N O V I T A D E W I N U R ’ A I N IB A T C H 61 2 6 3 6 2 0 0 3 9“HR –Compensation”An Overview of HR – TheImpact of CompensationMeiyu Fang, Ph.D.Assistant ProfessorInstitute of Human Resource ManagementNational Central University, TaiwanHuman ResourcesManagement inHospitality & TourismProf. Syamsir Abduh85
IntroductionCompensation is the remuneration received byan employee in return for his/her contribution tothe organization. It is an organized practice thatinvolves balancing the work-employee relation byproviding monetary and non-monetary benefits toemployees.HRM is the management of an oganization’sworkforce, or human resources. It’s responsiblefor the attraction, selection, training, assessmentand rewarding of employees, while alsooverseeing organizational leadership and cultureand ensuring compliance with employment andlabor laws.
IntroductionStrategic human resource management is theinvolvement in designing and implementing a setof internally consistent policies and practices,which aim to accomplish its business objectiveCompensation also includes payments suchasbonuses, profit sharing, overtime pay,recognition rewards and checks, and salescommission. Compensation can also include non-monetary perkssuch as a company-paid car, stockoptions in certain instances, company-paidhousing, and other non-monetary, but taxable,income items..
IntroductionPorter (1985) suggestedthat human resourcemanagement (HRM)helps a firm obtaincompetitive advantageby lowering costs, byincreasing sources ofproduct and servicedifferentiation, or by both.Youndt, Snell, Dean, &Lepaks (1996) found thatadministrative HR systems(i.e., control HR inAuthurs terms) areappropriate in thecontexts that emphasizereducing costs andeliminating uncontrollablebehavior Snell and Dean (1992) foundthat the use of advancedmanufacturing technology andBusiness, compensationstrategy, and firmperformance, p. 4 total quality management werepositively related to selectivestaffing, comprehensivetraining, developmentalappraisal, and externallyequitable rewardsLengnick-Hall & Lengnick-Hall(1988) argued that theintegration of human resourcemanagement and corporatestrategies can provide a broaderrange of solutions for solvingcomplex organizational problems,and it can ensures that human,financial, and technologicalresources receive equal amountof consideration in setting goalsand assessing the capabilities ofimplementation.Jackson, & Schuler, 1997;Gerhart & Milkovich, 1992;Gomez-Mejia &Balkin, 1992). Due to thehigh investment and highreturn, firms in the high-techindustry may have a biggerincentive than traditionalmanufacturers to providerewards commensurate withthose of competitor firms
Literature ReviewThe compensation measures were modifiedfrom the compensation strategy patternsproposed by Gomez-Mejia and Balkin (1992).The scale includes the pay level, the emphasisof pay for performance, and the profitsharing. All items use five-point Likert format.The pay level scale, consisted of two items,asks the hr managers to compare their paylevel with that of their competitors
Literature ReviewOne of the challenges facing firms in today’s businessenvironment is the transformation to a new paradigm(Drucker, 1990). A lot of evidence suggests that thefailure of some firms to make this transition is due tothe mismanagement of people rather than to problemswith technical systems (Ettlie, 1988; Majchrzak, 1988).Lengnick-Hall & Lengnick-Hall (1988) argued that theintegration of human resource management andcorporate strategies can provide a broader range ofsolutions for solving complex organizationalproblems, and it can ensures that human, financial, andtechnological resources receive equal amount ofconsideration in setting goals and assessing thecapabilities of implementation.
Literature Review1. Many researchers (Balkin & Gomez-Mejia, 1987; Begin, 1993; Gomez-Mejia &Balkin, 1992; Schuler & Jackson, 1987)attempted to show how a number of HRpractices are consistent with differentstrategic positions and how these practicesrelate to firm performance.2. Strategic human resource managementis the involvement in designing andimplementing a set of internally consistentpolicies and practices, which aim toaccomplish its business objective (Jackson& Schuler, 1995 )
Literature Review3. MacDuffie (1995) derived specificconfigurations, or “bundles.” of HR practicesthat enhance firm performance. Ichniowski,Shaw, and Prennushi attempted to test thehypothesis that “combinations of HRMpractices have bigger effects on productivitythan the sum of the component effects due toindividual practices (1994:9)
Conclusions• It is usually believed that higher pay level will attract bettertalents, and as results of their better performance, the organizationalwill have a better performance. This rationale can easily explain why thepay level is positively associated with the Business, compensationstrategy, and firm performance, p. 18 perceived-organizational performance in the present study.However, the presnt study did not find the link between pay level andROA. The present study also found that pay for performance was negativelyassociated with both subjective performance measure and ROA. Thefindings are contradictory to what most of the motivation literature ofpay for performance would claim. Cognitive evaluation theory(Ryan, Mims, and Koestner, 1983; Deci & Ryan, 1985) might offer somepossible explanations. According to CET, the influence of pay forperformance on intrinsic motivation is a function of two reward aspects.First, rewards have a controlling aspect. The controlling aspect wouldlead to a decrease in performance. On the other hand, the informationalaspect can actually increase intrinsic motivation, and thus increaseperformance.