Organizational culture and compensation systems: An examination of job applicants' attraction to organizations
International Journal of Organizational Analysis
ISSN: 1934-8835
Article publication date: 31 December 2007
Abstract
Purpose
Compensation influences applicants' perceptions of a position's attractiveness, but there has been limited analysis of how different compensation systems might reflect organizational cultures and influence organizational attractiveness. This article seeks to explore these issues.
Design/methodology/approach
An experiment was conducted in which 288 undergraduates reacted to scenarios describing a company that distributed salaries and benefits based on either merit or on seniority. Individual differences were also measured and analyzed. Analysis of variance and moderated regression were used to test the hypotheses.
Findings
Relative to seniority‐based compensation systems, the cultures of organizations relying on merit were perceived to be more aggressive, reward‐oriented, and less decisive. Unexpectedly, the psychological contracts of organizations using merit systems were generally perceived to be more relational and less transactional than those using seniority‐based systems. Individual differences were not related to attraction to the organization regardless of its compensation systems. Finally, individuals were least attracted to organizations that distributed both salaries and benefits based on seniority relative to those using a mixed compensation distribution system or one based entirely on merit.
Research limitations/implications
The sample was composed of undergraduates who responded to a hypothetical job scenario. The scenario only included information about how salary and benefits are allocated. Future research should use more experienced samples that are considering actual positions.
Practical implications
Findings indicate how information about compensation systems might be used in job descriptions to encourage applicants.
Originality/value
This study was the first to find that merit/seniority‐based compensation systems for determining salary and benefits reflect different organizational cultures to job applicants and influence job applicants' attraction to organizations.
Keywords
Citation
Li, L. and Roloff, M.E. (2007), "Organizational culture and compensation systems: An examination of job applicants' attraction to organizations", International Journal of Organizational Analysis, Vol. 15 No. 3, pp. 210-230. https://doi.org/10.1108/19348830710880910
Publisher
:Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited