contribution of variable pay plans on job performance of the shop-floor workers engaged in lean production systems. This demands more investigations to better understand the design features of variable pay plans.