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Theorizing the relationship between discretionary employee benefits and individual performance
Abstract
The literature on compensation has devoted little attention to the relationship between discretionary employee benefits and individual performance, perhaps because benefits are allocated equally to large groups of employees, are not tied to individual performance, and are viewed as entitlements. Discretionary benefits include all the benefits an employer provides to employees voluntarily (i.e., not legally required). Employees can use internet search tools to make comparisons between focal and referent firms of their expenditures on discretionary benefits, which can symbolize employer support for employee well-being or invoke perceptions of equity. In our paper, we provide a novel insight into the relationship between discretionary benefits and employee individual performance through a theoretical lens that combines insights from organizational support theory and equity theory shaped by perceptions of social and economic exchange relationships. In our conceptual model we develop theoretical logic that explains that perceived discretionary benefits, moderated by benefits satisfaction and mediated by perceived organizational support and perceived equity, are linked to individual performance. The paper concludes with a discussion of the theoretical implications and directions for future research.
... It is assumed that compensation and benefits play a role in boosting the employee's productivity. The pay literature indicates that compensation and benefits generally able to improve employee's job performance [13] . In addition, it is expected that those received compensation and benefits above industry norms will show high job performance. ...
... In recent years, the company has come to believe that remuneration and benefits are crucial to boosting and increasing employee performance. Researchers like David and Steve [13] suggested that compensation policies should include employee incentives that encourage the pursuit of novel solutions. According to Armstrong [14] , compensation management is one of the key pillars of human resources management. ...
... Hence, all the three hypotheses developed for this study are supported. Along the same line, the findings in this study are consistent with previous research such as David and Steve [13] who claimed there is a strong association between compensation and employee's performance. On the other hand, other researcher also suggested that compensation has one-way relationship with employee's performance [15] . ...
Human resource management practices are crucial especially in the private health care sector. This could be because managing personnel in the health care sector is particularly challenging, therefore meeting every employee’s needs is crucial. Recently, the health care sector experiences a scarcity and unbalanced distribution of employees due to the job turnover. In addition, employee’s performance in private health care sector has shown slightly drop due to the dissatisfaction of employees toward human resource practices such as unattractive compensation and rewards packages, bias in performance appraisal, lack of training and development, and many more. Therefore, this study is conducted to examine the impact of human resource practices toward employee’s job performance. Specifically, there are three main human resource practices observed as a factor that contribute to employee’s job performance. The three human resource practices are compensation and benefits, performance appraisal, and training and development. There were four private hospitals operating in Selangor, Malaysia chosen as a sample for this study. The private hospitals are; KPJ Selangor Specialist Hospital, Columbia Asia Hospital Puchong, Assunta Hospital PJ and Sunway Medical Centre. Out of these four private hospitals, there were about 291 employees that working as front desk, nurses, clinical workers, and administration staff have been chosen as a respondent in this study. The questionnaires were distributed to the respondents by hand. The data collected analysed by using SPSS version 29. The findings indicate that employee’s job performance in Malaysia private hospitals is positively correlated with compensation and benefits. Employees feel motivated with compensation which encouraged them to increase their production and work more efficiently. Additionally, the findings also suggest that performance appraisal and training and development significantly contribute to employee’s job performance.
... According to Lawler, thoughtfully created benefit plans can support a happy workplace, which raises employee engagement and satisfaction levels. Furthermore, (Balkin & Werner, 2023) research indicates that engaged workers are more likely to be satisfied with their perks. This emphasizes how crucial it is to match perks to needs and preferences of employees in order to increase engagement. ...
... They contend that employee engagement and satisfaction might increase when benefits are customized to satisfy their wide range of needs. This implies that a one-size-fits-all approach to benefits may not be successful in increasing employee engagement, and that businesses should make an effort to provide a variety of benefits that are tailored to the particular requirements of their workforce (Deadrick & Gibson, 2007) (Balkin & Werner, 2023). Providing benefits that correspond with the choices, needs, and values of employees can help firms improve employee happiness, commitment, and engagement. ...
This research investigates the impact of various HR policies on millennial employee engagement.Through a comprehensive literature review and empirical analysis, the study identifies key factors that influence millennial engagement. Primary data was collected using a structured questionnaire from 232 working millennials in the city of New Delhi, NCR. Reliability and validity of the questionnaire have been tested. The results indicate a positive relationship between employee training, flexible work practices, digital orientation, and employee benefits with employee engagement. Conversely, employee decision-making and participation, as well as pay for
performance management and pay for performance, show a negative relationship with employee engagement. These findings highlight the importance of aligning HR policies with the preferences and values of millennials to enhance their engagement and ultimately improve organizational performance.
KEYWORDS: Millennials, Employee Engagement, HR practices
... Equity theory explains that when an employee recognizes that he/she is overpaid compared to other individuals at referent firms, he/she would be motivated to increase their work effort in order to justify the overpayment. 24 Therefore, in this study, we used the real income level to measure the level of financial rewards PCPs got, used the expected income level to measure the perceived over-or less-paid level of PCPs, and used the percentage of performed-based income to measure the extent of linkage between financial rewards and work outputs. As the basis of two theories is the preference of workers on monetary income, we also measured the preference for monetary income through participants ranking the all financial and non-financial motivating factors in questionnaire. ...
... 29,30 The Cronbach's alphas for the three dimensions were 0.888, 0.835, and 0.893, respectively, being acceptable in reliability test. For the three dimensions, the total scores were divided into three levels of job performance, including task performance (≤16, 17-20, 21-24), contextual performance (≤20, [21][22][23][24][25][26][27][28][29][30] and learning performance (≤12, [13][14][15][16][17][18]. ...
