Global perspectives on top management team pay structures

DOIhttps://doi.org/10.1108/EBHRM-09-2015-0038
Publication Date07 Aug 2017
Pages183-195
AuthorMark Brown,Barbara Minsky,Richard Voss,Eren Ozgen
SubjectHR & organizational behaviour,Global HRM
Global perspectives on top
management team pay structures
Mark Brown
Department of Management and Leadership,
Bradley University, Peoria, Illinois, USA, and
Barbara Minsky, Richard Voss and Eren Ozgen
Sorrell College of Business, Troy State University, Dothan, Alabama, USA
Abstract
Purpose The purpose of this paper is to investigate the relation between countriesvalues of individualism/
collectivism and organizationstop 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
countrys 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 countrys level of individualism/collectivism mediates the relationship
between an organizations top managements 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.
Keywords International human resource management, Teamwork, Labour economics,
Cross-cultural values and beliefs
Paper type Research paper
1. Introduction
Over the last 30 years, research linking human resource management (HRM) practices
and organizational performance has received increased attention ( Jackson et al., 2014).
This includes evidence of HRMs effects on both operational indicators of organizational
performance (e.g. scrap rates, product quality, productivity) and financial measures of
performance (e.g. profit, return on assets (ROA)) ( Jiang et al., 2012). Of particular note,
compensation systems have been shown to play a major role in HRMs effects on
organization-level results (Becker and Gerhart, 1996). Even though a sufficient body of
research on compensation practices has emerged illustrating the sizable role that
compensation systems play in determining organizational performance, research
investigating compensation practicesinfluence on organizational performance continues
to evolve. Moreover, considering the importance and complexities of compensation issues,
research on the organizational performance implications of such practices is still needed.
In particular, research investigating the performance implications of compensation practices
across cultures is useful (Bonache and Paz-Aparicio, 2015). Thus, this research will focus on
cross-nationally investigating the relation between one compensation practice,
organizationstop management team (TMT) pay structures, and organizational
performance. First though, using Hofstedes (1984) individualism-collectivism (IDV)
dimension of national culture, we consider the theoretical underpinnings of whether
Evidence-based HRM: a Global
Forum for Empirical Scholarship
Vol. 5 No. 2, 2017
pp. 183-195
© Emerald PublishingLimited
2049-3983
DOI 10.1108/EBHRM-09-2015-0038
Received 14 September 2015
Revised 28 March 2016
23 October 2016
Accepted 15 December 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2049-3983.htm
183
Global
perspectives
on TMT pay
structures

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