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1 – 10 of over 5000Alison M. Konrad, Yang Yang and Kathleen Cannings
Relatively little research has examined whether pay dispersion influences men's and women's earnings differently. The purpose of this paper is to fill this research gap.
Abstract
Purpose
Relatively little research has examined whether pay dispersion influences men's and women's earnings differently. The purpose of this paper is to fill this research gap.
Design/methodology/approach
The authors used survey design and multiple regressions to analyze a sample of 650 Swedish medical doctors.
Findings
Pay dispersion was found to be negatively associated with both men's and women's earnings. These effects were contingent on compensation informality and the individual's position in the pay structure. Specifically, when pay dispersion was high, high compensation informality resulted in women being paid less. The interaction of pay dispersion and compensation informality was unrelated to men's earnings. Also, women who were paid less suffered larger penalties when pay dispersion was higher, but their female counterparts who were paid more gained from the existence of greater pay dispersion.
Originality/value
Examining the structure of labor markets on individual outcomes is increasing in importance due to the boundaryless nature of contemporary careers. As people cross functional, organizational, industrial, and even occupational boundaries more frequently in their career lifetimes, they are increasingly exposed to the structural effects of external labor markets. As such, the effects of factors such as pay dispersion and compensation informality in the market are becoming increasingly significant to the fortunes of women and men facing those conditions.
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The purpose of this paper is to answer the question: What happens to the outcomes of pay dispersion when the employees own stock in their own company?
Abstract
Purpose
The purpose of this paper is to answer the question: What happens to the outcomes of pay dispersion when the employees own stock in their own company?
Design/methodology/approach
The data set consisted of over 20,000 employee surveys. Pay dispersion was measured with the Gini coefficient. The outcome variables were attitudes and behaviors with numerous controls. The moderation effect of employee ownership was investigated at the individual and group level using multilevel regression analysis.
Findings
Most hypothesized outcomes did not yield statistically significant results. The results that were statistically significant had two patterns: first, higher pay dispersion was consistently associated with improved attitudes and behaviors; and second, employee ownership moderated the outcomes of pay dispersion for certain outcomes and job types (e.g. perceptions of company fairness among administrative support personnel, or absenteeism and production personnel). There was no evidence to support a link between pay dispersion and attitudes across job types (vertical), only within job types (horizontal).
Research limitations/implications
All the data were self-reported in surveys. Attitudes were measured with single items rather than validated scales. The data were cross-sectional, so no causality can be inferred.
Practical implications
While both higher pay dispersion and employee ownership can motivate employees, the interaction between them can be negative, especially in a cooperative environment. Consideration should be given to this when designing compensation packages.
Social implications
There was a surprisingly strong link between higher pay differentials and improved attitudes, suggesting that the opportunity for higher pay is more influential than any feelings of inequity.
Originality/value
The effect of employee ownership on the outcomes of pay dispersion has never been investigated. This should be valuable given how widely higher pay is used to attract, retain and motivate employees (leading to pay dispersion) as well as how increasingly popular employee ownership is becoming.
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Ho Wook Shin, Sungho Cho and Jong Kwan Lee
Integrating the resource-based view (RBV) with pay dispersion research, the authors examine how the allocation of resources between hiring new employees and compensating current…
Abstract
Purpose
Integrating the resource-based view (RBV) with pay dispersion research, the authors examine how the allocation of resources between hiring new employees and compensating current employees, as well as the allocation of resources among new employees, affects organizational performance.
Design/methodology/approach
The authors use panel data on Major League Baseball teams. The authors also use system generalized method of moments (GMM) estimations to control for the impact of past performance on current performance, unobserved individual heterogeneity and omitted variable bias.
Findings
The authors find that the larger the portion of the human resources (HR) budget allocated to hiring new employees, the poorer organizational performance becomes unless the focal organization has already significantly underperformed. The authors also find that pay concentration among new employees has a positive impact on organizational performance unless the focal organization has already significantly overperformed.
Originality/value
This study extends RBV research by examining how resource allocation patterns affect organizational performance, which has rarely been studied. Moreover, by showing the organizational context's significant effect on the outcome of financial allocation for resource acquisition, this study extends both the RBV research and the pay dispersion research.
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Xi Zhong, Weihong Chen and Ge Ren
This study aims to re-examine the impact of economic policy uncertainty (EPU) on firm innovation. Studies on how EPU affects firm innovation have been inconclusive. The authors…
Abstract
Purpose
This study aims to re-examine the impact of economic policy uncertainty (EPU) on firm innovation. Studies on how EPU affects firm innovation have been inconclusive. The authors clarified the curvilinear relationship between EPU and firm innovation and examined the moderating effects of managerial pay gaps, specifically vertical pay disparity and horizontal pay dispersion.
Design/methodology/approach
This study’s analyses used data collected from Chinese listed companies from 2007 to 2019.
Findings
The authors found an inverted U-shaped relationship between EPU and firm innovation. Furthermore, vertical pay disparity strengthens the curvilinear relationship, while horizontal pay dispersion weakens it.