Objective:
This study aims to explore the association between financial incentives and job performance of primary care providers (PCPs) from a nationally representative survey in China.
Methods:
This is a cross-sectional study conducted in six provinces of China in 2019. A sample of 1388 PCPs participated in the survey was selected using a stratified cluster sampling method. A self-administered questionnaire composed of socio-demographic, work-related characteristics, financial incentives received by PCPs and their job performance was used. The association between financial incentives and job performance are analyzed using logistic regression model. The significance level for statistics is set at P < 0.05.
Results:
The PCPs with higher real income level have lower contextual performance (OR = 0.67, p < 0.01) and learning performance (OR = 0.63, p < 0.01) than those with lower real income level. The PCPs with the expectation of income rising above 50% have lower contextual performance (OR = 0.66, p < 0.05) than those with the expectation of income rising above 20%. The PCPs with preference for monetary income have lower task performance (OR = 0.62, p < 0.01), contextual performance (OR = 0.55, p < 0.01) and learning performance (OR = 0.57, p < 0.01) than those without lower preference for monetary income. The percent of performance-based income has no significant effect on all the three dimensions of job performance.
Conclusion:
Financial incentive was regarded as the most important motivating factor of PCPs in China, but existing financial incentives received by PCPs could not improve their job performance. The findings can be attributed to the unsatisfying total income level, "intrinsic motivation crowding out" effect, and the poorly designed performance-based salary system for PCPs. Policy attention is called for to continuing efforts and system reform to increase the total income level for PCPs in China, and improve the performance-based salary system to better motivate PCPs and improve their job performance.
... company an attractive place to work and enhance job satisfaction (Balkin and Werner, 2023;Memili et al., 2023). Additionally, it fosters a positive and motivated workforce that is more likely to contribute to the company's success (Coetzee and Stoltz, 2015). ...
In a period marked by pressing worldwide issues such as post-COVID-19 global economic recovery, climate change, societal disparities, and labor market complexities, the importance of sustainability is of utmost significance. Thus, employers must assess the pros and cons of implementing and integrating sustainable practices into their operations. This chapter explores emerging trends in sustainable workforce management, solution methodologies, and practices enhancing decision-making and policy development, aligned with SDG 8 goal for inclusive, sustainable economic growth and full, productive employment. More specifically, this chapter explores and analyzes three topics that, when combined, provide a comprehensive approach to addressing current and future challenges in achieving the targets of SDG 8. The first topic investigates emerging trends in sustainable workforce management to adopt flexible work arrangements. The second topic explores solution approaches, emphasizing the role of operations research techniques to assess the impact of flexible work arrangements. The third topic emphasizes integration sustainable practices and policies into decision-making processes through stakeholder collaboration, including both employees and employers. This requires regulatory frameworks and development-oriented policies to create resilient, future-oriented workforce management systems.
... According to Foa and Foa (1980), resources may be classified into six categories: products, services, money, status, information, and love. They contend that the analysis of resources can be based on the universality of value (i.e., money has a relatively constant value) and the concreteness of the resource, i.e. a financial incentive is very objective and tangible (Balkin & Werner, 2023, but a promise for future development may be less concrete and more symbolic (Salem et al., 2023). According to Cropanzano and Mitchell (2005), these characteristics are frequently divided into two categories of resources: socioemotional and economic. ...
... Research on compensation shows that when employees discover their advantages through comparison of disposable income between organizations, they generate a sense of fairness through economic exchange, stimulate a comparison favorability impression of the organization, and ultimately increase their desire for increased performance. In other words, when employees perceive that their efforts are rewarded, there is a motivation to reciprocate higher levels of individual performance to the organization [28]. However, as organizations increasingly implement personalized compensation systems, researchers have found that peer comparison often reduces employee perceived fairness. ...
Previous studies suggest that career plateaus have detrimental effects on employees’ satisfaction and performance. Psychological distress generated by career plateaus hinders organizations from achieving the United Nations’ Sustainable Development Goals (UNSDGs) of ‘health and well-being at work’ (SDG-3) and ‘decent work’ (SDG-8). How to mitigate the negative impact of career plateaus becomes the key to enhancing sustainable well-being at work. However, the influencing mechanisms of career plateaus have not been fully discussed, especially regarding employees’ psychological processes. Drawing on the equity theory and the conservation of resource theory, this study examines the influence mechanism of career plateaus on employee job performance via organizational justice, with positive psychological capital moderating the process. Mplus and the Process macro for SPSS are adopted to conduct confirmatory factor analysis and regression analyses. Building on 368 supervisor–employee paired questionnaires with an average of eight employees per supervisor, empirical results indicate that employees who encounter career plateaus reduce their perceived organizational justice to discourage them from performing well in their jobs. Positive psychological capital, however, mitigates the negative effects of career plateaus on perceived organizational justice and the indirect effects of career plateaus on job performance through organizational justice. Theoretically, this study advances our understanding of the influence mechanism of career plateaus on employees’ job performance. Practical implications are also drawn for organizations to alleviate the negative impact of career plateaus to promote sustainable well-being at work.
... The starting point for the development of remuneration policies varies considerably among the different institutional types of enterprises. Research on equity theory and efficiency wages suggests that higher pay and benefits packages mean higher performance, which is also evidently the positive feedback that follows from the compensation and benefit management system [1]. In comparison, the average salary in Chinese central enterprises is lower than the average salary in jointstock and private enterprises, and accordingly, the corporate efficiency of Chinese state-owned enterprises is much lower than that of private enterprises. ...
