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Strategic impacts of compensation system on organizational outcomes: an empirical study of the conceptualizations of fit and flexibility in the compensation design

Kim, Hyondong
http://rave.ohiolink.edu/etdc/view?acc_num=osu1141829742

Abstract Details

2006, Doctor of Philosophy, Ohio State University, Labor and Human Resources.
The strategic role of the compensation system has been increasingly important to business. However, there has been little knowledge or research about how the compensation system strategically impacts organizations (Gerhart, 2000; Heneman, Ledford, & Gresham, 2000). Therefore, research is needed to substantiate how to improve the effectiveness of the compensation strategy. In this study, a large-scale survey was conducted to examine the effect of compensation practices in a wide variety of organizations. A total of 130 firms responded to the survey; of these firms, six had multiple respondents. The empirical results revealed that long-term incentive, group-based pay, and merit-pay programs positively impact perceptual and financial performance. As well as identifying direct impact, this study examined the indirect impact of compensation programs and practices. In this process, OCB plays a mediating role in the effect of several compensation programs such as, merit pay, group-based pay, and long-term incentive on a firm’s performance. The model developed in this study adds valuable insight to the existing strategic compensation literature by identifying the means through which the compensation strategy leads to a firm’s success. The current study also makes a theoretical contribution. The use of several compensation programs may have the potential to improve “flexibility” by developing several characteristics of human resources, which in turn are integrated into a firm’s success. This study supports the universal perspective by demonstrating positive effects of specific types of compensation programs across organizations and industries. Furthermore, unless human resource attributes achieve “fit” with the features of a compensation program, the strength in the relationship between the compensation program and a firm’s performance becomes lower. The findings support the contingency perspective that compensation program characteristics must be consistent with human resource attributes. Therefore, conceptually, the current study integrates conflicting SHRM perspectives—“fit vs. flexibility” and “universality vs. contingency”—as complementary and extends the performance implications of strategic compensation studies. Practically, this study provides guidance about how firms need to design, establish, and execute compensation programs to generate and sustain competitiveness.
Heneman Robert (Advisor)
191 p.
Business Administration, Management
#firm; COMPENSATION; Gerhart; pay; compensation programs; merit-pay; Human Resources

Recommended Citations

Citations

  • Kim, H. (2006). Strategic impacts of compensation system on organizational outcomes: an empirical study of the conceptualizations of fit and flexibility in the compensation design [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1141829742

    APA Style (7th edition)

  • Kim, Hyondong. Strategic impacts of compensation system on organizational outcomes: an empirical study of the conceptualizations of fit and flexibility in the compensation design. 2006. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1141829742.

    MLA Style (8th edition)

  • Kim, Hyondong. "Strategic impacts of compensation system on organizational outcomes: an empirical study of the conceptualizations of fit and flexibility in the compensation design." Doctoral dissertation, Ohio State University, 2006. http://rave.ohiolink.edu/etdc/view?acc_num=osu1141829742

    Chicago Manual of Style (17th edition)

osu1141829742
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© 2006, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.