Strategic reward systems : A contingency model of pay system design

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

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Original languageEnglish
Pages (from-to)777-792
Journal / PublicationStrategic Management Journal
Issue number8
Publication statusPublished - Aug 2001
Externally publishedYes


A limited number of studies have addressed the idea of 'strategic ' reward systems-the matching of compensation systems to a firm's strategy. Prior research on this topic has been confined to U.S. firms, however, and a number of key questions remain unanswered. Using a sample of 917 employees from two large Swiss financial institutions, we found that pay systems are linked with divisional strategic orientation, but in a different form than prior studies. Additionally, we identify hierarchical position as an important variable in the tailoring of reward systems. Hierarchy has a significant main effect on pay plan design, and an interactive effect with strategic orientation. Copyright © 2001 John Wiley & Sons, Ltd.

Research Area(s)

  • Compensation, Contingency theory, International, Managerial discretion