The purpose of this paper is to analyse Huawei's approaches to compensation and benefit management before and after COVID-19 through an analysis of past literature, combined with Huawei's actual compensation and benefit adjustment measures, focusing on how Huawei responded to the epidemic and dealt with the positive impact conveyed by its compensation and benefit management system. The main contents include the motivations for Huawei's payroll payments, the restructuring of its performance appraisal system and incentives before and after the epidemic. This study found that Huawei continued to improve its compensation and benefit management system before and after the epidemic, not only to maintain the level of employee benefits, but also so that the compensation program remained effective and did not pose a risk to employee benefits. In addition, Huawei's strategies for managing compensation and benefits have important implications for other internet communication companies.
... Although the existing research is persistently concerned about the relationship between reward satisfaction and work performance, empirical investigations barely pay attention to TRS as a multidimensional construct [10,11]. Moreover, the extant research pays far more attention to financial reward satisfaction than to non-financial reward satisfaction [3,7,10,12]. In addition, the conclusions of the existing studies are controversial. ...
It has recently become an incentive management challenge for organizations to implement a total reward system. Existing variable-centered studies have neglected to explore the incentive effect of a total reward system from the perspective of individual differences. Our study aimed to initially investigate the profiles of total reward satisfaction (TRS) and the impact of these profiles on work performance. Using a person-centered approach, two studies were conducted using retail industry employees in China as samples. Study 1 identified the TRS profiles of 429 samples using latent profile analysis. Study 2 replicated Study 1's configuration of profiles and examined the relationship of these profiles with demographic variables and work performance using 885 samples. Our results were as follows: (1) there were four quantitatively and qualitatively distinct profiles (subpopulations) of TRS, namely, dissatisfied (DS), development and career opportunities satisfied-dominant (DOS-dominant), work-life balance satisfied-dominant (WLS-dominant), and compensation satisfied-dominant (CS-dominant); (2) demographic variables involving gender, age, education, and position level affected the likelihood of membership in each TRS profile; and (3) the four profiles predicted different levels of work performance, or more specifically, different levels of task and contextual performance. The task and contextual performance of the four subpopulations listed from best to worst were WLS-dominant, DOS-dominant, CS-dominant, and DS. For practical management, organizations should customize a classified total reward system according to employee subpopulations to improve work performance.
Purpose
Understanding employees’ multi-dimensional motivations is at the core of realizing the potential of a well-designed human resource (HR) system. This study aims to investigate whether the effects of HR practices on employee motivations, and their performance would be dependent on the service orientation of HR department.
Design/methodology/approach
The authors collected data in two surveys: a pilot survey and a main survey with a two-wave design. The pilot survey with 93 respondents was to verify the newly developed HR service orientation scale. In the main survey, a total of 276 supervisor-subordinate pairs from 48 companies were valid for analysis.
Findings
The authors find support for their hypothesis that promotion-oriented motivation mediates the relationship between discretionary HR practices and employee outcomes [in-role performance and organizational citizenship behavior (OCB)]. Furthermore, the indirect effect of discretionary HR practices on employee outcomes is stronger when the HR service orientation is higher. Transactional HR practices, however, are not evidenced to relate to employee prevention-focused motivation and outcomes.
Practical implications
The findings illustrate a comprehensive process of HR practices on employees’ multi-dimensional motivations. High service skills of HR professionals in handling internal employees’ needs could amplify employees’ promotion-focused motives, which in turn increase their in-role performance and OCB.
Originality/value
In sum, the authors' study contributes to both human resource management (HRM) and employee motivation literature by demonstrating the different impacts of discretionary and transactional HR practices on employees’ motivations. In addition, by revealing HR service orientation as an important contingency factor, the authors shed greater light on when and how HR practices can motivate employees.
This study examined a model of the antecedents and consequences of perceived organizational support (POS) and leader-member exchange (LMX). It was predicted that organizational justice (procedural and distributive justice) and organizational practices that provide recognition to the employee (feelings of inclusion and recognition from upper management) would influence POS. For LMX, it was predicted that leader reward (distributive justice and contingent rewards) and punishment behavior would be important antecedents. Results based on a sample of 211 employee-supervisor dyads indicated that organizational justice, inclusion, and recognition were related to POS and contingent rewards were related to LMX. In terms of consequences, POS was related to employee commitment and organizational citizenship behavior, whereas LMX predicted performance ratings.
This study aims to find the significance of diversification strategy towards the performance of insurance companies in Sri Lanka, which will help the insurance companies in strategy-making process to improve the organization's performance. This study uses a secondary panel database of ten insurance companies operating in the market from 2009 to 2019. As the analysis tool ordinary least square method is used. The study used fixed effect, random effect, and pooled effect models for the data analysis. Results show that the concentric diversification strategy and the Core business-based diversification strategy have an insignificant relationship between Specialization Ratio and Return on Equity (ROE). Related and unrelated diversification showed a significant relationship with the Specialization ratio. The operating efficiency ratio negatively affects performance at all diversification strategies except relatedly diversified companies. Liquidity ratio and claims paid showed a negative insignificance relationship on performance in every diversification. Furthermore, it shows that diversifying the company may significantly influence its performance by negatively affecting the Specialization and ROE. The findings are much helpful to strategy makers in insurance companies which help them to build the most profitable and appropriate diversification strategy to improve the performance of the insurance companies.
Keywords: Diversification strategy, Organizational performance, Ordinary Least Square Method, Insurance companies
Purpose
The purpose of this paper is to apply and test a theory specifying which resources are most important for employee engagement. Specifically, this paper draws on resource theory to outline six resources (love, status, services, information, goods, money) provided by the organization that employees will exchange for engagement.
