Research On The Relationship Between Internal Pay Dispersion And Enterprise Performance

In the age of knowledge-driven economy,human resources have increasingly become the key factor for enterprises to win in market competition.Under this circumstance,how to attract talents,retain talents,and motivate talents to actively exert their subjective initiative has become a hot topic for companies.As an incentive mechanism,compensation is widely used in enterprises.It is true that a high level of compensation is indeed an effective means for companies to attract,motivate and retain talent.However,it remains to be seen whether the single incentive factor is sufficient to help companies recruit and improve their performance.According to the news,executives earned an average of millions in annual salary in Guotai Junan.Since then executives' huge salary was frequently updated.According to the data of annual reports of listed companies in 2015,the chairman of Fangda Special Steel ranked first in the ranking of A-share executive compensation in Shanghai and Shenzhen with an annual salary of 201.934 million yuan.Executives are the pioneers of corporate development.There is no doubt about it.For enterprises with rising profits,rewarding senior executives with huge pay is rewarding their operating results,and for companies whose profits have fallen or even lost,it will be hard to be convinced if paying them a huge amount of money.Executives are valuable human resources.Although a huge salary can motivate them to work hard for the benefit of shareholders,it also means that the pay gap between executives and employees is too large,which will abolish the enthusiasm of employees to work hard,especially companies whose performance has declined and executive compensation does not fall off sharply.Such a salary setting will have a negative impact on the long-term development of the company and will not be conducive to the improvement of corporate performance.Executives and ordinary employees are all indispensable talents for operations of companies.If they pay too much attention to executives and ignore ordinary employees,the long-term development of enterprises is unsustainable.Therefore,enterprises should reasonably set internal pay gaps in enterprises and strengthen the supervision and management of executive compensation so that the pay gap can maximize its effect on the promotion of corporate performance,and the fairness of employees at all levels can be effectively guaranteed.And then,the performance of enterprises can be steadily improved.The sustainable development of the company can have a more solid foundation.This paper takes China's Shanghai and Shenzhen A-share listed companies,which were listed before 2006,as research object,and it empirically explores the inverted U-shaped relationship between the two internal pay gaps and corporate performance.On this basis,this paper uses management power as a regulated variable to further explore its regulatory role for the relationship between the two pay gaps and corporate performance.At the same time,this paper classifies the sample according to the nature of property rights,and discusses whether there are differences in the inverted U-shaped relationship between internal pay gap and corporate performance in state-owned enterprises and non-state-owned enterprises.The article first reviewed and combed the literature related to the pay gap and corporate performance,and then deduced the main assumptions of this paper through the analysis of relevant theories.Then the model is constructed based on assumptions and the assumptions are tested empirically.The empirical results show that there is a significant inverse U-shaped relationship between internal salary gap and firm performance,that is to say there is an interval effect among internal salary gaps.At a certain salary gap,corporate performance can reach a peak.Management power has a regulatory effect on the aforementioned relationship,and it will inhibit the incentive effect of internal pay gap on corporate performance.And,compared with state-owned enterprises,the best performance of non-state-owned companies appears at a higher level of internal wage gap.