1. N O V I T A D E W I N U R ’ A I N I
B A T C H 6
1 2 6 3 6 2 0 0 3 9
“HR –Compensation”
An Overview of HR – The
Impact of Compensation
Meiyu Fang, Ph.D.
Assistant Professor
Institute of Human Resource Management
National Central University, Taiwan
Human Resources
Management in
Hospitality & Tourism
Prof. Syamsir Abduh
85

2. Introduction
Compensation is the remuneration received by
an employee in return for his/her contribution to
the organization. It is an organized practice that
involves balancing the work-employee relation by
providing monetary and non-monetary benefits to
employees.
HRM is the management of an oganization’s
workforce, or human resources. It’s responsible
for the attraction, selection, training, assessment
and rewarding of employees, while also
overseeing organizational leadership and culture
and ensuring compliance with employment and
labor laws.

3. Introduction
Strategic human resource management is the
involvement in designing and implementing a set
of internally consistent policies and practices,
which aim to accomplish its business objective
Compensation also includes payments such
asbonuses, profit sharing, overtime pay,
recognition rewards and checks, and sales
commission. Compensation can also include non-
monetary perkssuch as a company-paid car, stock
options in certain instances, company-paid
housing, and other non-monetary, but taxable,
income items..

4. Introduction
Porter (1985) suggested
that human resource
management (HRM)
helps a firm obtain
competitive advantage
by lowering costs, by
increasing sources of
product and service
differentiation, or by both
.
Youndt, Snell, Dean, &
Lepak's (1996) found that
administrative HR systems
(i.e., control HR in
Authur's terms) are
appropriate in the
contexts that emphasize
reducing costs and
eliminating uncontrollable
behavior
 Snell and Dean (1992) found
that the use of advanced
manufacturing technology and
Business, compensation
strategy, and firm
performance, p. 4
 total quality management were
positively related to selective
staffing, comprehensive
training, developmental
appraisal, and externally
equitable rewards
Lengnick-Hall & Lengnick-Hall
(1988) argued that the
integration of human resource
management and corporate
strategies can provide a broader
range of solutions for solving
complex organizational problems,
and it can ensures that human,
financial, and technological
resources receive equal amount
of consideration in setting goals
and assessing the capabilities of
implementation.
Jackson, & Schuler, 1997;
Gerhart & Milkovich, 1992;
Gomez-Mejia &
Balkin, 1992). Due to the
high investment and high
return, firms in the high-tech
industry may have a bigger
incentive than traditional
manufacturers to provide
rewards commensurate with
those of competitor firms

5. Literature Review
The compensation measures were modified
from the compensation strategy patterns
proposed by Gomez-Mejia and Balkin (1992).
The scale includes the pay level, the emphasis
of pay for performance, and the profit
sharing. All items use five-point Likert format.
The pay level scale, consisted of two items,
asks the hr managers to compare their pay
level with that of their competitors

6. Literature Review
One of the challenges facing firms in today’s business
environment is the transformation to a new paradigm
(Drucker, 1990). A lot of evidence suggests that the
failure of some firms to make this transition is due to
the mismanagement of people rather than to problems
with technical systems (Ettlie, 1988; Majchrzak, 1988).
Lengnick-Hall & Lengnick-Hall (1988) argued that the
integration of human resource management and
corporate strategies can provide a broader range of
solutions for solving complex organizational
problems, and it can ensures that human, financial, and
technological resources receive equal amount of
consideration in setting goals and assessing the
capabilities of implementation.

7. Literature Review
1. Many researchers (Balkin & Gomez-
Mejia, 1987; Begin, 1993; Gomez-Mejia &
Balkin, 1992; Schuler & Jackson, 1987)
attempted to show how a number of HR
practices are consistent with different
strategic positions and how these practices
relate to firm performance.
2. Strategic human resource management
is the involvement in designing and
implementing a set of internally consistent
policies and practices, which aim to
accomplish its business objective (Jackson
& Schuler, 1995 )

8. Literature Review
3. MacDuffie (1995) derived specific
configurations, or “bundles.” of HR practices
that enhance firm performance. Ichniowski,
Shaw, and Prennushi attempted to test the
hypothesis that “combinations of HRM
practices have bigger effects on productivity
than the sum of the component effects due to
individual practices (1994:9)

9. Conclusions
• It is usually believed that higher pay level will attract better
talents, and as results of their better performance, the organizational
will have a better performance. This rationale can easily explain why the
pay level is positively associated with the Business, compensation
strategy, and firm performance, p. 18
 perceived-organizational performance in the present study.
However, the presnt study did not find the link between pay level and
ROA.
 The present study also found that pay for performance was negatively
associated with both subjective performance measure and ROA. The
findings are contradictory to what most of the motivation literature of
pay for performance would claim. Cognitive evaluation theory
(Ryan, Mims, and Koestner, 1983; Deci & Ryan, 1985) might offer some
possible explanations. According to CET, the influence of pay for
performance on intrinsic motivation is a function of two reward aspects.
First, rewards have a controlling aspect. The controlling aspect would
lead to a decrease in performance. On the other hand, the informational
aspect can actually increase intrinsic motivation, and thus increase
performance.

10. THANK YOU