Design/methodology/approach
The paper’s main focus is theoretical, outlining how resource theory provides a more nuanced classification and understanding of the workplace antecedents of engagement. Specifically, engagement is proposed to represent love as a resource, since engagement represents the whole-hearted investment of oneself. Thus, employees will exchange engagement for employer resources that similarly denote individual warmth and caring. The resource classification is assessed using engagement data from IBM NZ (n=13,929).
Findings
The theoretical analysis identifies eight workplace resources, five of which are proposed to be exchanged for engagement: mission, vision and values; opportunities for development; supportive leadership; job resources; and teamwork. Subsequent empirical analysis of IBM NZ data identified three similar constructs, with two being stronger predictors of employee engagement: learning and development; and vision and purpose. This provides some initial support for the application of resource theory to engagement.
Practical implications
Resource theory enables the identification of specific resources that will more strongly facilitate engagement: those which demonstrate warmth and caring for the employee.
Originality/value
Resource theory adds specificity in identifying which workplace resources will be exchanged for engagement, and therefore extends existing models of engagement, and is valuable for future employee engagement research and practice.
The authors reviewed more than 70 studies concerning employees' general belief that their work organization values their contribution and cares about their well-being (perceived organizational support; POS). A meta-analysis indicated that 3 major categories of beneficial treatment received by employees (i.e., fairness, supervisor support, and organizational rewards and favorable job conditions) were associated with POS. POS, in turn, was related to outcomes favorable to employees (e.g., job satisfaction, positive mood) and the organization (e.g., affective commitment, performance, and lessened withdrawal behavior). These relationships depended on processes assumed by organizational support theory: employees' belief that the organization's actions were discretionary, feeling of obligation to aid the organization, fulfillment of socioemotional needs, and performance-reward expectancies.
Four hundred thirteen postal employees were surveyed to investigate reciprocation's role in the relationships of perceived organizational support (POS) with employees' affective organizational commitment and job performance. The authors found that (a) POS was positively related to employees' felt obligation to care about the organization's welfare and to help the organization reach its objectives; (b) felt obligation mediated the associations of POS with affective commitment, organizational spontaneity, and in-role performance; and (c) the relationship between POS and felt obligation increased with employees' acceptance of the reciprocity norm as applied to work organizations. Positive mood also mediated the relationships of POS with affective commitment and organizational spontaneity. The pattern of findings is consistent with organizational support theory's assumption that POS strengthens affective commitment and performance by a reciprocation process.
Recently, there has been a movement towards pay openness in the workplace. However, the pay
communication literature is narrow in scope, considering only a limited range of outcomes,which
makes the reasoning for this recent trend of pay openness practices hard to determine. Therefore,
the purpose of this paper is to encourage expansion of the pay communication research, specifically
focusing on pay openness practices. A definitive description of pay communication, as well
as its two extremes (pay openness and pay secrecy) are provided. Additionally, a typology of
the two aspects of pay communication (organizational restriction and employee restriction)
that has been identified from the literature is developed. Based on the organizational justice
framework, propositions are developed for pay openness practices' influence on previously
overlooked dependent variables such as workplace deviance, organizational citizenship behaviors,
organizational commitment, and perceived organizational support. Several propositions, models,
and additional new directions are presented for future research.
Organizational support theory (OST) proposes that employees form a generalized perception concerning the extent to which the organization values their contributions and cares about their well-being (perceived organizational support, or POS). Based on hypotheses involving social exchange, attribution, and self-enhancement, we carried out a meta-analytic assessment of OST using results from 558 studies. OST was generally successful in its predictions concerning both the antecedents of POS (leadership, employee-organization context, human resource practices, and working conditions) and its consequences (employee’s orientation toward the organization and work, employee performance, and well-being). Notably, OST successfully predicted the relative magnitudes of different relationships, influences of process variables, and mediational effects. General implications of the findings for OST and research on POS are discussed.
Taking a more empirical approach to theory development, in this chapter, Marie Mitchell, Russel Cropanzano, and David Quisenberry raise the question of what social exchange theory has contributed to organizational research. Scholars generally agree on the reciprocal nature of exchange patterns, but theories of social exchange differ in terms of their explanation of the resources exchanged and how those resources are perceived by exchange partners. Contemporary models of social exchange incorporate interpersonal relationships into their exchange theories, but these models differ in how they conceptualize relational patterns. Three broad conceptual paradigms are distinguished: models that emphasize relationship formation, attributes of the relationship as resources to be exchanged, and relationships as a social context that changes the rules by which exchanges are conducted. The authors integrate strengths of each approach to provide a research agenda that can extend social exchange theorizing by providing a better description of what is exchanged and how meaning is derived in exchange relations.
Organizational justice has the potential to create powerful benefits for organizations and employees alike.
These include greater trust and commitment, improved job performance, more helpful citizenship behaviors,
improved customer satisfaction, and diminished conflict. We demonstrate the management of
organizational justice with some suggestions for building fairness into widely used managerial activities.
These include hiring, performance appraisal, reward systems, conflict management, and downsizing.
Evidence is presented that (a) employees in an organization form global beliefs concerning the extent to which the organization values their contributions and cares about their well-being, (b) such perceived organizational support reduces absenteeism, and (c) the relation between perceived organizational support and absenteeism is greater for employees with a strong exchange ideology than those with a weak exchange ideology. These findings support the social exchange view that employees’ commitment to the organization is strongly influenced by their perception of the organization’s commitment to them. Perceived organizational support is assumed to increase the employee’s affective attachment to the organization and his or her expectancy that greater effort toward meeting organizational goals will be rewarded. The extent to which these factors increase work effort would depend on the strength of the employee’s exchange ideology favoring the trade of work effort for material and symbolic benefits.
