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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...
Contexts in source publication
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
... Cultural control refers to the process by which organizations establish and maintain a specific set of values, norms, and beliefs among their employees to shape their behavior and align it with the organization's objectives (Madhani, 2014). It involves creating a shared understanding of desired behaviors and attitudes that contribute to the organization's culture (Pathiranage et al., 2020). ...
This research study explores the relationship between cultural and cybernetic control, cost leadership strategy, differentiation strategy, and corporate sustainability. Utilizing a quantitative methodology, data is collected from a diverse sample of companies representing different industries in Indonesia. Validated questionnaires are used to measure cultural control, cybernetic control, cost leadership strategy, differentiation strategy, and corporate sustainability performance. The collected data is analyzed using statistical techniques such as regression analysis or correlation tests to examine the connections between the variables. The findings of this study will enhance our understanding of how cultural and cybernetic control mechanisms, in conjunction with cost leadership and differentiation strategies, influence corporate sustainability. The outcomes will provide valuable insights and recommendations for organizations aiming to improve their sustainability practices and optimize their competitive strategies.
... The more flexible work arrangements are not suitable for work arrangements in organizations with a hierarchical culture. More flexible work arrangements are more suitable for organizations with an adhocracy culture and achievements following a market-based culture (Madhani, 2014), such as salespeople or salespeople and research and development in private ...
Purpose: This research aimed to explain: (1) the role of job satisfaction as a mediator of the effect of organizational justice on job procrastination behavior, and (2) psychological contract breach as a moderator of the effect of organizational justice on job satisfaction and procrastination behavior.. . Theoretical framework:. Procrastination is the behavior of delaying starting work or tasks, or delaying completing a task that does not need to be postponed (Ferrari, 2023). Some people intentionally procrastinate for various subjective reasons, such as laziness or boredom. Delaying work due to this intentional element is often called procrastination (Ferrari, 2023). Most research on factors that influence procrastination behavior focuses more on individual factors; therefore, few include social relationship factors such as organizational justice and psychological contract breach.. Perceived organizational justice is one of the organizational factors that can be investigated from sociology and organizational behavior. Design/methodology/approach: This research was conducted through a survey of 195 education staff civil servants at three state universities in Indonesia. The data analysis used AMOS 17.0 Findings: The results found that organizational justice did not directly affect procrastination behavior but through the mediation of job satisfaction. The psychological contract breach was proven not to moderate the effect of organizational justice on job satisfaction. This research was conducted on education staff with civil servant status in state universities Research, Practical & Social implications: This research implication that an informal-unwritten work contract arrangement through a psychological contract will be effective according to the characteristics of the job and the organization. This study compares the effect of organizational justice on job satisfaction and procrastination behavior in the context of formal and informal contract arrangements. Originality/value: This study was motivated by two research gaps. First, a study on the effect of organizational justice on previous procrastination behavior showed a low R-square of 0.292 (Karimi & Andam, 2016). The resulting very low R-square number indicated that the effect was weak, thus it is necessary to have other variables that mediate or moderate to improve the results. Based on behavioral theory, there is a need for research that examines the role of job satisfaction in mediating the effect of organizational justice on procrastination behavior.
... However, different types of organizational cultures can be identified that mark the actions of individuals in the company (Cameron & Quinn, 2011), to the point of influencing the implementation of specific organizational policies (Li & Roloff, 2008;Tosi & Greckhamer, 2004). In the case of compensation policies, the type of cultural orientation drives the decision to implement performancebased compensation (Madhani, 2014;Triguero-Sánchez et al., 2018;Wei et al., 2008;Yeganeh & Su, 2011). ...
... As stated in the literature, compensation is essential for the employee and the company. It represents an expected reward mechanism for the employee based on their effort (Gomez-Mejia et al., 2014) and a complementary element for achieving the organization's strategic objectives (Madhani, 2014). At the same time, it represents one of the most critical costs from which a positive return is expected (Gupta & Jenkins, 1996). ...
... From the HRM literature, several studies recognize the effect of culture on corporate compensation practices (Li & Roloff, 2008;Tosi & Greckhamer, 2004;Yeganeh & Su, 2011). A key point in the results of these studies is the directionality and magnitude of the effect of organizational culture on compensation, which can vary from one cultural approach to another (Madhani, 2014;Wei et al., 2008;Yeganeh & Su, 2011). In this sense, the effect that organizational culture can exert on performance-based compensation in family businesses is presented following the typology proposed by Cameron and Quinn (2011). ...
his study aims to analyze how different types of organizational culture influence the implementation of performance-based compensation policies in family-owned micro, small and medium-sized enterprises (MSMEs) and whether the presence of the owning family in the management of the firm moderates this relationship. Hypotheses were statistically tested using a multiple hierarchical regression analysis with a cross-sectional sample of 315 family MSMEs located in three main cities in Colombia. The results obtained suggest that there is no single cultural path for implementing a performance-based compensation policy in family MSMEs, even when the presence of family members in managerial positions moderates this relationship. The clan, adhocratic, and market cultures favour using a performance-based compensation policy in family-owned MSMEs. This work contributes to the literature on human resources and family businesses by extending the existing knowledge on the relationship between organizational culture and compensation policies related to performance in family MSMEs. Furthermore, it offers empirical evidence in the Latin American context of a relationship treated mainly from a conceptual approach and in the Eastern context and developed countries.
