Section Five
and culture does wonders for self-esteem and an
eagerness to learn, not to mention performance.^6As this excerpt indicates, in addition to the ability of
compensation practices to complement other sources of
motivation, they tend to work best where organizational
contingencies, such as culture, are taken into account. As the
individual practices are discussed, a number of contingencies
will be noted that are probably important to consider before
implementing even the most robust of the potential “universal”
best practices.
High Compensation Linked to
Organizational Performance
As with many compensation issues, there are different
perspectives on high compensation as well as on making it
contingent on organizational performance. Professor
Jeffrey Pfeffer has asserted that it is folly for some companies
to claim that their employees are their source of competitive
advantage while they pay their workforces only the market
average. He points out that Home Depot has achieved success
because of its superior workforce, maintained by paying
relatively high wages in a low-wage industry.^7 Unfortunately,
while there is anecdotal evidence that supports this assertion,
there are few empirical studies on the impact of high wages