Does Pay‐for‐Performance Strain the Employment Relationship? The Effect of Manager Bonus Eligibility on Nonmanagement Employee Turnover

We tested the organization‐level effects of manager pay‐for‐performance practices on nonmanagement employee turnover within the context of agency theory and equity theory—two frameworks commonly applied to understand compensation policy and practice. We also propose an alternative theoretical perspective that predicts that managerial pay‐for‐performance policies may strain the employment relationship and increase nonmanagement employee turnover,...