Practical implications
First, politicians should avoid adjusting economic policies too frequently because the high EPU levels created by frequent adjustments can inhibit business innovation. Second, firms should be aware that EPU creates opportunities for leapfrogging. In particular, firms can incentivize executives to take advantage of the valuable growth opportunities presented by EPU by widening vertical pay disparities and avoiding excessive horizontal pay dispersion.
Originality/value
First, the authors analyze not only the positive effects of lower EPU on firm innovation but also the negative impacts of higher EPU to examine EPU’s “double-edged sword” effect on firm innovation. Second, the investigation of vertical pay disparity and horizontal pay dispersion as moderating variables sheds new light on the equivocal research findings regarding the EPU–firm innovation relationship and clarifies the boundary conditions of the double-edged sword effect of EPU on firm innovation.
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This paper aims to evaluate the effects of both salary dispersion and incentive pay on team performance using data complied from the National Football League over the years…
Abstract
Purpose
This paper aims to evaluate the effects of both salary dispersion and incentive pay on team performance using data complied from the National Football League over the years 2000‐2007.
Design/methodology/approach
The authors consider the effect of pay structure on both in terms of on‐field and financial performance. Salary disparity and its subsequent consequences has been a topic of economic research on corporate pay structure and also professional team sport organizations. Analysis of pay structures incorporating the effects of incentive pay on performance is also recurrent in the literature. The paper uses regression analysis and incorporates both fixed and random effects models.
Findings
A relationship between improved on‐field performance and increased payroll, lower levels of salary dispersion, and increased incentive payments is found. However, when employing team revenue production as the measure of performance, a positive relationship with salary dispersion is found.
Research limitations/implications
The findings are of particular interest because a conflict of objectives is seen. When financial incentives are primary, hierarchical pay structure is optimal. It is shown that more compressed pay structures improve on‐field performance.
Practical implications
This study is unique in addressing how salary dispersion in combination with incentive pay correlates to team success as measured by both winning and revenue production. While the authors used the NFL as the organization of interest, this type of analysis could be applied to other professional sport leagues incorporating some type of salary cap. In addition, future research could also involve a mixed methods approach to help gain an additional understanding of the decision making of those in managerial positions of influence within sport and non‐sport organizations.
Originality/value
The study is unique in that most previous empirical work analyzing payroll structure in sport organizations does not consider disparity in conjunction alternative methods of improving performance through structure of compensation.
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Bernd Frick, Joachim Prinz and Karina Winkelmann
Wage disparities and their consequences have long been a topic of economic research. While most papers focus on describing the development of wage differentials over time and seek…
Abstract
Wage disparities and their consequences have long been a topic of economic research. While most papers focus on describing the development of wage differentials over time and seek to identify the reasons for the observed patterns, few attempts have been made to analyze the influence of pay inequality on economic outcomes. A unique and rather large data set from the North American team sports industry is used to address the question how wage disparities affect the performance of professional teams. First, changes in intra‐ and inter‐team wage inequality are documented. Second, the impact of wage inequality on team performance is directly analyzed. Overall, the results differ to a considerable degree between the four major leagues, suggesting that the relative importance of high‐powered incentives and cooperation is different in football and hockey from basketball and baseball.
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Abstract
Purpose
This paper extends the current understanding of the retrenchment-–turnaround relationship in declined companies by introducing a compensation gap view. It argues that the effectiveness of the retrenchment strategy is contingent on reducing the executive-employee compensation gap in the turnaround process.
Design/methodology/approach
Drawing from a two-stage turnaround model and insights from the literature on executive-employee compensation gap, we develop and test a theoretical model that explains how five attributes, which refer to executive-employee compensation gap, asset retrenchment, cost retrenchment, ownership and size, affect the outcome of the organizational turnaround. This paper uses the fuzzy-set qualitative comparative analysis (fsQCA) method and based on the samples of 112 listed companies that experience the decline between 2005 and 2013.
Findings
This paper concludes two valid causal paths and finds that small companies with small executive-employee compensation gap have a higher likelihood of successful turnaround when they implement cost or asset retrenchment actions. As for large state-owned companies, they should reduce the costs and maintain a small executive-employee compensation gap. An excessive compensation gap can be problematic, which could impair the organizational ability to cope with adversity and decline.
Research limitations/implications
First, this paper taps the vital role of employees in the turnaround process besides the mainstream “organizational decline-layoffs” logic, which hints a new human resource management strategy when organizations are facing decline. Second, this paper reveals the theoretical linkage between pay dispersion, internal stakeholder and organizational resilience. Third, as a methodological contribution, we introduce fsQCA, overcoming the shortcomings of turnaround strategy research with case and regression analysis and breaking through the paradigm of “specific factor-turnaround.”
Practical implications
Organizational turnaround is a systematic process that constitutes multiple factors together. When organizations take the asset retrenchment to stop bleeding, reducing the executive-employee compensation gap will help enhance employee's cognition of organizational values and strategic goals, eliminate feelings of exploitation in retrenchment implementation and thus effectively promote turnaround. This paper also provides a basis for executive compensation restrictions and re-examines pay dispersion and economic inequality.
