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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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    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. Adama Aloysious Gross & Gudlyne M. Karngar & Uriah G. Bailey, 2024. "The Political Economy of Salary Harmonization Policy and Social Equity among Public Sector Workers in Liberia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(7), pages 2006-2020, July.
    3. A. Varadaraj & M. Prasanna Mohan Raj & S. Ananth, 2021. "The Impact of Human Resource Management Policies on Business and Marketing Strategy Implementation within the Marketing Organization," Eastern European Journal for Regional Studies (EEJRS), Center for Studies in European Integration (CSEI), Academy of Economic Studies of Moldova (ASEM), vol. 7(2), pages 182-207, December.
    4. Speckbacher, Gerhard & Wabnegg, Markus, 2020. "Incentivizing innovation: The role of knowledge exchange and distal search behavior," Accounting, Organizations and Society, Elsevier, vol. 86(C).
    5. Möller Quintanar, Ana, 2022. "Transparency in Complex Compensation Systems," Junior Management Science (JUMS), Junior Management Science e. V., vol. 7(1), pages 185-200.
    6. Gomez-Mejia, Luis R. & Mendoza-Lopez, Anabel & Cruz, Cristina & Duran, Patricio & Aguinis, Herman, 2024. "Socioemotional wealth in volatile, uncertain, complex, and ambiguous contexts: The case of family firms in Latin America and the Caribbean," Journal of Family Business Strategy, Elsevier, vol. 15(1).
    7. 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," Nova SBE Working Paper Series wp415, Universidade Nova de Lisboa, Nova School of Business and Economics.
    8. Ali Shakir Zaidan & Khai Wah Khaw & Chew XinYing & Alhamzah Alnoor & Yuvaraj Ganesan & Abdullah Mohammed Sadaa, 2023. "Influence of Organizational Contingencies on Financial Performance: Mediating Role of Crisis Management," Central European Business Review, Prague University of Economics and Business, vol. 2023(2), pages 37-59.
    9. 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.
    10. David Kryscynski & Russ Coff & Benjamin Campbell, 2021. "Charting a path between firm‐specific incentives and human capital‐based competitive advantage," Strategic Management Journal, Wiley Blackwell, vol. 42(2), pages 386-412, February.
    11. 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.
    12. 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.
    13. Mansour Al-miman, 2017. "Human Resources Management Practices, Psychological Contract Fulfillment and Organizational Commitment in Deluxe Hotels in Jeddah, Saudi Arabia," International Journal of Psychological Studies, Canadian Center of Science and Education, vol. 9(4), pages 1-94, December.

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