addressed in this chapter—pay form, structure, and level—there are a myriad of
issues that require the proverbial ‘additional future research.’ While evidence
clearly suggests that ‘money matters,’ in the sense that it aVects many aspects of
individual and organizational behavior and performance, it is often unclear as to
‘how’ or ‘why’ this occurs.
As one example, while paying an above-market wage can improve organizational
eVectiveness (e.g. Brown et al. 2003 ), this is not always true (Gerhart and Milkovich
1990 ). In part this is because pay-level eVects depend on contingencies such as, for
example, use of contingent pay and pay structure. In fact, the uncertainty about
this issue may leadWrms to ‘play it safe’ and attempt to conform to market pay
norms: ‘the consequences associated with paying too little or too much may be so
serious that organizations avoid risky experimentation with pay level strategies’
(Gerhart and Milkovich 1990 : 685 ).
Although compensation practice remains imbued with ambiguity, itisimport-
ant—the vast array of research and writing devoted to compensation issues is a
testament to this fact. Recent years have witnessed signiWcant progress; future
research can inform practice by continuing to reduce uncertainty surrounding
organizational reward systems.
References
Akerlof, G. A., and Yellen,J.L.( 1986 ).EYciency Wage Models of the Labor Market.
Cambridge: Cambridge University Press.
Arthur, J. B., and AimanSmith,L.( 2001 ). ‘Gainsharing and Organizational Learning: An
Analysis of Employee Suggestions over Time.’Academy of Management Journal, 44 :
737 54.
and Huntley, C. L. (forthcoming). ‘Ramping up the Organizational Learning Curve:
Assessing the Impact of Deliberate Learning on Organizational Performance under
Gainsharing.’Academy of Management Journal.
and Jelf,G.S.( 1999 ). ‘The EVects of Gainsharing on Grievance Rates and Absentee
ism over Time.’Journal of Labor Research, 20 :133 45.
Azfar, O., and Danninger,S.( 2001 ). ‘ProWt Sharing, Employment Stability and Wage
Growth.’Industrial and Labor Relations Review, 54 :619 30.
Barber, A. E., and Bretz,R.D.( 2000 ). ‘Compensation, Attraction and Retention.’ In
S. L. Rynes and B. Gerhart (eds.),Compensation in Organizations: Current Research and
Practice. San Francisco: Jossey Bass.
Becker, B. E., and Huselid,M.A.( 1992 ). ‘The Incentive EVects of Tournament Compen
sation Systems.’Administrative Science Quarterly, 37 :336 50.
Bloom,M.( 1999 ). ‘The Performance EVects of Pay Dispersion on Individuals and
Organizations.’Academy of Management Journal, 42 :25 40.
and Michel,J.G.( 2002 ). ‘The Relationship among Organizational Context, Pay
Dispersion and Managerial Turnover.’Academy of Management Journal, 45 :33 42.
remuneration: pay effects at work 359