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Relationship of salary/bonus mix and culture.

Relationship of salary/bonus mix and culture.

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Organization culture and compensation system design function as complementary elements in achieving the strategic goals of the organization. When compensation systems are not aligned with organization culture, it causes many unintended consequences. This research study looks at the impact of organization culture on compensation and vice versa. Vari...

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Context 1
... who work within a specific type of culture will expect a compensation system that is distinctive and compatible within that culture. In a salary-friendly culture, employees expect a higher proportion of fixed pay in pay mix design while in an incentive-friendly culture employees will expect a higher proportion of variable pay ( Figure 6). ...
Context 2
... in an adhocracy or market culture, where employees are externally oriented and the emphasis is on individual results, variable pay should account for a higher percentage of the total. As shown in Figure 6, the hierarchy culture and clan culture are salary friendly while adhocracy and market cultures are incentive friendly. ...

Citations

... Sales-oriented organizations often face the complex decision of how to appropriately compensate their sales force. Organizations must consider various factors when deciding the most effective compensation and incentive structure, including the organizational life cycle (i.e., start-up, growth, maturity, or decline) of the organization (Madhani, 2010), the organizational culture (Madhani, 2014), and the ever-evolving competitive landscape. stresses that, regardless of the pay structure an organization chooses to adopt, that structure should attract the right talent and should not be so costly that it creates a disadvantage for the organization compared to similar firms in the respective industry. ...
... Dohmen and Falk (2011) state that experiments are ideal for studying how individual characteristics affect decision making, relative to incentives, because rel-evant data is difficult to collect in the field. In addition to conducting an extensive literature review, Madhani (2010Madhani ( , 2014 constructs several frameworks based on the literature reviewed to support the incentive structure claims. Table 4 summarizes the key findings from each paper with a summary translation of the collective findings. ...
... Important elements to consider in relation to compensation are the nature of the performance measurement (short-term or long-term) and the timing of the incentive pay. Madhani (2014) states that when organizations create a structured and more formalized workplace environment, they typically have a longer-term focus and therefore put a greater focus on fixed pay structures. Madhani (2010) explains that a larger focus on variable pay can cause salespeople to become short-sighted (more individually focused) in terms of how they spend their time. ...
... The greater or higher the compensation provided by the school to the teacher, the higher and better the quality of teacher performance. This is in line with (Madhani, 2014) that compensation should encourage desired behaviors. Good job performance, experience, loyalty, new responsibilities and other behaviors can be rewarded. ...
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The purpose of this study was to determine the effect of compensation on the teacher performance in vocational school. This research used a quantitative approach. Data collection technique was by distributing a questionnaire using a five-likert scale. The sampling technique used was cluster random sampling. Samples taken from each school amounted to 3 teachers from each department, so there were 42 respondents from 5 schools. Validity test used the Pearson product moment. The analysis technique used to answer the research hypothesis uses simple linear regression. The results showed that teacher compensation had an effect on teacher performance in vocational high school.
... The creation of an own remuneration system can influence organizational individuals so that they develop what is of interest to the organization itself, obviously being a motivational method. When that system is not align with the organizational culture, there are likely to be consequences for achieving the companies objectives (Madhani, 2015). ...
... Without customer focusedculture, organizations should not expect survival, let alone success, in the long-term. Compensation and reward systems have a substantial impact on the customer-oriented behaviors of employees (Madhani, 2014a(Madhani, , 2014b. Compensation and reward system helps organizations in enhancing customer-focused culture as it positively influences customer-focused strategy. ...
... Zappos actually bribes its new employees to quit! Where it says to its newest employees: "If you quit today, we will pay you for the amount of time you've worked, plus we will offer you a bonus" (Madhani, 2014a). The Offer, which applies to all new Zappos employees, started at $100, went to $500, then $1,000, and now increased to $3,000 (Taylor, 2008). ...
... It sets norms of behavior in the organization and the meaning that is vital for the performance of marketing activities. The major focus of the market culture is on profitability and the customer and is driven by customer orientation as well as market competitiveness (Madhani, 2014a). ...
... Information sharing is required to signal to the organizational members that rewards are available, timely, equitable, and performance-contingent. Compensation and reward systems have a substantial impact on customer oriented behaviors of employees (Madhani, 2014a(Madhani, , 2014b. It is very difficult to inculcate customer focused culture in absence of supporting compensation and reward system. ...
