Doctor of Philosophy, The Ohio State University, 2006, 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 resou (open full item for complete abstract)
Committee: Heneman Robert (Advisor)
Subjects: Business Administration, Management