Between universality and contingency: An international study of compensation performance
Purpose – The purpose of this study is to examine whether the performance of the compensation system is better explained by the universalist approach or the contingent approach. The paper also attempts to determine the type of fit that yields the most promising gains in terms of perception of performance. Design/methodology/approach – Data were collected by questionnaire from 602 large organizations in three countries (Canada, France, and the UK), and from this, five hypotheses were formulated and tested using moderated regression analysis. Findings – The study shows that having an optimal relationship among compensation policies (intra-activity fit) leads to a more efficient compensation system than that obtained following an alignment with business strategies (vertical strategic fit) and with organizational development strategies (internal organizational fit). However, the results suggest that the universalist perspective cannot be rejected. Practical implications – Human resources managers should exercise prudence regarding the pairing of compensation policies with various organizational characteristics, particularly those related to compensation management policies, because it is the interaction between compensation policies and their management methods that most influences the perception of performance. Of all these management policies, transparency of salary information seems to be central to the contingency perspective. Originality/value – One of the most interesting contributions of this research is the identification of negative alignments that may result in negative performance. The joint application of two compensation policies, which, individually, have a positive influence on performance, can create a negative interaction. Contingency is therefore not always desirable, and prudence is recommended in the types of alignments introduced.
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Volume (Year): 32 (2011)
Issue (Month): 8 (November)
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References listed on IDEAS
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- Donald P. Schwab & Craig A. Olson, 1990. "Merit pay practices: Implications for pay-performance relationships," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(3), pages 237-255, February.
- Drago, Robert & Heywood, John S, 1992. "Is Worker Behaviour Consistent with Efficiency Wages?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 39(2), pages 141-53, May.
- Jeffrey B. Arthur, 1992. "The link between business strategy and industrial relations systems in American steel minimills," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 45(3), pages 488-506, April.
- Paul Osterman, 1994. "How common is workplace transformation and who adopts it?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(2), pages 173-188, January.
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