No pay system should be put into practice unless it is congruent with the values of the people it will affect. Cross-cultural research suggests performance pay is a poor fit for some cultures, although its actual use is rising throughout these very same cultures. This seeming contradiction is investigated through an exploratory, qualitative analysis to understand how performance pay translates across cultures. Findings call for (a) appropriate level of cultural aggregation, (b) focus on pay equity construal rather than preference and (c) attention to specific dimensions of culture identified as potentially most predictive of equity construal.
For an overview of cultural fit findings, see Fischer, R., & Smith, P.B. ( 2003). Reward allocation and culture: A meta-analysis. Journal of Cross-Cultural Psychology, 34, 251-268; Schuler, R.S., & Rogovsky, N. (1998). Understanding compensation practice variations across firms: The impact of national culture. Journal of International Business Studies , 29, 159-177.
2.
As reported in Abosch , K., Schermerhorn, J., & Wisper, L. ( 2008). Broad-based variable pay goes global. Workspan, May, 57-62.
3.
Lawler, E.E., III. (1981). Pay and organization development . Reading, MA: Addison-Wesley.
4.
See Deutsch, M. (1975). Equity, equality, and need: What determines which value will be used as the basis of distributive justice?Journal of Social Issues, 31, 137-149.
5.
For a detailed explanation of equity theory, see Adams, J.S. ( 1963). Towards an understanding of inequity. Journal of Abnormal and Social Psychology, 67, 422-436; Adams, J.S. ( 1965). Inequity in social exchange. In L. Berkowitz (Ed.), Advances in experimental social psychology (Vol. 2, pp. 267-299). San Diego, CA: Academic Press.
6.
Bolino, M.C. , & Turnley, W.H. (2008).Old faces, new places: Equity theory in cross-cultural contexts. Journal of Organizational Behavior, 29, 29-50; Morris, M.W., Leung, K., Ames, D., & Lickel, B. (2008). Views from inside and outside: Integrating emic and etic insights about culture and justice judgment. Academy of Management Review, 24, 781-796.
For an overview of VOM and the other culture models noted, see Kluckhohn, F.R., & Strodtbeck, F.L. (1961). Variations in value orientations . Evanston, IL: Row-Peterson; Hofstede, G. ( 1980). Culture’s consequences: International differences in work-related values. Beverly Hills, CA: Sage; House, R.J., Hanges, P.J., Javidan, M., Dorfman, P.W., Gupta, V. (2004). Culture, leadership and organizations: The GLOBE study of 62 societies. Thousand Oaks, CA: Sage; Schwartz, S.H. (1999). A theory of cultural values and some implications for work. Applied Psychology: An International Review, 48, 23-47; Trompenaars, F. ( 1993). Riding the waves of culture: Understanding cultural diversity in business. Bath, England: Bath Press.
9.
See Maznevski, M.L., Gomez, C.B., DiStefano, J.J., Noorderhaven , N.G., & Wu , P.-C. (2002). Cultural dimensions at the individual level of analysis: The cultural orientations framework. International Journal of Cross Cultural Management , 2, 275-295; Morris et al. ( 2008), pp. 781-796.
10.
Examples includeKim , K.I., Park, H.-J., & Suzuki, N. (1990). Reward allocations in the United States, Japan, and Korea: A comparison of individualistic and collectivistic cultures. Academy of Management Journal, 33, 188-198; Leung, K., & Bond, M.H. (1984). The impact of cultural collectivism on reward allocation. Journal of Personality and Social Psychology, 47, 793-804; Leung, K., & Iwawaki, S. ( 1988). Cultural collectivism and distributive behavior: A cross-national study. Journal of Cross-Cultural Psychology, 19, 35-49.
11.
See Maznevski et al. (2002), pp. 275-295.
12.
Bozionelos, N., & Wang, L. (2007). An investigation on the attitudes of Chinese workers towards individually based performance-related reward systems. International Journal of Human Resource Management , 18, 284-302.
13.
Bolino and Turnley (2008), pp. 29-50.
14.
See Maznevski et al. (2002), pp. 275-295.
15.
See Maznevski et al. (2002), pp. 275-295; Morris et al. (2008), pp. 781-796.
16.
See Maznevski et al. (2002), pp. 275-295.
17.
See Schaeffer, B.S., & Riordan , C.M. (2003). A review of cross-cultural methodologies for organizational research: A best-practices approach. Organizational Research Methods, 6, 169-215; Tsui, A.S., Nifadkar, S.S., & Ou , A.Y. (2007). Cross-national, cross-cultural organizational behavior research: Advances, gaps, and recommendations. Journal of Management, 33, 426-478.
18.
This notion also supported by Gerhart, B. (2008). Cross cultural management research: Assumptions, evidence and suggested directions . Internal Journal of Cross Cultural Management, 8, 259-274; Gerhart, B., & Fang, M. (2005). National culture and human resource management: Assumptions and evidence. International Journal of Human Resource Management, 16, 975-990.
19.
For a more detailed discussion, see Morris et al. ( 2008), pp. 781-796.
