The role of human resources in ethics/compliance management: a fairness perspective

Many large corporations now have formal programs for managing ethical behavior and legal compliance. But the often minor role of human resources (HR) in companies' ethics management efforts is problematic. This is because ethics management efforts are likely to raise questions of fairness, and trigger a fairness heuristic among employees that can generate important outcomes for the ethics program specifically and the organization generally. Relying on research on fairness in organizations and corporate ethics practices, we explain why the extensive involvement of HR in corporate ethics programs is important to the perceived fairness, and thus the likely outcomes (e.g., employee commitment), of those programs.     

Contextual Determinants of Variable Pay Plan Design: A Proposed Research Framework

Increasingly, organizations are using variable pay plans to reward employees for the results that they achieve. Current discussion of variable pay focuses on variable pay plan design mechanics, with insufficient attention given to contextual variables that may affect variable pay plan design. We offer a preliminary framework for examining the contextual determinants of variable pay plan design. Components of the framework include characteristics of the environment, characteristics of the organization, and the organization's pay strategies. Propositions for future research are offered.     

Determinants of monetary penalties for environmental violations

This research investigates the likely determinants of monetary penalties for poor environmental performance. We retrieve data from Bloomberg on the monetary penalties imposed on companies in the European Union (EU) found to have performed poorly in corporate social responsibility (CSR), and particularly in the environmental aspects of CSR. Our primary findings reveal that firms with high levels of greenhouse gas and hazardous waste emissions are more likely to receive monetary penalties. On the other hand, firms that invest in green supply chain practices and disclose environment‐related matters avoid monetary penalties more. We also find that firms having executive compensation linked with environmental compliance face more monetary penalties. This finding adds a new dimension to the voluminous research on executive compensation that has investigated primarily the effects of cash and stock option‐based compensation schemes on pay–performance sensitivities. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Performance Measurement and Incentive Compensation: An Empirical Analysis and Comparison of Chinese and Western Firms' Practices

This paper describes the findings of a study aimed at providing a replication and extension in China of studies focused on incentive compensation practices of automobile retailers in the USA and the Netherlands. Rich, detailed data-sets from all three countries are analysed together and in comparison. As theory is not well developed at the level of detail of the data collected, the purpose of this study was primarily exploratory, to provide empirics that can lead to the development of theory. The findings show that Chinese firms are much more likely to provide incentive compensation than are Dutch firms, and they are even somewhat more likely to provide them than are US firms. But Chinese bonus plans are more likely to be subjective, rather than formula-based. In the situations where incentive payments are based on pre-set formulas, the Chinese firms' systems are more like those used in the Netherlands than in the USA, with bonuses based on non-financial performance measures and with more complex performance–reward functions. Like managers in the US firms, but unlike managers in the Dutch firms, Chinese managers who receive some form of incentive compensation are more satisfied with their pay. The paper concludes with tentative explanations of the findings and suggestions for future research.     

Innovative human resource management and corporate performance in the context of economic liberalization in India

The Indian economy was forced to adopt a structural adjustment programme at the beginning of 1991. The structural adjustment programme or liberalization initiated the process of the opening up of an otherwise closed economy of India. Liberalization created a hyper-competitive environment and to respond to this turbulence, Indian organizations adopted innovative changes in their HRM practices. Current research shows that HRM practices are important for enhanced corporate performance but little has been reported on the effect of HRM practices and corporate performance in the context of economic liberalization of India. This study tries to understand the role of innovative HRM practices and specifically questions how HRM practices, such as the role of HR department, recruitment, retraining and redeployment, performance appraisal and compensation, enhance corporate performance during the change process. A multiple-respondent survey of 69 Indian organizations was undertaken to study the impact of innovative HRM practices on firm performance. The survey found that the innovative recruitment and compensation practices have a positive significant relationship with firm performance. It was observed that recruitment, the role of the HR department and compensation practices seem to be significantly changing within the Indian firms in the context of India's economic liberalization. The synergy between innovative HRM practices was not significant in enhancing corporate performance during the liberalization process.     

Disability status,individual variable pay,and pay satisfaction: Does relational and institutional trust make a difference?

