Employment Stability Under Different Managerial Compensation Systems

Compensation design may influence the extent to which managerial decision-makers take a long-term perspective in managing important resources like employees. I hypothesize that organizations relying more heavily on long-term compensation incentives exhibit greater stability in employment, perhaps because of a greater concern among management with long-term effectiveness. I also hypothesize that employment stability is more feasible when employees are covered by variable pay plans, which permit labor cost reductions without cuts in employment. Using multiple years of employment, financial performance, and managerial compensation data on 156 organizations, support is found for both hypotheses

Gender Differences in Current and Starting Salaries: The Role of Performance, College Major, and Job Title

Starting and current salaries of 3,564 men and 1,053 women hired between 1976 and 1986 by a large, private firm were examined. Using a comprehensive model including year of hire, potential experience, education degree, college major, firm tenure, performance, and job title, men were found to have 5.8% higher current salaries. Among college graduates, men ~alized a 2.9% current salary advantage. Further analyses suggested that the bulk of the current salary disadvantage of women could be attributed to a one-time salary shortfall incurred at the time of hire. Although among college graduates, for example, differences in college major explained much of the starting salary advantage for men, an unexplained 4.8% advantage in starting salaries remained. Although women were more likely to leave the firm, correction for this potential source of sample selection bias did not change the pattern of results. Finally, we suggest that the fact that women experience a greater salary disadvantage at entry may stem from the smaller amount of job-relevant information available for applicants relative to current employees.

Measures of New Constructs or Old Ones? The Case of Organizational Commitment and Job Satisfaction

The construct validity of organizational commitment has recently been investigated in several studies. The authors of these studies have concluded that organizational commitment is a valid construct, sufficiently distinct from job satisfaction. Our re-analysis of data reported in these studies, however, suggests that the construct validity evidence is unconvincing. Analysis of meta-analytic results cast further doubt on the discriminant validity of organizational commitment as typically measured. Based on these findings, suggestions for future research are offered

Organizational Differences in Managerial Compensation and Financial Performance

The present study has two general purposes. First, based on the compensation strategy literature, we examine the extent to which organizations facing similar conditions make different managerial compensation decisions regarding base pay, bonus pay, and eligibility for long-term incentives. Second, working from expectancy and agency theory perspectives, we explore the consequences of these decisions for subsequent firm performance as measured by return on assets. Using longitudinal data on approximately 16,000 top and middle level managers and 200 organizations, significant between-organization differences in compensation decisions are found. The smallest organization effects are on the level of base pay. The largest organization effects are on bonus levels and eligibility for long-term incentives. In other words, our results suggest that organizations tend to distinguish themselves through decisions about pay contingency or variability rather than through decisions about the level of base pay. To study consequences, residualized measures (adjusted for employee and job factors) of organization pay level and pay mix are used. Pay level is not associated with organization financial performance. On the other hand, greater contingency of pay in the form of bonuses and long-term incentives is associated with better financial performance

Salaries, Salary Growth, and Promotions of Men and Women in a Large, Private Firm

[Excerpt] Salaries, promotions, and salary growth of men and women in a large, diversified firm were examined for the years 1980 through 1986. Consistent with other studies, men\u27s average salary was higher than women\u27s average salary. However, statistical adjustment for gender differences in-education, tenure, time at level, experience, and job level substantially reduced the salary advantage of men over women. Although the average salary of men was higher than that of women in 1980 and 1986, women actually received greater numbers of promotions, as well as larger percentage salary increases between 1980 and 1986. One reason for women\u27s salary growth advantage was the higher average performance ratings of women between 1980 and 1986. One important reason for women\u27s promotion advantage was their greater likelihood of being in (lower) job levels where promotion opportunities were greatest

Earnings and Percentage Female: A Longitudinal Study

Comparable worth is designed to raise the earnings of women assumed to be penalized for working in female-dominated occupations. Comparable worth advocates assume that the relation between earnings and percentage female in an occupation is due to crowding or other forms of discrimination. An alternative explanation is that the relation stems from women freely choosing different occupations. In other words, preferences are an omitted variable. In our study, we first replicate previous research that has used cross-sectional data to find a negative relation between earnings and percentage female (in an occupation) for both men and women. However, using longitudinal data to control for time-invariant omitted variables, we find that while men\u27s estimated penalty is not reduced, the percentage female penalty falls substantially for women and is not statistically significant. These results imply that estimates of the percentage female effect based on cross-sectional data may be inflated for women. An exception to this general finding is that women with intermittent labor force participation do experience a sizeable penalty for working in female-dominated occupations. Hence, this pattern of results suggests that a comparable worth policy would most likely benefit women with discontinuous employment--perhaps an unintended outcome

Job Search Strategies and Labor Market Success

This study examines the relation between job search strategies and two measures of labor market success, starting salary and number of job offers received, in a sample of graduating MBAs. Controlling for applicant and market characteristics, we find that job search strategy is related to both starting salary and number of job offers, but most strongly to the latter measure of labor market success. Beginning the job search earlier, greater numbers of employer contacts, and not accepting the first job offer all contribute to greater labor market success. These findings suggest that individuals take concrete steps to achieve greater labor market success than would be expected based on their personal attributes and market conditions

Starting Salary Differences Between Women and Men: Organization-Level Findings and an Analysis of Current Policy Options

This study examined the starting salaries paid by over 250 employers to 2,800 university graduates. Of the overall female-male salary difference of $4,396, the majority, or$3,175 (72%), occurred between employers; $1,221 (28$1,221 (28%) of the female-male pay difference. Although adjustment for qualifications such as degree level, grade point average, and college major reduced the pay difference between women and men, our findings indicate that, on average, the same employer pays graduating women 3.5% to 5.8% less than graduating men with similar qualifications

Employee Compensation: Research and Practice

[Excerpt] An organization has the potential to remain viable only so long as its members choose to participate and engage in necessary role behaviors (March & Simon, 1958; Katz & Kahn, 1966). To elicit these contributions, an organization must provide inducements that are of value to its members. This exchange or transaction process is at the core of the employment relationship and can be viewed as a type of contract, explicit or implicit, that imposes reciprocal obligations on the parties (Barnard, 1936; Simon, 1951; Williamson, 1975; Rousseau, 1990). At the heart of that exchange are decisions by employers and employees regarding compensation

Interviewer Assessments of Applicant Fit : An Exploratory Investigation

Although both strategic management theorists and practicing recruiters endorse selecting applicants on the basis of fit, precise delineation of fit in a selection context remains elusive. Moreover, the majority of previous work in this area has been based on anecdotes, case studies, or prescriptions rather than empirical evidence. The present investigation examines interviewers\u27 assessments of job applicants in terms of both general and firm-specific employability (i.e., fit). Results suggest that (1) assessments of general employability differ from firm-specific assessments, (2) there is a firm-specific component to interviewers\u27 evaluations of job applicants, and (3) interpersonal skills, goal orientation, and physical attractiveness contribute to assessments of fit (holding general employability constant), while objective qualifications (e.g., grade point average, extracurricular offices, years experience) do not. Suggestions for future research are offered