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In today's highly competitive business environments, organizations tend to become more sensitive and responsive to the changing needs of customers. Inculcating and continually strengthening 'customer focus' is essential for achieving and sustaining competitive advantages for the organizations. The seven Cs framework and research propositions developed in this research is an actionable model for building a customer focused strategy in organizations. With this framework significant steps can be taken to strengthen an organization's customer focus. A strong customer focused strategy exhibits high ratings on all seven Cs: CEO leadership, collaborative approach, compensation system, customer insight, criteria for decisions, competitor awareness and a deep organizational commitment and contribution of all functions to creation of superior customer value, profitably. Research discusses customer focused strategy at Zappos and also provides numerical illustrations to calculate increase in firm valuation for a customer focused organization.
... Thus the proxy is the total compensation paid to employees as a percentage of operating expenses. The reasons to use the compensation paid to employees as a percentage of operating expenses, as a proxy for clan culture, cause it represents a powerful tool for influencing an organization's culture by influencing and controlling employee behaviour (Madhani, 2014). ...
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This study aimed to investigate how organizational culture affects sustainability performance through the mediating effect of strategic posture. The data were collected from the Indonesian Stock Exchange from period 2009-2018. The sampling technique used is purposive sampling. The technique analysis used is regression analysis. From the results of the analysis and discussion, the following conclusions are clan culture, adhocracy culture, hierarchy culture, and market culture has a positive effect on organization strategic posture. Strategic posture affects Sustainability performance. Clan, hierarchy, and market culture positively affects sustainability performance mediated by strategic posture; adhocracy culture cannot affect sustainability performance mediated by strategic posture.
... Although many researchers have explored the causal link between organizational culture and HR management, they have tended to conduct research in developed countries (Aycan, Kanungo, & Sinha, 1999;Kosiorek & Szczepańska, 2016;Vetráková & Smerek, 2015). Researchers have investigated this relationship in China (Liu & Liao, 2017), Pakistan (Mujeeb, Masood, & Ahmad, 2011), Nigeria (Adeniji, Osibanjo, & Abiodun, 2013;Izuogu, 2015;Osibanjo & Adeniji, 2013), and India (Kandula, 2006;Madhani, 2014), which are bigger countries than those in Eastern Asia, including Vietnam. Therefore, business conditions differ from those in Eastern Asia. ...
... The culture of an enterprise and the design of its compensation system should serve to inspire workers to fulfill the strategic objectives of their enterprise. Madhani (2014) highlighted the important role of company culture in orienting worker behavior. An enterprise should recognize, widen, and communicate its beliefs, values, and practices efficiently. ...
... With the second international sample, the focus of the model shifted from psychological health to employees' organizational deviance and commitment, including affective commitment and intention to stay in the organization, to contribute to the field's understanding as to why, under some conditions, past research has found cash rewards to be associated with lower work ethics. [61][62][63][64][65] Last, the full model encompassing employees' psychological health as well as motivation, satisfaction, commitment and intentions to stay and to recommend the organization was tested with a third national sample of Canadian workers. ...
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Using self-determination theory, this research sheds light on the role of different subjective, or functional, meanings of cash rewards on employees’ functioning. Based on three samples of workers from across the world in a variety of industries, the current research provides empirical evidence that cash rewards perceived as having an informative meaning positively contribute to their psychological needs, which leads to better functioning, whereas cash rewards perceived as having a controlling meaning negatively contributed to their psychological needs, which is then associated with suboptimal functioning. These findings highlight the theoretical and practical relevance of considering employees’ perceptions to understand the influence of cash reward programs on their commitment, quality of motivation and behaviors in the workplace as well as to better design these programs, including their roll out strategies, if organizations set those in place to drive healthier forms of motivation and commitment.
... H 0 : Klan kültürü ile performans yönetimi arasında anlamlı bir ilişki vardır. (Madhani, 2014). ...
... A strong culture may act as an asset or a liability for the organization, depending on the types of values that are shared. If a positive culture exists, it functions as an intangible asset (Madhani 2014a). ...
... (See Figure 2.) Business strategy also influences the sales plan, with organization culture and compensation system being its major drivers. The culture and compensation system design of a sales organization function as complementary elements in directing salespeople toward achieving the strategic goals of the sales organization (Madhani 2014a). As shown in Figure 2, there is a mutual and two-way impact between the organizational culture and the compensation system. ...
Article
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The increasingly complex and competitive global business environment poses greater challenges than ever to organizations today. Because of a sluggish global economy, which could include any fallout from Brexit, the sole reliance on a compensation system as a performance driver to motivate and reward sales employees is not effective as sales organizations rely more on cost-cutting measures. Therefore, sales organizations might want to consider other alternatives, such as revisiting organizational culture as a means to help employers achieve their goals and effectively implement their strategies. Organizational culture represents the shared values, beliefs, ideologies and norms held by organizational members that can influence their day-today behavior within the organization and their expected code of conduct outside the organization.