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Matching compensation and organizational strategies

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  • David B. Balkin
  • Luis R. Gomez‐Mejia

Abstract

This study examines the impact of organizational strategies (at both the corporate and business unit level) on pay strategies, and their interactive influence on the effectiveness of the compensation system. The empirical findings are based on the survey responses of 192 human resource management executives in business units of large manufacturing firms. Corporate strategy was a significant predictor of pay package design, pay level relative to the market, and pay administration policies. Business unit strategy was a significant predictor of pay package design and pay level relative to the market. The findings are supportive of congruency notions which suggest that the effectiveness of the compensation system is partly a function of the fit between pay strategies and organizational strategies.

Suggested Citation

  • David B. Balkin & Luis R. Gomez‐Mejia, 1990. "Matching compensation and organizational strategies," Strategic Management Journal, Wiley Blackwell, vol. 11(2), pages 153-169, February.
  • Handle: RePEc:bla:stratm:v:11:y:1990:i:2:p:153-169
    DOI: 10.1002/smj.4250110207
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    File URL: https://doi.org/10.1002/smj.4250110207
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    Cited by:

    1. Christian Grund & Tanja Hofmann, 2019. "The dispersion of bonus payments within and between firms," Journal of Business Economics, Springer, vol. 89(4), pages 417-445, June.
    2. Mirza, Aimal, 2019. "Organizational Approach for the Design of a Comprehensive Compensation Package for Bank Employees in Afghanistan A Strategy for Acquiring and Retaining Talent," MPRA Paper 96531, University Library of Munich, Germany.
    3. Speckbacher, Gerhard & Wabnegg, Markus, 2020. "Incentivizing innovation: The role of knowledge exchange and distal search behavior," Accounting, Organizations and Society, Elsevier, vol. 86(C).
    4. Yan Ling & Zeki Simsek & Michael Lubatkin & John F. Velga, 2008. "Transformational Leadership's Role in Promoting Corporate Entrepreneurship : Examining the CEO - TMT Interface," Post-Print hal-02276697, HAL.
    5. Esther Del Brio & Elida Maia-Ramires & Alberto De Miguel, 2011. "Ownership structure and diversification in a scenario of weak shareholder protection," Applied Economics, Taylor & Francis Journals, vol. 43(29), pages 4537-4547.
    6. Rita Campos e Cunha & Miguel Pina e Cunha & Antonio Morgado & Chris Brewster, 2002. "Market forces, strategic management, HRM practices and organizational performance, a model based in European sample," FEUNL Working Paper Series wp415, Universidade Nova de Lisboa, Faculdade de Economia.

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