... Sistem kompensasi tidak hanya terkait dengan aspek keuangan namun juga terkait sistem yang lain seperti sistem karir, sistem penilaian kinerja. Sistem kompensasi tidak hanya terkait dengan aspek administratif, namun dapat digunakan sebagai strategi untuk pencapaian tujuan organisasi (Bregn, 2008;Madhani, 2014). Struktur kompensasi (tetap-variabel, finansial-non finansial) dapat digunakan untuk mendorong perilaku produktif, mengendalikan perilaku kontra produktif (Yusuf, 2017), serta menjadi insentif perlaku tertentu (Mariani et al., 2019) seperti: perilaku inovatif, perilaku hidup sehat, perilaku prososial. ...
... Kompensasi pegawai di sektor publik terdiri dari kompensasi tetap-variabel, dan kompensasi finansial -non finansial (Madhani, 2014). Kompensasi tetap yaitu besarnya kompensasi yang dibayarkan sama untuk setiap periode penggajian. ...
Sistem kompensasi pegawai tidak hanya terkait dengan aspek administratif dan keuangan, namun dapat digunakan sebagai strategi untuk pencapaian tujuan organisasi. Studi ini bertujuan untuk membahas pengaturan sistem kompensasi pegawai sektor publik di tengah perubahan lingkungan yang semakin dinamis di era digital. Penelitian dilakukan dengan pendekatan kualitatif. Pertama, studi ini merangkum regulasi pengaturan sistem kompensasi dan penilaian kinerja pegawai negeri sipil pada sektor pelayanan publik di Indonesia di era digital, Kedua, studi ini mengevaluasi kelebihan dan kelemahan praktek yang ada, serta peluang pengembangan sistem kompensasi berbasis kinerja di tengah dinamika lingkungan. Penelitian menggunakan data sekunder terkait regulasi dan praktek yang diperoleh dari sumber online di media internet. Analisis dilakukan dengan pendekatan kualitatif. Hasil penelitian menemukan bahwa pengaturan dan standarisasi sistem kompensasi berbasis kinerja memberikan peluang pengaturan kerja yang menjamin kepastian dan keadilan. Teknologi digital memberikan kemudahan sistem kompensasi yang lebih terintegrasi dan fleksibel di tengah dinamika lingkungan. Namun demikian, pengaturan hubungan kerja formal di era digital memberikan kelemahan seperti: pegawai lebih mengejar aspek yang mudah terukur dibandingkan aspek substantif atau efektivitas kerja. Modul dan perangkat sistem kompensasi berbasis kinerja dalam hal ini perlu dukungan sistem sosial dan budaya kerja.
... Pemberian kompensasi bagi pegawai tidak hanya berkaitan dengan kegiatan administratif, tetapi juga menjadi bagian dalam manajemen strategi dan manajemen kinerja organisasi secara keseluruhan. Desain program pemberian kompensasi sangat penting karena terkait dengan manajemen kinerja (Hall & McCord, 2013), membangun iklim keadilan, insentif perilaku, dan instrumen untuk membangun budaya (Madhani, 2014). ...
... Tiap jenis kompensasi mempunyai karakterisik tersendiri yang dapat digunakan untuk memotivasi dan mempertahankan pegawai, mengendalikan konflik, insentif perilaku, mendorong penciptaan budaya, dan kinerja organisasi. Pemberian kompensasi bagi pegawai menjadi instrumen untuk insentif perilaku dan budaya (Madhani, 2014), seperti perilaku inovatif, kedisiplinan pegawai, perilaku in role dan extra role, perilaku pro sosial, perilaku hidup bersih dan sehat. Pemberian kompensasi bagi pegawai juga dapat menjadi insentif kinerja (Hall & McCord, 2013), seperti untuk mendorong kinerja penjualan, produktivitas, budaya penelitian, kualitas pelayanan, dan prestasi pegawai. ...
... Program pemberian kompensasi karyawan dipengaruhi oleh dua faktor, yaitu internal dan eksternal. Sebagaimana dikatakan oleh (Madhani, 2014) Pada level individu, besarnya kompensasi dipengaruhi oleh pengalaman, level jabatan, level pendidikan yang dibutuhkan, dan penilaian pengawas (Werner & Gemeinhardt, 1995). ...
Compensation programs need to be aligned with organizational policies and objectives. This article is a literature review on employee compensation programs in support of organizational policies and goals. Organizations can use a combination of fixed-variable compensation, direct-indirect compensation according to organizational goals. Fixed compensation is more appropriate for routine work, whereas variable compensation is more appropriate for behavioral incentives and performance-based management. The amount of direct compensation will provide autonomy for employees in spending their family needs, however, it does not guarantee employees to allocate it, such as for: education and training costs, sports, health insurance, old age insurance, recreation. These costs are more suitable for indirect compensation. Organizations can consider the amount of compensation both in planning, evaluation through several factors, namely internal employees, organizational environment, and external environment. Keyword: planning program, compensation, fixed-variable compensation, and organization.
