Handbook of Research on Comparative Human Resource Management
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Handbook of Research on Comparative Human Resource Management

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Edited by Chris Brewster and Wolfgang Mayrhofer

This unique and path-breaking Handbook explores the issue of comparative Human Resource Management (HRM) and challenges the notion that there can be a ‘one best way’ to manage HRM.
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Chapter 7: HRM Activities: Pay and Rewards

Marion Festing, Allen D. Engle, Peter J. Dowling and Ihar Sahakiants

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7 HRM activities: pay and rewards Marion Festing, Allen D. Engle Sr., Peter J. Dowling and Ihar Sahakiants Compensation is crucial for both employers and employees. It is an important source of motivation and an instrument for attracting and retaining employees (Milkovich and Newman, 2008). At the same time, it represents a significant part of the production costs of the firm, especially in developed industries. Most of the research in the field of international reward systems focuses on monetary elements of pay, which makes the analysis incomplete. Therefore, this chapter takes a broader perspective by focusing on the total compensation concept. This includes, in addition to the monetary elements, the non-monetary contributions of the employer. It has increasingly been used in recent work to provide the international comparability of national compensation data. Despite the importance of the field of compensation and rewards, the topic of international or comparative rewards is still an underdeveloped area. It is part of comparative management research, the major objective of which is to ‘identify aspects of organizations which are similar and aspects which are different in cultures around the world’ (Adler, 1984: 32). The academic work in this field either takes a macro-economic approach focusing on indicators for labour costs and productivity or follows a Human Resource Management perspective. In the latter case, latent variables such as the impact of the institutional or cultural environments on the choice of pay elements and attitudes are at the centre of consideration. The complexity involved in considering the...

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