Fairness Preference, Compensation Gap And Company Performance

The issue of compensation design has become a top issue which is concerned by the circle of theory and practice since 1980s. That is because the compensation gap directly affects the working mood of inter-company employees, thereby affect the company performance. However, the existing researches only discuss the relationship between the compensation gap and company performance. The existing researches about the relationship between the fairness preference and company performance are little relatively. Meanwhile, the existing researches about the measurement of staff Fairness Preference and discuss the relationship between the compensation gap and company performance through the compensation gap are barely little. Therefore, the research to the relationship of the fairness preference, Compensation gap and company performance can not only advance the development of the compensation theory in the company, but also understand the reform of compensation system of our companies objectively. It can guide the compensation decision and has important theoretical and practical significance.This paper selects the data of A-share market from listed companies in Shanghai and Shenzhen from 2005 to 2009, using the method of combing the normative research and empirical research. Basing on sample data and model, we are study the relationship between the fairness preference and company performance through compensation gap. The main conclusions of this paper are: (1)The fair preference in the State-owned holding company or central and western regions is more than in the non-state-owned holding company or eastern region; (2)Compensation gap between senior management team and staff have a negative impact on the company performance; (3)The fair preference will increase the relationship between the compensation gap and company performance, the company policies are required to pay attention to the factor of fair preference.