REWARD MANAGEMENT
Ten compensation studies you should know about
A study by researchers at the University of Houston looks at how reward practitioners grappling with managing change can draw on academic research to increase their understanding of today's compensation issues, with answers supported through rigorous, scientific research.
Researchers Stephanie Ward and Steve Werner, who are both based at the University of Houston's C T Bauer College of Business, identified ten recent academic studies that look at pay fairness, pay plan differences and managerial rewards. The questions raised by this batch of studies are both timely and supported by theory and rigorous data analysis.
Writing in a recent edition of WorldatWork Journal, Ward and Werner explore, in turn, each study's purpose, findings and the bottom line for managers and executives.
While some of the findings of these academic studies may seem like obvious common sense, all too often reward practitioners do not follow them. So, as the University of Houston researchers point out, practitioners could do a lot worse to increase their understanding of today's reward issues than examine some of these academic research findings.
Emerging themes
For Ward and Werner, two broad conclusions emerge from their analysis of the ten academic studies:
1. Perceptions related to reward determine fairness
Incorporating fairness into your reward system is related directly to how that system is received by your employees.
As Ward and Werner observe: "Several studies emphasised the importance of managing the procedures by which compensation decisions are made, regardless of the level or location of the employees involved. Also, how those procedures are communicated and the interaction between the supervisor and the subordinate can affect employees attitudes and behaviours directly."
2. Include greater employee discretion in your benefit system and over work methods
By allowing employees to participate within your benefits system, you can positively affect how employees perceive the actual benefit level and the overall system.
According to Ward and Werner's reading of the research, in service industries, discretion over work methods has the greatest effect on sales growth and turnover. "More discretion leads to increased sales and lower employee turnover. However, there appear to be increased labour costs (3% to 5%) associated with greater employee involvement."
Want to know more?
Title: "10 Compensation studies you should know about", by Stephanie Ward and Steve Werner, WorldatWork Journal, first quarter 2004.
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WorldatWork, formerly the American Compensation Association, is one of the HR professions oldest and most distinguished bodies. Founded in 1955, it is "dedicated to knowledge leadership in compensation, benefits and total rewards". WorldatWork is a not-for-profit association with a membership of more than 25,000 human resource professionals, consultants, educators and others, primarily in the United States and Canada.
For further details about WorldatWork visit www.worldatwork.org
Posted 16 July 2004