Originality/value
This study sheds some light on the importance of the executive-employee compensation gap in retrenchment strategy and contributes to both organizational turnaround and pay dispersion theories. Also, it reveals the theoretical linkage between internal stakeholders, organizational resilience and long-term orientation.
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Mark Brown, Barbara Minsky, Richard Voss and Eren Ozgen
The purpose of this paper is to investigate the relation between countries’ values of individualism/collectivism and organizations’ top management team (TMT) pay structures…
Abstract
Purpose
The purpose of this paper is to investigate the relation between countries’ values of individualism/collectivism and organizations’ top management team (TMT) pay structures. Individualistic countries are expected to prefer more hierarchical TMT pay structures and collectivist countries are expected to prefer more egalitarian TMT pay structures. The manuscript also investigates the international implications of the relation between TMT pay structures and organizational performance. Specifically, it is proposed that a country’s level of individualism/collectivism will mediate the relation between TMT pay structure hierarchy and organizational performance.
Design/methodology/approach
A pooled sample of data from 56 organizations in 12 countries was used to investigate the research questions. Individualism/collectivism was measured using country specific individualism/collectivism scores and top management pay structures were operationalized using Gini coefficients. Organizational performance was evaluated using return on assets.
Findings
Support was found both for a preference for more hierarchical TMT pay structures in individualistic countries, and that a country’s level of individualism/collectivism mediates the relationship between an organization’s top management’s pay structure and company performance.
Originality/value
Findings demonstrate that organizations use pay structures consistent with their environments. Results suggest cultural dimensions can contribute to understanding cross-national TMT pay structures and that national culture plays a significant role in the relationship between TMT pay structure and company performance.
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Elizabeth Cooper and Andrew Kish
The purpose of this paper is to study bank executive compensation and securitization, two important strategic developments in finance that are central to the debate on the cause…
Abstract
Purpose
The purpose of this paper is to study bank executive compensation and securitization, two important strategic developments in finance that are central to the debate on the cause of the crisis.
Design/methodology/approach
We study the relationship between securitization and executive pay in a sample of US banks from 2001 to 2010, using a series of multivariate regression models to test our hypotheses.
Findings
Bank Chief Executive Officer (CEO) pay exhibits a positive pay-for-performance relationship. Since the crisis, this relationship is weakened. For banks that securitize, we find that prior to the crisis, higher securitization activity led to higher CEO compensation levels. While we do not find that securitization is related to bank CEO pay gap (the difference between CEO and the next-highest paid bank executive), we do see that bank ratings are a factor in pay gap and compensation level.
Research limitations/implications
Bank regulatory ratings influence the relationship between compensation and securitization. Also, the relationship differs pre- and post-crisis.
Originality/value
Our study is unique for several reasons. First, we look at the relationship between compensation and securitization over a time period that includes the recent financial crisis. Second, we include an analysis of pay gap. Third, we include bank regulatory ratings, which are proprietary and therefore not available for use in many banking studies.
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Lilian Otaye-Ebede, Paul Sparrow and Wilson Wong
Organizational justice research has become the main paradigm of research in the field of HRM. The purpose of this paper is to outline a number of underlying challenges to which…
Abstract
Purpose
Organizational justice research has become the main paradigm of research in the field of HRM. The purpose of this paper is to outline a number of underlying challenges to which this paradigm is ill-suited. It broadens the traditional understanding of what is meant by fairness within the HRM literature to help explain how justice judgements are formed and may be used to influence societal-level fairness processes. It develops a framework to aid the understanding of the fairness of decisions that individuals or organizations make.
Design/methodology/approach
The paper presents a conceptual review of the main paradigms used in fairness research. It draws upon the organizational justice literature as the dominant paradigm in HRM research, and conducts a cross-disciplinary review that introduces a range of theories less frequently used by HRM researchers – specifically capability theory, game theory, tournament theory, equity sensitivity theory, theories of intergenerational equity, and burden sharing. It demonstrates the relevance of these theories to a number of areas of organizational effectiveness.
Findings
The paper shows that researchers are now augmenting the organizational justice research paradigm under two important pressures – awareness of hidden structures that preclude the option for real fairness; and new variables that are being added to the consideration of organizational justice.
Practical implications
HR functions have invested significant resources in employee engagement or insight units, but if their policies trigger significant inequality of outcomes, perceived problems of justice, a lack of burden sharing, no sense proportionality, organizations may not be able to achieve other important HR strategies such as sustaining and deepening employee engagement, developing organizational advocacy, building an employer brand, or being seen to have authenticity in its values. The framework suggests a broadened educational base for HR practitioners around fairness. It also suggests that there may be complex employees segments concerning perceptions of fairness.
Originality/value
The cross-disciplinary perspective taken on fairness helps deconstruct the judgements that employees likely make, enabling organizations and individuals alike to ask more critical questions about their respective behaviour.
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