This chapter provides a general review of the research conducted over the past two decades on individuals’ conceptions of equity and distributive justice and their reactions to inequity. Various theoretical formulations are identified and important topics for further theoretical development and empirical investigation are discussed. In conclusion, the authors suggest that micro-level concepts of distributive justice have certain limitations. Consideration of more macrolevel concepts suggests possibilities for integrating equity and distributive justice theories with sociological theories of power, conflict, and collective action. This integration, if achieved, would bring notions of justice to the forefront in the analysis of social change.
We propose six hypotheses that relate employee, internal, and external inequities to changes in performance. We test these hypotheses with a sample of 362 Major League Baseball players. The findings showed that overpayment (as measured by actual employee and external inequities) is a significant predictor of positive performance changes, underpayment is a significant predictor of negative performance changes, and employee equity is a greater predictor of change in performance than internal equity.
Purpose
The purpose of this paper is to examine whether organizations can encourage the loyalty of their international employees through the composition of their expatriate packages.
Design/methodology/approach
Two separate but complementary theoretical perspectives – the total reward approach, and the exchange‐based construct of state of the psychological contract (SPC) – are used to explain the affective commitment of expatriates. Hypotheses are developed and tested on a sample of 263 assigned and self‐initiated expatriates from Finland.
Findings
A positive SPC relating to tangible universal rewards (i.e. the compensation package traditionally considered in previous expatriate research) is not linked to an increase in the overall affective commitment of expatriates. In contrast, a very strong positive relationship was found between the expatriates' SPC relating to total rewards (which include intangible particularistic rewards (IPR)) and affective commitment.
Research limitations/implications
The sample only includes highly educated Finnish expatriates, which limits the external validity of the results. Moreover, the cross‐sectional nature of this study does not allow for confirmation of the cause‐effect relationship between the SPC and affective commitment.
Practical implications
The results suggest that, as a rule, organizations could improve the retention of their valuable international employees via the exchange of IPR usually found in socio‐emotional and trusting employment relationships.
Originality/value
First, this paper focuses on expatriate perceptions regarding their compensation. Second, it applies the “concreteness” and “particularism” dimensions developed by Foa and Foa to distinguish between the constituting components of the bundle of total rewards and provide an evaluation‐oriented measure of the SPC relating to this bundle. Third, this approach enables explaining expatriates' affective commitment.
Employees develop exchange relationships both with organizations and immediate superiors, as evidenced by research on perceived organizational support (POS) and leader-member exchange (LMX), respectively. Despite conceptual similarities between these two constructs, theoretical development and research has proceeded independently. In an attempt to integrate these literatures, we developed and tested a model of the antecedents and consequences of POS and LMX, based on social exchange theory. Results indicated that POS and LMX have unique antecedents and are differentially related to outcome variables, providing support for the importance of both types of exchanges.
Social exchange theory (SET) is one the most influential conceptual paradigms in organizational behavior. Despite its usefulness, theoretical ambiguities within SET remain. As a consequence, tests of the model, as well as its applications, tend to rely on an incompletely specified set of ideas. The authors address conceptual difficulties and highlight areas in need of additional research. In so doing, they pay special attention to four issues: (a) the roots of the conceptual ambiguities, (b) norms and rules of exchange, (c) nature of the resources being exchanged, and (d) social exchange relationships.
Tested a proposed order among 6 classes of interpersonal reinforcers or resources (love, status, information, money, goods, and services), plotted on the 2 coordinates of particularism and concreteness. 3 interrelated studies were conducted with undergraduates (n = 317), dealing respectively, with perceived similarity of reinforcers, their exchange, and their structural invariance. Results support the order by showing that (a) reinforcers proximal in the order were perceived as similar and substituted for 1 another more than the distal ones; (b) for each resource given there was 1 most frequently chosen for exchange; and (c) the intercorrelation pattern of resources was invariant across exchange situations. Implications of the findings for interpersonal reinforcement, social exchange theory, and experimental games studies are suggested. Some differential properties of the resources, related to their order, are discussed in reference to problems of behavior in the city. (33 ref.) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Argues that a category of performance called citizenship behavior is important in organizations and not easily explained by the same incentives that induce entry, conformity to contractual role prescriptions, or high production. Data were collected from 422 employees and their supervisors from 58 departments of 2 banks to examine the nature and predictors of citizenship behavior. Results suggest that citizenship behavior includes at least 2 dimensions: altruism, or helping specific persons, and generalized compliance, a more impersonal form of conscientious citizenship. Job satisfaction, as a measure of chronic mood state, showed a direct predictive path to altruism but not generalized compliance. Rural background had direct effects on both dimensions of citizenship behavior. The predictive power of other variables (e.g., leader supportiveness as assessed independently by co-workers and extraversion and neuroticism as assessed by the Maudsley Personality Inventory) varied across the 2 dimensions of citizenship behavior. (31 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Employed U. G. Foa and E. B. Foa's (1974) resource exchange theory to examine the types and patterns of exchanges involved in 57 college students' interpersonal interactions. Two judgment tasks were used to test both the functional and structural aspects of this theory. The dimensions of particularism and concreteness were hypothesized to underlie the 6 resource categories of love, status, information, money, goods, and services. In addition, resources perceived to be in the same category were expected to be exchanged with a higher probability than resources in different categories. Support for both the structural and the functional relations among the resource categories was consistent not with the initial classification of the behaviors used to represent the 6 resource categories but with the meaning associated with the behaviors. (22 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
A theory of social inequity, with special consideration given to wage inequities is presented. A special case of Festinger's cognitive dissonance, the theory specifies the conditions under which inequity will arise and the means by which it may be reduced or eliminated. Observational field studies supporting the theory and laboratory experiments designed to test certain aspects of it are described. (20 ref.) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Many have noted the lack of human resource management research on employee benefits, which is surprising because employer-sponsored benefits are a primary concern of executives and employees alike. Moreover, of special interest to scholars, benefits provide a unique opportunity to examine fundamental theoretical and empirical questions about employee behavior and contemporary employment relationships. This paper provides a foundation for such research by providing an overview of the context from which U.S. employer-provided benefit programs evolved and the contemporary state of benefits research in human resource management. Propositions related to primary employee benefit research are provided.
