The External Fairness, Internal Gap Of Employee Compensation And Firm Performance

As the economy develop at a high speed and the living standards keep constantly increasing, employees pay more and more attention to their payment problems, such as differences between individuals; unfairness of income distribution; the huge differences between manager and staff, and individuals. These problems are urgent, and the problem about income distribution has been a nonnegligible key point in constructing a harmonious society. From the discussion about the “whopping price” in 2008 to the policy about“ruling the country by law and reasonable allocation”, combining with the supervision to the managers’ income in the state-owned or central enterprise and the more attention paid to the overall income level, the importance of compensation to our country and people is so obvious. According to this, the definition of compensation problem, how could it influence the development of enterprises and employees, how to achieve the fair compensation distribution and the elements of fairness in compensation, are the principle problems which need our research work. So we cut in with the compensation fairness problem in order to focus on the relationship between the income of employees and the influence to enterprises.Bases on the practical background, using the fairness of employees’ compensation as the entry point, the article does some research about the influences from the external and internal fairness of employees’ income to the enterprise’s performance. Since the current competence from our society, people have a burning desire to accept fairness. Involved in an income-fair environment, we could get a higher positive attitude from employees to work. And the efficiency and capability of employees could increase based on the fairness level. Not only the mentioned parts are good for enterprises, but the happiness and the satisfaction of employees will be helpful to the kilter and future of enterprises. As an employee in one enterprise, the feeling of fairness is mainly from the comparison of external environment and the differences between the internal employees. So we divide the fairness of compensation to the external fairness level and internal income differences. And we also suggest two assumptions about improving enterprise ’ s performance by achieving the compensation fairness. By fetching the data of the annual financial statements of 1575 companies from the Shanghai Stock Market from 2009 to 2013 and doing regression analysis, we approve our assumption.The main conclusions are :(1) The fairness of compensation has positive correlation to the enterprise ’ s performance. And this phenomenon is more obvious in the non-state-owned enterprises due to the political promotion in state-owned enterprises.(2) The relationship curve which based on both the difference between manager and normal employees and the enterprise’s performance is anti-U shape. According to these, we have 3 suggestions:(1) Distribute accords to work. Improve the employees’ salary to enhance the positive attitude of employees.(2) Balance the compensation difference between manager and normal employees to enhance the total work enthusiasm, which could help improve the whole work performance.(3) Improve the effective constitution supervision system in the internal and external environment to make the compensation system more fair and strategic.