Empirical Study On The Integration Between Pay Policy And Competitive Strategy In High-Performing Firms

The idea that pay policies have strategic impact has become a major theme within the compensation literature since the mid- 1980s. Overseas there already appeared the massive notable volumes concerned with compensation and the strategy, and already expanded to the business-level strategy and the pay policy integration to the performance influence stage. As for our country, researchers put forward strategic motivation, strategic compensation and compensation strategy and so on, but does not conducts the research to the integration between pay policy and the enterprise strategy, furthermore has not progressed to its matching and the performance influence, therefore this article has the significance.This paper uses the empirical method, The preceding ideas coupled with existing strategic compensation theory, we advance these propositions.(Pl: The pay philosophy of Cost Leaders will emphasize"labor cost"objectives more than the philosophy of Differentiators or Innovators. P2: Innovators will have a pay philosophy that places more emphasis on"attraction/retention"objectives than Cost Leaders or Differentiators.P3: The pay philosophy of Differentiators will emphasize"motivation"objectives more than the philosophy of Cost Leaders or Innovators.P4: With respect to pay level, Cost Leaders will be more likely to lag their labor market competitors and Innovators will be more likely to lead their labor market competitors.P5: Differentiators (and perhaps Cost Leaders) will have a higher Incentive-to- base ratio than Innovators.P6: Innovators will make more extensive use of merit pay than Cost Leaders and Differentiators.P7: Innovators, and to some extent Differentiators, will be more open and participative in the administration of their pay policies than Cost Leaders.) we put out questionnaire, and data analysis in this study starts with Multi-variate analysis of variance (MA-NOVA) followed by canonical discriminant analysis. We test the relation between the pay policies and competitive strategy in high-performing firms.In addition, this study makes two methodological contributions. First, it demonstrates a procedure for evaluating contingency models through the joint analysis of organizational strategy, pay policy and performance. second, this study shows an approach for measuring compensation policy in terms of"hard'objective indices, instead of the perceptual data typically used in the past research.