Pulling in different directions? Exploring the relationship between vertical pay dispersion and high-performance work systems

Authors

Jake G. Messersmith, University of Nebraska–LincolnFollow
Kyoung Yong Kim, City University of Hong KongFollow
Pankaj C. Patel, Villanova UniversityFollow

ORCID IDs

Kyoung Yong Kim http://orcid.org/0000-0002-1917-6781

Pankaj C. Patel http://orcid.org/0000-0003-4934-8166

Date of this Version

2017

Citation

Published in Human Resources Management, 2017, 17pp. doi 10.1002/hrm.21846

Comments

Copyright © 2017 Wiley Periodicals, Inc. Used by permission.

Abstract

Vertical pay dispersion (VPD), a hierarchical pay structure used to motivate employees, has traditionally been studied separately from high-performance work systems (HPWSs). As a component of HPWSs, incentive-based compensation schemes focus on employee- or team-level incentives. However, the influence of the simultaneous utilization of VPD and HPWS on performance remains understudied. This study addresses the question of whether these approaches to managing human capital serve as complements or substitutes to one another. VPD and HPWS are argued to substitute for one another with respect to motivation- and skill-enhancing practices. The opposite notion is true in regard to opportunity-enhancing HPWSs, which serve to amplify the effectiveness of VPD. In a multisource, longitudinal sample of South Korean firms, the hypothesized predictions are supported.