Topic: Compensation, Culture, Motivation, Rewards, Organizational Reputation
Publication: The International Journal of Human Resource Management
Article: Compensation as a Signal of Organizational Culture: The Effects of Advertising Individual or Collective Incentives
Author: K. Kuhn
Reviewed By: Lit Digger
It is commonly assumed that compensation and rewards systems reflect the cultures of the organizations that implement them, but what type of message is being received by your organization’s job applicants?
Kristine Kuhn (2009) conducted an experimental study to investigate how job advertisements’ simple statements about an organization’s compensation structure would affect applicant perceptions of organizational culture. In the same article, Kuhn conducted an additional study to see how job advertisement differences in compensation structure statements would affect applicants when they were forced to choose one organization over another. (Yes, this article was two-for-one – jam-packed with researchy goodness!)
Kuhn found that applicants were more likely to perceive an organization’s culture as individualist when that organization’s compensation structure statement suggested that employees would be rewarded for individual performance or skill. In contrast, applicants were more likely to view an organization’s culture as collectivist when that organization included a compensation structure statement suggesting that employees would be rewarded with profit sharing across the company or from taking part in a high-performing team. This is a notable finding because, aside from commonly held assumptions, little empirical research exists on this topic.
Kuhn also noted that some job seekers may be more likely to be high on idiocentrism, meaning that they would view themselves as, in her words, “independent entit[ies]” such that personal achievements would naturally take precedence over group achievements. (For you curious cats, the alternative to this would be allocentrism, which involves viewing yourself in relationship to others and having a more interdependent worldview). Regarding this idea, Kuhn found that the relationship between idiocentrism and the applicant’s attraction to a company was affected by the applicant’s perceptions of the company’s culture in the following way:
· If I perceive the company’s culture to be highly individualistic, and the more idiocentric I am in my worldview, the more likely I am to be attracted to that company.
· On the other hand, if I perceive the culture as not very individualistic, and the less idiocentric I am in my worldview, the chances are greater that I will be attracted to that
So perceptions of organizational culture MATTER, especially when job applicants are forced to choose one organization over another (Sound like the real world to you? Sure does to me). And if perceptions of organizational culture are affected in part by the language used in job advertisements, editors beware! If you’re sending the wrong message to your job applicants, you’ve just missed your first (fairly inexpensive and easy) opportunity to give that potential newbie a realistic job preview, and you’re risking one more head on your end-of-the-year turnover count.
So think of this as an opportunity. Consider your organization’s compensation structure, the message it’s sending to your current employees, and the message that’s being received by your job applicants. If all of the above are in alignment with your organization’s values and intentions, proclaim away… and may the best applicant win.
Kuhn, K. (2009). Compensation as a signal of organizational culture: The effects of advertising individual or collective incentives. The International Journal of Human Resource Management, 20 (7), 1634-1648.