Remuneration and reward systems during an economic crisis: case study from Attica region, Greece
-
DOIhttp://dx.doi.org/10.21511/ppm.18(2).2020.22
-
Article InfoVolume 18 2020, Issue #2, pp. 261-276
- Cited by
- 1049 Views
-
780 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study investigated the structure of employees’ remuneration and rewards systems, focusing on medium- and large-sized firms in the region of Attica in Greece during the economic crisis. Data were collected using a structured questionnaire based on relevant literature. A sample of 150 companies filled out a total of 500 questionnaires. The results revealed that medium- and large-sized companies applied various remuneration systems, including the base wage, performance-related bonuses, and a combination of additional non-wage benefits. Greek firms did not avoid wage cut in times of low turnover, although hypotheses testing revealed no relationship between firm size and the use of flexible remuneration systems. However, a positive relationship between the unions’ engagement and the use of non-wage cutting strategies was confirmed. Furthermore, a positive correlation between wage rigidity, labor market legislation, and collective agreements for setting minimum wage levels was found. Finally, a hypothesis test regarding the association between the firm, the business sector, and wages cut over the last seven years was accepted. The study concludes that wages cut should be the final choice by firms since remuneration is a source to satisfy, engage, and attract employees.
-
JEL Classification (Paper profile tab)E24, M52, M54
-
References61
-
Tables13
-
Figures2
-
- Figure 1. Scree plot
- Figure 2. ANOVA means plot
-
- Table 1. Demographic characteristics of firms
- Table 2. Reasons that refrain firms from cutting wages to reduce labor costs
- Table 3. Flexible benefits to employees per professional category
- Table 4. Percentage of employees in a company who have experienced wage cut over the last seven years
- Table 5. Incidence of wage cuts
- Table 6. Firms’ reaction to an unanticipated slowdown in demand
- Table 7. Descriptive statistics for the strategies that firms select to reduce labor costs
- Table 8. KMO and Bartlett’s test
- Table 9. Factor analysis of the strategies to reduce labor costs
- Table 10. Correlations between firm size and use of non-wage methods
- Table 11. Test statisticsa for the presence of unions and non-wage cost-cutting strategies
- Table 12. ANOVA results
- Table 13. Correlations between firm size and internal reasons
-
- Agell, J., & Bennmarker, H. (2002). Wage policy and endogenous wage rigidity: a representative view from the inside (CESifo Working Paper No. 751).
- Agell, J., & Bennmarker, H. (2006). Wage incentives and wage rigidity: A representative view from within. Labor Economics, 14(3), 347-369.
- Agell, J., & Lundborg, P. (1995). Theories of pay and unemployment: survey evidence from Swedish manufacturing firms. Scandinavian Journal of Economics, 97(2), 295-307.
- Agell, J., & Lundborg, P. (2003). Survey Evidence on Wage Rigidity and Unemployment: Sweden in the 1990s. Scandinavian Journal of Economics, 105(1), 15-29.
- Akerlof, G. A., Dickens, W. T., & Perry, W. L. (1996). The macroeconomics of low inflation. Brookings Papers on Economic Activity, 27(1), 1-75.
- Andrews, Y. (1988). The personnel function. Pretoria: HAUM.
- Armstrong, M., & Taylor, S. (2017). Armstrong’s Handbook of Human Resource Management Practice (14th ed.). Kogan Page Publishers.
- Aswathappa, K. (2017). Human Resource Management: Text and Cases (8th ed.) McGraw-Hill Education.
- Avouyi-Dovi, S., Fougere, D., & Gautier, E. (2010). Wage rigidity, collective bargaining and the minimum wage: evidence from French agreement data (Working paper No. 287). Banque de France.
- Babecký, J., Du Caju, P., Kosma, T., Lawless, M., Messina, J., & Rõõm, T. (2009). The Margins of Labor Cost Adjustment: Survey Evidence from European Firms (Working Paper Series No. 1106). European Central Bank.
- Babecký, J., Du Caju, P., Kosma, T., Lawless, M., Messina, J., & Rõõm, T. (2010). Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms. The Scandinavian Journal of Economics, 112(4), 884-910.
- Bartlett, M. S. (1950). Tests of Significance in Factor Analysis. British Journal of Statistical Psychology, 3(4), 77-85.
- Bewley, T. F. (1999). Why Wages Don’t Fall During a Recession. Cambridge, MA: Harvard University Press.
- Bewley, T. F. (2004). Fairness, Reciprocity, and Wage Rigidity (IZA Discussion Paper No. 1137). Institute for the Study of Labor (IZA), Bonn.
- Blinder, A. S., & Choi, D. H. (1990). A Shred of Evidence on Theories of Wage Stickiness. The Quarterly Journal of Economics, 105(4), 1003-1015.
- Brown, C., & Medoff, J. L. (2003). Firm age and wages. Journal of Labor Economics, 21(3), 677-697.
- Bullard, J., & Keating, J. W. (1995). The long-run relationship between inflation and output in postwar economies. Journal of Monetary Economics, 36(3), 477-496.
- Burns, N., & Grove, S. K. (2001). The practice of Nursing Research. Conduct, critique and utilization (4th ed.). WB Saunders Company, Philadelphia, PA.
- Campbell, C., & Kamlani, S. K. (1997). The Reasons for Wage Rigidity: Evidence from a Survey of Firms. The Quarterly Journal of Economics, 112(3), 759-789.