... 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 compensation system is also known to have a significant effect on determining organizational culture (Li & Roloff, 2007). Madhani (2014) adds through the results of his research that the compensation system that is designed, developed, communicated and managed, can positively or negatively affect organizational culture. Given that individual reward plans are often criticized for having a negative effect on organizational culture (Pfeffer, 1998), the research design applied to this study adds a new perspective to the question of the relative attractiveness of individual and collective rewards. ...
This study aims to analyze and determine the effect of each variable on corporate strategy, organizational citizenship behavior and compensation on organizational culture and company performance in Forestry SOE: Perum Perhutani. The analytical instrument of this research is SEM (Structural Equation Modeling) through AMOS v.22 software which emphasized structural equation testing and model testing. The results of hypothesis testing from the model shows that: First, corporate strategy has a positive and significant effect on company performance. Second, organizational citizenship behavior has a positive and significant effect on company performance. Third, compensation has a positive and significant effect on company performance. Fourth, organizational culture has a positive and significant effect on company performance. Fifth, corporate strategy has a positive and significant effect on organizational culture. Sixth, organizational citizenship behavior has a positive and significant effect on organizational culture. Seventh, compensation has a positive and significant effect on organizational culture. In addition, the indirect effect test through the Sobel Test finds that organizational culture is able to intervene the effect of corporate strategy, organizational citizenship behavior and compensation on company performance.
... 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). ...
Goal: This research intends to propose a remuneration system adjusted to remote work conditions in Pandemic context, considering the types of Charles Handy’s Cultural Typology Design/Methodology/Approach: The research developed in this study is qualitative and descriptive. For data collection, a questionnaire elaborated based in a validated protocol was applied to the director and other employees at the company as a Simple Case Study. Results: According to the results, the Person Culture is the one most present at the Organization studied. The authors took into consideration the fact that the Task Culture is also greatly presented in the organizational culture of the company. The results indicate that the company would need to increase the share of variable remuneration in compliance with the more autonomous forms of work organization rules, as the home office way of work. The company also presents a good organizational climate, with a lot of collaboration and trust in the relations between its employees. Limitations of the Investigation: the limitations of the study are related to the fact that it is not possible to generalize the results to other small companies, considering that the organizational culture of the studied company is unique if compared to other companies. Other limitations refer to the fact that the study presents an initial overview of a home office situation at the beginning of the pandemic context, and other considerations can be made later. Practical Implications: The company should seek to increase the variable portion on the payroll of its employees. Because the people that work at the company have great autonomy, working remotely and being able to choose work hours, adopting a system that prioritizes variable portion of the salary is important so that the workers feel motivates to produce more, seeking a higher remuneration. Otherwise, with a good level of fixed remuneration, the workers can become less productive and comfortable Originality/Value: The research contributes to understand the remuneration strategies in new work contexts, especially in terms of the transition from presential work to home office in a digital market business.
... Compensation such as money, direct or indirect goods received by employees are the other form of company services which are returned (Madhani, 2014). The employee compensations are payment or reward given by company due to their performance (Khalid and Nawab, 2018;Yan and Sloan, 2016). ...
... /2021 53 shows that the amount of payment provided can affect employees' performance. A sound compensation system will have double effects in the company, which are, the result of operational costs and the effect of work behavior (Do, 2018;Khudhair et al., 2020;Madhani, 2014;Weldon, 2012). ...
This research aimed to analyze the nexus of transformational leadership (TL), compensation (CM), and knowledge management (KM) on employee performance (EP) through work motivation (WM) on engineering consulting companies in Capital Region of Jakarta. This was a causality research which used survey approach. The analysis unit of this research was some engineering companies represented by the experts of construction planners. They had high qualification and they were the members of National Association of Indonesian Consultant (Inkindo) in Capital Region of Jakarta, Indonesia. The target sample of this research was consulting company organizations represented by permanent experts or skilled manpower who worked in construction planning services. The data collection of this research was primary and secondary by using structural equation modeling with partial least squares method. The total respondent of this research was 106 who were the employees from selected engineering consulting companies in Capital Region of Jakarta. TL had a significant effect towards EP through work motivation. CM had a significant effect towards EP through WM. Lastly KM had a significant effect towards EP through WM. The importance of this research was taken from its context which was conducted in Capital Region of Jakarta, Indonesia. Moreover, this was one of initial efforts to indicate EP by considering TL, CM, and KM and to observe the use of EP for engineering consulting companies in Indonesia. The findings of this research could serve several inputs for organizations in developing the practices between WM dimension and KM expansion among consulting engineering companies in Capital Regional of Jakarta, Indonesia.
... 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. ...
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.