Agency theory highlights losses in productivity that may occur when the interests of owners and employees are imperfectly aligned. Pay for performance has been proposed as a solution to this problem. Using a real-effort laboratory experiment with salient incentives, we compared pay-for-performance and fixed-salary compensation. The former achieved significantly higher firm productivity through both sorting and incentive effects. In particular, more productive employees selected pay for performance, and employees on average, regardless of their preferred compensation scheme, produced more under it. However, more risk-averse individuals were less likely to select pay for performance and less responsive to its incentives.
This study examined the economic and social exchanges between employee and employer within a model in which perceived organizational support and affective and continuance commitment served as predictors and performance, altruism citizenship behavior, absence, and lateness served as outcomes. Two samples were used. 384 master of business administration students participated in Study 1, and Study 2 consisted of 181 aerospace employees and their managers, working for a single organization. Both studies supported the distinctiveness between economic and social exchanges. Study 2 showed the overall fit of the proposed model was adequate, though only social exchange, and not economic exchange, directly predicted the performance outcomes. These results suggest the importance of perceived exchanges between employee and employer.
This study extends previous research on the influence of CEO pay inequity on CEOs' decision-making by examining the relationship in the acquisition context. Focusing on CEOs' compensation vis-à-vis external and internal referents, we find that underpaid CEOs pay higher acquisition premiums and that overpaid CEOs pay lower premiums, although this tendency is reduced as the level of overpayment increases, creating a U-shaped relationship. We further find that the CEO-TMT pay gap moderates the relationship between CEO under-/overpayment and acquisition premiums by adjusting CEOs' perceptions of pay inequity and motivation to restore inequity through their higher or lower sense of self-importance. The findings of this study suggest that CEOs' decision-making is strongly influenced by their framing of gains and losses and the perception of pay inequity vis-à-vis external and internal referents.
This research examines how to recompense customers, from a social resource theory perspective, which portrays financial compensation as the act of offering the resource “money” to customers during a service recovery attempt. This resource can differ in its particularism (is the money offered in a more or less personal way?) and concreteness (is the money offered in a more or less tangible way?), which are shown in two experiments to affect recovery outcomes. Specifically, personal compensation accompanied by a handwritten note from the service person (vs. impersonal: a typewritten note from the firm) fosters recovery satisfaction, mediated by justice perceptions, and reciprocal customer behavior (tipping, cross-buying), mediated by an obligation to reciprocate. Tangible compensation in the form of a banknote or banknote-like coupon (vs. intangible: a credit entry) also fosters reciprocal customer behavior via the obligation to reciprocate. In both studies, relationship strength amplifies the indirect effect of compensation’s particularism on recovery satisfaction. As a theoretical contribution, we show that the way the monetary resource is presented matters for service recovery. As a major managerial takeaway, this research presents personal (vs. impersonal) compensation as an impactful property of compensation: It increases recovery outcomes without additional monetary costs. Further, managers learn that handing over the money in a personal and tangible way can be a way to increase monetary returns to the firm in the form of tipping and cross-buying.
In any investigation of a causal relationship between an X and a Y, the time when X and Y are measured is crucial for determining whether X causes Y, as well as the true strength of that relationship. Using past research and a review of current research, we develop a set of XY configurations that describe the main ways that causal relationships are represented in theory and tested in research. We discuss the theoretical. methodological, and analytical issues pertaining to when we measure X and Y and discuss the implications of this analysis for constructing better organizational theories.
Building upon labor market theory, we investigate whether under- or over-investing in CEOs (i.e., strategically paying above or below a CEO's predicted labor market compensation rate) affects long-term firm value and whether there are diminishing returns to these investments. Our results indicate that investments in CEOs are positively related to long-term firm value and that the relationship diminishes, eventually becoming negative, as investments increase.
The process of exchange is almost continual in human interactions, and appears to have characteristics peculiar to itself, and to generate affect, motivation, and behavior that cannot be predicted unless exchange processes are understood. This chapter describes two major concepts relating to the perception of justice and injustice; the concept of relative deprivation and the complementary concept of relative gratification. All dissatisfaction and low morale are related to a person's suffering injustice in social exchanges. However, a significant portion of cases can be usefully explained by invoking injustice as an explanatory concept. In the theory of inequity, both the antecedents and consequences of perceived injustice have been stated in terms that permit quite specific predictions to be made about the behavior of persons entering social exchanges. Relative deprivation and distributive justice, as theoretical concepts, specify some of the conditions that arouse perceptions of injustice and complementarily, the conditions that lead men to feel that their relations with others are just. The need for much additional research notwithstanding, the theoretical analyses that have been made of injustice in social exchanges should result not only in a better general understanding of the phenomenon, but should lead to a degree of social control not previously possible. The experience of injustice need not be an accepted fact of life.
