Incentives to move up: Effects of pay gaps between levels on employee performance

Chi, Wei; Liao, Hui; Wang, Lei; Zhao, Rui; Ye, Qing

doi:10.1111/1748-8583.12221

Cited by 11 publications

(6 citation statements)

References 54 publications

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“…Although the compensation gap between executives and employees has attracted considerable attention, our knowledge of its possible consequences from a corporate economic performance perspective is still rather limited and elusive [38]. On the one hand, Lazear and Rosen [39] proposed tournament theory, and indicated that an enterprise can establish a hierarchy to motivate employees.…”

Section: Compensation Gapmentioning

confidence: 99%

The Impact of Compensation Gap on Corporate Innovation: Evidence from China’s Pharmaceutical Industry

Shan

2022

IJERPH

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The pharmaceutical industry is typically driven by innovation, and is relevant to people’s livelihoods. How to effectively motivate pharmaceutical enterprises to engage in innovative activities is a hot topic. On the basis of the perspective of the combined effect of tournament theory and social comparison theory, this study explored the impact of internal compensation gap on corporate innovation by using data from China’s listed pharmaceutical enterprises during 2011–2018. The findings show a nonlinear (inverted-U-shaped) relationship between compensation gap and corporate innovation within the pharmaceutical industry, which illustrates that the role of the compensation gap is not endless. We also find the optimal compensation gap between executives and employees. Further analyses indicate that this association is more pronounced in regions with low marketization levels, and in large enterprises. Moreover, the practical significance of the results is explored with an expectation of providing theoretical references for the pharmaceutical industry to establish reasonable incentive mechanisms and promote innovative development, and for the government to introduce innovation incentive policies.

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Section: Compensation Gapmentioning

confidence: 99%

The Impact of Compensation Gap on Corporate Innovation: Evidence from China’s Pharmaceutical Industry

Shan

2022

IJERPH

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“…Employee performance (EP): Employee performance is the product of employee-centric practices (Kooji et al, 2013) aimed at improving employee skillset and satisfaction TQM 33,6 (Guest, 2011). It is fostered by employee participation (Ogbonnaya and Messersmith, 2018), and commensurate wage package to performance (Chi et al, 2019). It is the exhibition of behaviours that align with firm goals and objectives (Lepak et al, 2006).…”

Section: Impact Of Quality Managementmentioning

confidence: 99%

Direct and indirect impact of quality management on the integrated performance of medium-scale manufacturers

Udofia

Adejare

Olaore

et al. 2021

TQM

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PurposeMost studies on small and medium scale enterprises lump both small-scale and medium-scale businesses together as entirely similar phenomenon, thus creating an oversight of the degree of performance recorded by medium-scale businesses. In line with investigating medium-scale firms' performance, this study examines the role of quality management in the performance of medium-scale firms to evolve research-based recommendation for better performance.Design/methodology/approachCross-sectional survey design and random sampling were employed. Analysis was based on 915 responses obtained via questionnaire copy distribution from employees within the supply chain, production, operations, and marketing/sales department of selected firms. Hypotheses testing was done using the structural equation model.FindingsA positive significant relationship between quality management and operational performance, employee performance, and quality performance dimensions was identified. An insignificant relationship between quality management and financial and innovation performance dimensions was discovered. However, when mediated by employee focus and process management, significant relationships were observed among all performance dimensions.Research limitations/implicationsThe study reveals that employee focus and process management have the greatest mediating impact on the relationship between quality management and the organisational performance of medium-scale manufacturing firms. This study charts the course for other studies to investigate the mediating role of quality management practices on the relationship between quality management and the organisational performance of medium-scale firms in other developing nations. The manufacturing sector has thirteen industries, but only six were captured in this study. This poses a limitation to the generalisation of the findings of this study. Further studies could strive for a representation of every manufacturing industry to aid generalisation purposes.Practical implicationsManagers of medium-scale manufacturing firms must understand that it might be impossible to get a one size fits all approach to improving performance dimensions. Managers are advised to choose one or two performance dimensions as the goal, then focus on achieving them. This will help clarify which path is best to get the desired results and maximise their quality management system.Originality/valueThis study examines the impact of quality management practices on an integrated performance model of medium-scale firms. The study also uniquely examines the mediating impact of exclusive quality management practices on the relationship between quality management and an integrated performance model.

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“…The enthusiasm of employees not only depends on the level of their own pay, but also is affected by the management pay. Higher pay gap can induce low-level employees to make efforts to win competition prizes, rather than immerse themselves in past achievements [7,9]. In the case of a large number of competitors and increasing environmental uncertainty, in order to stimulate competition participants to improve their efforts and willingness to take risks, enterprises should increase the pay gap.…”

Section: Strategy and Pay Gapmentioning

confidence: 99%

Corporate Strategy, Pay Gap and Employee Turnover Rate: Based on Mediation Model

Zhu¹

2021

SJAMS

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The characteristics of prospector are to constantly find new market opportunities, carry out technological innovation, and obtain growth opportunities by moving to high value-added fields. Defender often choose a relatively stable market area and take effective actions, such as setting competitive prices or providing high-quality products and services, to actively prevent subsequent competitors from entering this industry. Although different strategic types of enterprises have different business preference, they cannot do without the active cooperation of employees in the process of strategy implementation, because they are the closest to the production and customers. If the incentive mechanism conflicts with employees' interests, employees may respond by leaving. Based on the sample of China's A-share listed companies from 2007 to 2019, this paper uses the fixed effect model to examine the impact of strategy on employee incentive mechanism and turnover rate. The empirical results show that, compared with defender, the pay gap of prospector is higher, and the above phenomenon is more significant in enterprises with lower labor intensity. In addition, prospector will also push up the turnover rate of employees, in which the pay gap plays a mediating role. This conclusion not only enriches the research of strategic theory and compensation contract, but also has some enlightenment for the relevant government departments to develop vocational training to improve employees' skills.

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Incentives to move up: Effects of pay gaps between levels on employee performance

Cited by 11 publications

References 54 publications

The Impact of Compensation Gap on Corporate Innovation: Evidence from China’s Pharmaceutical Industry

The Impact of Compensation Gap on Corporate Innovation: Evidence from China’s Pharmaceutical Industry

Direct and indirect impact of quality management on the integrated performance of medium-scale manufacturers

Corporate Strategy, Pay Gap and Employee Turnover Rate: Based on Mediation Model

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