Although prior research suggests that disabled employees have different needs in the context of some HRM practices, we know little about their reactions to reward systems. We address this gap in the literature by testing a model using the 2011 British Workplace Employee Relations Survey (disabled employees, n = 1,251; nondisabled employees, n = 9,959; workplaces, n = 1,806) and find that disabled employees report lower levels of pay satisfaction than nondisabled employees, and when compensated based on individual performance, the difference in pay satisfaction is larger. We suggest that relational (derived from trust in management) and institutional (derived from firm‐wide policies and HRM practices, both intended to provide equitable treatment to disabled employees) forms of trust play important roles. The results of multilevel analyses show that when trust in management is high, the difference in pay satisfaction under variable pay is reduced. We find just the opposite for employees who work in organizations with a formal disability policy but without supportive HRM practices; the gap in pay satisfaction is exacerbated. However, the combination of the presence of a firm‐wide policy and HRM practices reduced the difference in pay satisfaction. Implications of the findings for theory, future research, and management practice are discussed.     

Pay increase satisfaction: A reconceptualization of pay raise satisfaction based on changes in work and pay practices

A new perspective on pay raise satisfaction, termed “pay increase satisfaction,” is conceptualized and used to guide the development of measures to supplement the widely used Pay Satisfaction Questionnaire (PSQ) [Int J Psychol 20 (1985) 129.]. The need for this new conceptualization lies in the nature of contemporary work and pay systems, particularly to those organizations adopting new strategic pay practices. Six dimensions of pay increase satisfaction are proposed: pay increase amount, pay increase opportunity, pay increase form, pay increase requirements, pay increase personal control, and pay increase rules. These dimensions are necessary to capture elements of the pay satisfaction domain not currently being captured by the PSQ. Implications for future research are discussed.     

Compensation in the jobless organization

The job has traditionally played a central role in the design and structure of organizations. Recently, however, the jobless organization has emerged in response to a number of economic and technological developments. As the design and structure of organizations has changed, efforts have increasingly been made to move from the traditional job-based compensation system to a person-based approach. This paper reviews the changes that have been observed in compensation programs as efforts are made to respond to the jobless organization. This paper then highlights possible directions for future research by developing research propositions relating to the impact of person-based pay and the conditions likely to affect the nature of that impact.     

Team Rewards: How Far Have We Come?

Although many organizations find teams to be important to their success, few have implemented reward systems that encourage team effort. This study examines the practices of 35 firms using team‐based reward programs and identifies some features of these programs that improve their effectiveness. The results indicate that the most valued programs were those associated with (1) high levels of communication to employees about the specifics of the plan, (2) strong worker involvement in the plan's design and implementation, and (3) team members' perceptions that the pay system was fair. HR managers considered more complex plans more beneficial than simple plans. © 2001 John Wiley & Sons, Inc.     

Why Do Board Members Receive Excess Compensation?

This paper examines compensation to the boards of directors and supervisors for a sample of 656 firms over the period 1999–2008. I find in Taiwan that about 53.21% of firms pay excess compensation to their boards and 13.72% of the boards are overpaid by more than 50%. This paper conjectures that firms reward directors and supervisors in order to retain their valuable human capital and notes a robust positive effect of excess compensation on future firm performance. Because directors and supervisors are rewarded for future success, their excess pay may not be considered all that bad. Copyright © 2015 John Wiley & Sons, Ltd.     

Compensation as a signal of organizational culture: the effects of advertising individual or collective incentives

Beyond their impact on current employees, compensation systems are thought to convey important messages about an organization's values and practices to potential hires, but explicit empirical support for this belief is scant. In two experiments, US participants evaluated recruiting advertisements containing simple statements about bonuses, with performance basis manipulated between-subjects in the first experiment and within-subjects in the second. Advertising bonuses based on individual performance caused an organization to be perceived as likely to have a more individualist culture, whereas bonuses based on team or organizational performance led to perceptions of a more collectivist culture. When participants in the second study were asked to choose between hypothetical jobs at organizations with different advertised compensation systems, the relation between individual differences and job preference was contingent on their organizational culture perceptions. In contrast to previous research, no modal preference for individual over collective rewards was observed.     

