(Crealis) -- Job satisfaction is somewhat connected to whether you consider that you are being paid a fair salary. To have a successful compensation system, companies must take perceived fairness into account.

But what’s fair? In one country, employees might expect higher wages for completing higher education, while in another, employees with a large family could expect to pocket more than those without kids, based solely on practical need.

IESE Prof. Carlos Sánchez Runde and Purdue University Prof. Greg Hundley question just how much people’s judgments of pay fairness can be attributed to their national culture. Their research, “Cross-National Differences in the Determination of Pay Fairness Judgments: Do Cultural Differences Play a Role?” was published as a chapter in the latest volume of The Global Diffusion of Human Resource Practices: Institutional and Cultural Limits (Advances in International Management).

The authors surveyed managers in eight countries: Argentina, Nigeria, Peru, the Philippines, Spain, Thailand, the United States and Uruguay. The respondents judged the fairness of someone’s salary according to five qualifications: individual job performance, organizational performance, seniority, education and employee need.

The responses, grouped by country, were examined against the culture of that country, which was measured on a scale of individualism versus collectivism.

Testing Assumptions

You might expect that an individualistic society would be more inclined to give higher compensation to a worker for showing strong job performance, while in a collectivist society you would expect organizational performance would count as more important.

International businesses need to know if such assumptions are accurate or not when implementing pay systems. A better understanding of how cultural differences affect pay satisfaction can help them decide if different pay systems are needed.

While the research finds that, yes, a more collectivist country does tend to be less sensitive to individual performance, some surprises emerged. In highly collectivist societies, such as Peru and Uruguay, for example, there was almost equal evidence that they are just as, if not more, sensitive to individual performance, in comparison with a highly individualistic country like the United States.

The assumption that pay fairness is more sensitive to the organization’s financial success in collectivist countries only holds true when contrasted with the United States. In general, however, there was too much variation among all the collectivist countries for the authors to conclude that this always holds true.

Furthermore, the authors found no strong cross-cultural pattern to make any generalizations regarding the impact of someone’s education or seniority on perceived pay fairness.

The most notable pattern emerged in the four Latin countries studied: Peru, Uruguay, Argentina and Spain. Here sensitivity to individual and business performances was much stronger than in any of the other countries. But, as these countries are not similar enough in their individualistic nor collectivist orientation, national culture cannot be said to play a role.

Differences Not Driven By Culture

So, while there are substantial differences between nations in the way judgments are made about pay equity, the authors argue that these cannot be explained by differences in national culture alone. They conclude that the failure to find such a connection requires new lines of inquiry.

Companies need to be careful in assuming that a nation’s collectivist or individualistic culture dictates certain judgments in pay fairness. And they cannot expect two countries with the same pay schemes to both think that their salaries are fair, even if they share a similar culture.

Subscribe in a reader

Related Posts by Categories

Widget by Hoctro | Jack Book