Although the vast majority of U.S. firms follow a policy of pay secrecy, research provides a limited understanding of its overall utility to organizations. Building on signaling theory, we develop and test a model of the incentive and sorting effects of pay secrecy-a pay communication policy that limits employees' access to pay-related information and discourages the discussion of pay issues-under varying pay-for-performance (PFP) system characteristics. Results of a multiround laboratory simulation largely support the proposed moderated-mediation model. They indicate that pay secrecy has an adverse impact on individual task performance that is mediated by PFP perceptions, amplified when pay determination criteria are relative (as opposed to absolute), and attenuated when performance assessment is objective (as opposed to subjective). Results also indicate that pay secrecy has a similar adverse effect on participant continuation intentions (mediated through PFP perceptions, amplified when pay determination criteria are relative, and attenuated when performance assessment is objective), particularly among high performers. These findings suggest that weak signals associated with a particular managerial practice may become salient when interpreted in the context of other practice-based signals and that, under such conditions, even weak signals may drive negative-oriented inferences, having important behavioral implications.
Pay secrecy is a contentious issue in many organizations and a controversial one in our society. However, there has been little scholarly research on this topic. We hope to address this void by exposing the complexity of pay secrecy as a construct. What are its costs and benefits? What factors affect the link between pay secrecy and the extent to which it is a cost or benefit? This article reveals the complexity of pay secrecy and, we hope, generates ideas for much new research in the broad management field.
The equity theory of motivation has received strong support within sport settings; however, research had focused almost solely on relationships in which there is inequity in underpayment but not that of overpayment. Using equity theory, it was argued that athletes attempt to restore equity to a situation of overpayment by increasing their performance, thereby justifying their overpayment. This prediction was supported for major league baseball teams (N=16) moving to a new stadium as performance increased after the move. Discussion focused on the implications of inequity in overpayment for coaches and sport psychologists.
We suggest that a firm's benefits can relate to important organizational outcomes that have strategic implications. We propose a number of mechanisms that could relate benefits to strategic outcomes, including the notion that benefits can help attract and retain the type of employees who are most likely to perform in ways consistent with the firms’ strategies. We illustrate this with the case of supplemental retirement benefits in an actual setting, the long-haul trucking industry. We report positive organization-level relationships associated with the management choice of offering these benefits. Our results show that firms offering supplemental retirement plans engage in significantly safer driving practices, as measured by the proxy of driver insurance costs, as hypothesized. These findings show that benefits can be related to outcomes that have strategic implications for the firm. By showing that retirement plans may be of value to organizations, we help to bridge the academic-practitioner divide and provide motivation and guidance for additional work on this important but underresearched topic. © 2015 Wiley Periodicals, Inc.
This research explores the effects of an objectively determined, continuous measure of inequity on composite measures of individual performance in a pay-for-performance context, professional baseball and basketball. It was hypothesized that pay-for-performance contingencies would lessen the effects of individual underreward on individual performance. In addition, it was hypothesized that individual underreward would lead to less cooperative and more selfish behavior. Regression models of performance were run, controlling for prior career performance. The effects of the continuous measure of inequity on performance were greater for overrewarded individuals than for underrewarded individuals. Furthermore, underrewarded individuals behaved less cooperatively and more selfishly, while overrewarded individuals behaved more cooperatively.
Organizational theorists have advanced models of individuals' determination of equitable payment for work. Current demands by minority and women's groups stress equitable treatment by formal organizations. This article reviews primary areas in which the concept of equitable treatment has centered, notes findings, and discusses significant theoretical/methodological issues. The relationship of the equity concept and behavioral models is discussed, and frameworks for future research are presented.
The manner in which the concept of reciprocity is implicated in functional theory is explored, enabling a reanalysis of the concepts of "survival" and "exploitation." The need to distinguish between the concepts of complementarity and reciprocity is stressed. Distinctions are also drawn between (1) reciprocity as a pattern of mutually contingent exchange of gratifications, (2) the existential or folk belief in reciprocity, and (3) the generalized moral norm of reciprocity. Reciprocity as a moral norm is analyzed; it is hypothesized that it is one of the universal "principal components" of moral codes. As Westermarck states, "To requite a benefit, or to be grateful to him who bestows it, is probably everywhere, at least under certain circumstances, regarded as a duty. This is a subject which in the present connection calls for special consideration." Ways in which the norm of reciprocity is implicated in the maintenance of stable social systems are examined.
The assumptions of material self-interest, bounded rationality, and negative opportunism that underlie organizational economics are deficient for many managerial purposes because they underrepresent the importance of interpersonal and other nonmarket resources in human motivation. This paper adds an aspiration-level assumption called betterment that extends transaction cost analysis to include exchanges involving interpersonal resources. Implications are discussed for the efficient design of organizational boundaries, organizational subunits, and employment relations, and special attention is given to cooperation as an organizational asset.
Although an increasing number of organizations implement social media as means to enhance internal knowledge exchange, employees are in many cases not motivated to make use of new technologies. Therefore, the purpose of this study is to identify antecedents of employees' intentions to adopt social media for knowledge exchange. Measured factors were derived from expectancy theory and technology acceptance model. To identify factors influencing the willingness to seek and contribute knowledge using social media, in this study N = 315 employees within one organization were surveyed. The results clearly support the predictions: the interplay between the importance and deficits concerning knowledge exchange, perceived usefulness of social media for knowledge exchange, and experience in social media use jointly affected the intention to apply social media for knowledge exchange after their implementation.
The theoretical precision and research related to equity theory, as it is conceived by Adams, are reviewed. While equity theory is a significant step forward, the theory itself needs further specification. The research supports equity predictions in the area of underpayment, but the overpayment effects have not been satisfactorily demonstrated. Elaborations of the theory are presented in the areas of (1) determinants of inequity, (2) dissatisfaction resulting from inequity, and (3) responses to dissatisfaction.