Vertical Foreclosure Using Exclusivity Clauses: Evidence from Shopping Malls

Exclusive contracts are one of the most controversial topics in the economic analysis of antitrust. Yet, very few empirical papers analyze the determinants and the consequences of exclusive contracts. In this paper, I study exclusive contracts between hamburger restaurants and Israeli shopping malls, in which mall owners commit to prohibiting additional hamburger restaurants from entering their malls. I investigate the determinants of these exclusive contracts and examine how such contracts affect the number of hamburger restaurants and their sales. I show that exclusive contracts are less likely to be adopted in larger malls, in malls that face more competition from other malls, and in malls that opened before 1993, when McDonald's and Burger King entered the Israeli market. I then use the mall's opening year—before or after 1993—as an instrumental variable to estimate a negative effect of exclusive contracts on the number of restaurants and on total mall hamburger sales. My findings are generally consistent with anti‐competitive vertical foreclosure models.     

CEO compensation structure following succession: Evidence of optimal incentives with career concerns

To motivate managers to pursue shareholder interests, boards may design management compensation packages to reward managers for good firm performance. However, Gibbons and Murphy (1992) note that when CEOs are far from retirement, they have career concerns. In these cases, Gibbons and Murphy argue that it may not be optimal for their current compensation to be too dependent on firm performance. Testing this proposition, we find that abnormal returns are negatively related to the percentage of performance-based pay of newly hired CEOs when companies announce CEO successions. Since these newly hired CEOs are likely some distance from retirement, we interpret these results as being consistent with Gibbons and Murphy; it may be better to allow newly hired CEOs to be paid in human capital increases from the managerial labor market than to have their current pay too closely related to performance.     

Why does firm reputation in human resource policies influence college students? The mechanisms underlying job pursuit intentions

Business periodicals, such as Fortune magazine, rank organizations in lists such as the “Best Companies to Work For,” providing applicants with information about firms' human resource practices, including pay, benefits, work‐life, and diversity practices. It is not clear what influence this reputational information about HR practices has on applicant interest in pursuing employment or, more important, why it does so. Given that firms invest substantial resources in HR practices to vie for positions on these lists, the current study sought to fill these gaps in the literature. In the 2 (compensation) × 2 (work‐family) × 2 (diversity) factorial design, 232 college students read about magazine rankings in which a firm's reputation in each HR practice was manipulated as ranking either high or low relative to competitors. We examined perceptions of organizational prestige, anticipated organizational support, and anticipated role performance as mechanisms that explain the influence of HR practice reputation on job pursuit intentions. Our results indicate that a firm's reputation in compensation, work‐family, and diversity efforts increase college students' intentions to pursue employment with a firm. They do so because college students perceive that the organization is prestigious, will be supportive, and will foster their job performance. Our results suggest that a strong employer brand derived from employee‐centered HR practices is important for recruiting college students. © 2012 Wiley Periodicals, Inc.     

CEO compensation, shareholder rights, and corporate governance: An empirical investigation

We investigate whether CEO compensation is influenced by the strength of shareholder rights. Our evidence reveals that CEOs of firms where shareholder rights are weak obtain more favorable compensation. It is also found that higher CEO pay is associated with a higher degree of potential managerial entrenchment. Additionally, CEOs of firms with governance provisions that offer them protection from takeovers enjoy more generous pay. We also examine the change in CEO compensation relative to the change in shareholders' wealth. The evidence shows that when there is an increase in shareholders' wealth, the CEO is able to obtain higher incremental compensation when shareholder rights are weak. On the contrary, when shareholders' wealth falls, there is no corresponding decline in CEO compensation when shareholder rights are weak. Given the empirical evidence, we argue that CEO compensation practices reflect rent expropriation rather than optimal contracting.     

