Understanding Cultural Influence on Perceptions of Performance-Based Pay:
Insights from a multi-national SME
Based on the findings of the literature review, the influence factors on employees’ perceptions of target-based pay, as defined by previous researchers, were mapped with Hofstede’s VSM framework. During the verification of the findings of the literature review, through discussions with a practitioner expert panel, a further cultural factor “general pay perception” was added to the original form of Hofstede’s model.
A survey was then designed to examine the influence of the cultural factors on the employees’ perceptions of target-based pay in a multi-national manufacturing SME with subsidiaries in Germany, the Czech Republic and China.
The data were initially explored by means of a factor analysis, which refined the survey scale into a 6-dimensional structure detailing the cultural factors at play. These 6 dimensions were in line with the extended VSM framework determined previously in this study. This framework, with its underlying attributes, was employed as an assessment instrument of the cultural influence on perceptions of target-based pay in further process of this research. The reliability and validity of the assessment instrument was successfully tested and subsequently the results were verified and validated through panel discussions. The survey data were also explored in two comparison studies using descriptive statistics: the cross-country comparison and the organisational position comparison.
This research makes a contribution to knowledge by developing a methodology for the study of cultural influence on perceptions of target-based pay and by providing valuable real-world data for future research.