Previous organizational citizenship behavior (OCB) research (a) has not demonstrated that extra-role behaviors can be distinguished empirically from in-role activities, and (b) has not examined the relative contributions of components ofjob satisfaction a nd organizational commitment to the performance of OCBs. Factor analysis of survey data from 127 employees' supervisors supported the distinction between in-role behaviors and two forms of OCBs. Hierarchical regression analysis found two job cognitions variables (intrinsic and extrinsic) to be differentially related to the two types OCBs, but affective variables and organizational commitment were not significant predictors. The link between the present findings and previous research is discussed, as are directions forfuture research.
Compensation research distinguishes between satisfaction with pay level and the system that determines and delivers pay, but has neglected to make a similar distinction with respect to benefits. We (1) develop a measure of the benefit system satisfaction construct, (2) examine the discriminant validity of benefit system satisfaction, and (3) examine aspects of procedural and distributive justice and transaction costs as they relate to benefit satisfaction. Confirmatory factor analysis of a comprehensive pay satisfaction measure supported a separate benefit system satisfaction dimension. Structural equation models supported common and unique antecedents of benefit system and benefit level satisfaction, and supported their relationships with global job satisfaction.
The present article chronicles the history of the field of organizational justice, identifies current themes, and recommends new directions for the future. A historical overview of the field focuses on research and theory in the distributive justice tradition (e.g., equity theory) as well as the burgeoning topic of procedural justice. This forms the foundation for the discussion offive popular themes in contemporary organizational justice research: (a) attempts to distinguish procedural justice and distributive justice empirically, (b) the development of new conceptual advances, (c) consideration of the interpersonal determinants of procedural justice judgments, (d) new directions in tests of equity theory, and (e) applications of justice-based explanations to many different organizational phenomena. In closing, a plea is made for future work that improves procedural justice research methodologically (with respect to scope, setting, and scaling), and that attempts to integrate and unify disparate concepts in the distributive and procedural justice traditions.
This review examines the personal and situational variables that influence an individual's choice of comparative referent. Earlier models (Goodman, 1974; Levine & Moreland, 1987) are considered, which predict referent choice based on the availability of referent information and the relevance of the referent. These models are then expanded to consider situational and personal variables that may influence availability and relevance. Hypotheses detailing the effects of these personal and situational variables on referent choice are presented, and the potential impact of these choices for organizations is explored.
This research presents a conceptual framework for determining how people evaluate their pay. The data indicate that people use multiple referents in evaluating their pay. Three classes of referents (Other, System, and Self) are identified, and these referents are significantly associated with feelings about pay satisfaction. Factors affecting the selection of referents are also presented. Level of professionalism and salary relate to the selection of different types of referents. Location in an organizational boundary (vs inside) role did not directly affect the selection of referents.
Although early studies support the equity theory prediction that increasing rewards for task performance enhance the effort devoted to the task, these findings may be challenged on a number of counts. Social exchange theory suggests, for example, that when rewards exceed what is felt to be equitable, the recipient may increase his perception of task difficulty and his estimate of what is a fair return for his efforts. In this case, there should be little need to devote increased energy to task performance. The present study, conducted in both Italy and the United States, supports this reasoning. Compared with equitably rewarded subjects, those rewarded by either 40% or 80% over their estimate of what was fair, altered both their perceptions of task difficulty and of a fair return. No performance differences were found.
In this research we discuss the relationship between CEO and top management team (TMT) member compensation, and explore the implications of TMT pay for firm performance. Specifically, we suggest that firm performance may benefit due to agency and group behavioral issues when top management team member pay is aligned—alignment is defined as the degree to which TMT member pay reflects (1) shareholder interests and (2) key political and strategic contingencies within the firm. In support of our theorizing, we found CEO pay to be related to TMT pay; TMT compensation, in turn, predicted performance (i.e., return on assets and Tobin's q) when aligned with shareholder interests and internal contingencies. Moreover, the effect of CEO pay on future firm performance was dependent on top team pay. Copyright © 2002 John Wiley & Sons, Ltd.
Over 4300 articles published in four HR-focused journals over a 20-year period of time were content analyzed according to topic area (indicator of interest area) and journal orientation (HR research versus HR practice). Analyses suggest that there were numerous interest area gaps between HR professionals and academics and that the magnitude of those gaps varied across topic areas. The gap regarding Compensation & Rewards was consistently large, with the interests of professionals far exceeding that of academics for the entire 20 years of analysis (approximately 14% of all articles in the professional journals, versus approximately 2% of all articles published in the academic journals). In contrast, the gap regarding OB & Motivation-related topics was consistently large with more than 16% of all articles in the academic journals on this topic, compared to less than 4% of all articles in the professional journals. These findings, along with suggestions for better understanding and closing the gap, are discussed.
We examine outcome satisfaction in situations in which people receive better outcomes than comparable other persons. Building on classical and modern social psychological theories, we argue that when reacting to these arrangements of advantageous inequity, judging the advantage is quick and easy as preferences are primary. We further propose that adjusting this appraisal requires cognitive resources as it entails integrating fairness concerns with the initial preference appraisal. Extending the literature on cognitive busyness, we therefore predict that people should be more satisfied with advantageous inequity when cognitive processing is strongly—as opposed to weakly—limited. Findings across several different experimental paradigms support our predictions. Taken together, our findings shed light on the psychological processes underlying the intriguing interplay between egoism- and fairness-based considerations when evaluating outcomes, as well as on more general preference and adjustment processes.