高校薪酬制度的国际比较及其对我国研究型高校薪酬制度改革的启示

随着我国高等教育体制特别是高校人事制度的深化改革,研究型高校的薪酬制度再设计颇受各方关注。本文首先剖析了当前我国高校薪酬制度存在的主要问题,然后通过对美国、法国、德国、印度等国家高校薪酬体系的比较分析,提出我国研究型高校薪酬制度改革的若干建议。     

A Research Agenda for Examining the Role of Compensation Consultants in the Executive Pay Process

Executive compensation has risen dramatically during the past several years. In some cases, organizations have lost money and value, while their executives have received generous if not excessive compensation. The business press has brought this issue to the attention of the American public and Congress, resulting in increasing examination of all parties involved in the pay-setting process. The selection and use of compensation consultants has come under particular scrutiny. Critics have argued that these firms suffer from serious conflicts of interest, such that they may be partly responsible for the rise in pay and the decoupling of pay from performance. Academic attention to the impact of compensation consultants in the pay-setting process, however, has been lacking, and thus most of the analysis of the subject is based on anecdotal evidence and superficial arguments. In the interest of fostering a more rigorous approach, this paper presents several theoretical perspectives that could be used to examine and explain the influence of compensation consultants on executive compensation. We present these theories in light of a specific case and suggest directions for future research.     

The Meaning and Determinants of Skills Shortages

In this paper we use establishment-level data to examine what managers mean when they report having skills shortages. We find that the concept of a skills shortage is not always the same as a hard-to-fill vacancy despite the latter being used by many authors who have considered the economic consequences of skills shortages. It seems that, while employers appear not to have any problems for themselves in interpreting questions on ‘skills shortages’, we cannot rely on them being perceived in a uniform way by all employers. Indeed, many employers stress that, amongst both their existing workforce and job applicants, there appear to be important shortfalls in motivational and attitudinal skills, leading us to believe that social skills are an important part of the skills said to be in shortage. Our findings point to two main conclusions for future research. First, studies that investigate the causes and effects of ‘skill shortages’ need to pay greater attention to their definition and measurement. Secondly, in future research on establishments and their skill formation practices, further steps could be taken to gain clarification either directly or indirectly from respondents as to the experiences they choose to classify as a skills shortage.     

An employee-focused human resource management perspective for the management of global virtual teams

Abstract

The number of global virtual teams (GVTs) has increased in recent years due to globalization of business, improved information and communication technology, and higher innovation needs. Practitioners expect GVTs to be creative, innovative, and high-performing. However, GVT members suffer from interpersonal problems, stress, and misunderstandings based on cultural differences. It is therefore important that the HRM function intervenes in the functioning of GVTs. HRM and GVT research has mostly focused on instrumental practices to improve performance, but globalization and the dynamic business environment require international organizations to adopt new HRM perspectives. To advance research on GVTs and HRM, we draw on the job demands-resources model and research on quality of work life to introduce an employee-focused HRM perspective for the management of GVTs. This new perspective focuses explicitly on improving employee wellbeing in GVTs. We develop a novel theoretical framework that provides HR practitioners and leaders with several employee-focused management tools such as flexible work practices, international training and development opportunities, and fair pay and procedures. These tools are likely to help GVT members to cope with job demands and to improve their wellbeing, and are particularly useful for GVTs due to their interpersonal problems, stressful environment, and cultural differences.     

Human resource differentiation: A theoretical paper integrating co‐workers' perspective and context

This paper conceptualises “human resource (HR) differentiation” as a set of deliberate and differentiating HR practices across individuals within the organisation to address employees' unique work needs and preferences as well as reward them for their input. Despite the importance of HR differentiation, research has mainly focused on the recipients of such practices, overlooking the consequences of HR differentiation from co‐workers' perspective. This is a significant omission because a growing concern suggests that HR differentiation might be a double‐edged sword, as the presumed positive effects might only be confined to employees benefiting from it. Taking a first step, this paper offers a conceptual model that explains how co‐workers of a focal employee, who is entitled to an advantageous outcome through HR differentiation, are likely to react, either positively by showing contentment or negatively by showing anger, with behavioural consequences towards the focal employee and organisation. In so doing, we rely on deontic justice theory and explore contextual conditions at the individual and team level under which co‐workers react. As a result, our model can inspire future research by adopting a broader and more inclusive approach to HR differentiation, underlining the need for caution when implementing HR differentiation in a team setting.