Early Retirement Incentives and Employee Performance in a Restructuring Organization

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Park, Ohsoo; Kim, Seongsu
Issue Date
College of Business Administration (경영대학)
Seoul Journal of Business Vol2(1): 141~163(1996)
University of Californiadecision modelservice credit
As downsizing becomes more prevalent in organizations in the 1990s,
understanding employee behavior in response to workforce reduction
programs becomes critical. This study examined the effects of financial
incentives and performance on retirement behavior, occurring under a voluntary
early retirement incentive program at the University of California
First, using retirement decision models, we examined the effects of
financial incentives on the probability of retirement. The major component
of the incentive package was five year's service credit. Results of regression
analyses suggest that increasing service credit by one year is associated with
an increase in retirement probability of about three percent.
Second, we studied the relationship between research performance and
retirement probability. The evidence indicates no signXicant relationship be -
tween career publication activity and retirement probability. However, a significant
and negative relationship was found between recent publication ac -
tivity and retirement. This suggests that professors who recently slowed
down on their research were more likely to retire. The negative relationship
between research performance and retirement probability was in part affected
by the University's promotion system, which rewards those who
continues to publish their research.
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of BusinessSeoul Journal of Business Volume 02, Number 1 (1996)
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