- Christofides, N. L., & Nearchou, P. (2015). Patterns of nominal and real wage rigidity. In S. W. Polachek & K. Tatsiramos (Eds.), Jobs, Training, and Worker Well-being (pp. 301-337).
- Creswell, J. W. (2014). Research Design: Qualitative, Quantitative and Mixed Methods Approaches. Sage, Los Angeles.
- De Kok, J. M. P. (2012). Do firm size and firm age affect employee remuneration in Dutch SMEs? (EIM Research Report No. H201210). Amsterdam Center of Entrepreneurship.
- De Kok, J. M. P., Fris, P., & Brouwer, P. (2006). On the relationship between firm age and productivity growth (EIM Research Report No. H200617). Zoetermeer: EIM.
- Dessler, G. (2017). Human Resource Management (15th ed.). Pearson Education Limited.
- Dias, A. D., Marques, C. R., & Martins, F. (2013). Wage rigidity and employment adjustment at the firm level: Evidence from survey data. Labor Economics, 23, 40-49.
- Doris, A., O’Neill, D., & Sweetman, O. (2013). Wage flexibility and the great recession: The Response of the Irish labor market (IZA Discussion Paper No. 7787). The Institute for the Study of Labor.
- Dowling, P. J., Welch, D. E., & Schuler, R. S. (1999). International Human Resource Management: Managing People in an International Context (3rd ed.). Cincinnati: South Western College.
- Fabiani, S., Kwapil, C., Rõõm, T., Galuscak, K., & Lamo, A. (2010). Wage Rigidities and Labor Market Adjustment in Europe. Journal of the European Economic Association, 8(2-3), 497-505.
- Fey, C. F., Björkman, I., & Pavlovskaya, A. (2000). The Effect of Human Resource Management Practices on Firm Performance in Russia. International Human Resource Management, 11(1), 1-18.
- Field, A. (2013). Discovering Statistics Using IBM SPSS Statistics (4th ed.). London: SAGE Publications Ltd.
- Franco-Santos, M., & Gomez-Mejia, L. (2015). Reward Systems. In Wiley Encyclopedia of Management.
- González-Pernía, L. J., Guerrero, M., Jung, A., & Peña-Legazkue (2018). Economic recession shake-out and entrepreneurship: Evidence from Spain. BRQ Business Research Quarterly, 21(3), 153-167.
- Hair, J. F., Black, B., Babin, B., Anderson, R. E., & Tatham, R. L. (2006). Multivariate Data Analysis (6th ed.). New Jersey: Prentice Hall.
- Hanes, C. (2000). Nominal wage rigidity and industry characteristics in the downturns of 1893, 1929, and 1981. American Economic Review, 90(5), 1432-1446.
- Harrison, D. A., & Liska, Z. (2008). Promoting Regular Exercise Occupational Fitness Programme. Journal of Personnel Psychology, 5(5), 27-45.
- Holden, S. (2002). The costs of price stability – downward nominal wage rigidity in Europe (NBER Working Paper No. 8865).
- Keeney, M., & Lawless, M. (2010). Wage Setting and Wage Flexibility in Ireland: Results from a Firm-Level Survey (Working Paper No. 1181). European Central Bank.
- Kessler, I. (2015). Remuneration Systems. In S. Bach & M. R. Edwards (Eds.), Managing Human Resources: Human Resource Management in Transition (Chapter 12).
- Kwapil, C. (2010). Firms’ Reactions to the Crisis and their Consequences for the Labor Market. Results of a Company Survey conducted in Austria (Working Paper No. 1274). European Central Bank.
- Lawler, E. E. (1990). Strategic pay: Aligning organizational strategies and pay systems. San Francisco, CA, US: Jossey-Bass.
- Lawler, E. E. (1995). The New Pay: A Strategic Approach. Compensation & Benefits Review, 27(4), 14-22.
- Levine, D. I. (1993). Fairness, Markets, and Ability to Pay: Evidence from Compensation Executives. American Economic Review, 83(5), 1241-1259.
- Maloney, M., & McCarthy, A. (2013). Managing Rewards. In R. Carbery & C. Cross (Eds.), Human Resource Management: an Introduction. UK: Palgrave Macmillan.
- Martins, F. (2011). Price and wage setting in Portugal: learning by asking (Working Paper Series No. 1314). European Central Bank.
- Mavridis, S. (2018). Greece’s Economic and Social Transformation 2008–2017. Social Sciences, 7(1), 9.
- Messina, J., & Sanz-de-Galdeano, A. (2014). Wage Rigidity and Disinflation in Emerging Countries. American Economic Journal: Macroeconomics, 6(1), 102-133.
- Mondy, R. W., & Martocchio, J. J. (2016). Human Resource Management (14th ed.). Pearson New International Edition.
- Montornès, J., & Sauner-Leroy, J. B. (2009). Wage-setting behavior in France. Additional Evidence from an Ad-Hoc survey (Working Paper No. 1102). European Central Bank.
- Nelson, R., Belkin, P., & Jackson, J. (2017). The Greek debt crisis: Overview and implications for the United States (CRS Report). Congressional Research Service.
- Papasotiriou, E., Sidiropoulos, G., Ntanos, S., Chalikias, M., & Skordoulis, M. (2018). The relationship between professional burnout and satisfaction: A case study for physical education teachers in a Greek urban area. Serbian Journal of Management, 13(2), 353-363.
- Psycharis, Y., Kallioras, D., & Pantazis, P. (2014). Economic crisis and regional resilience in Greece. Regional Science Policy & Practice, 6(2), 121-141.
- Pynes, E. J. (2013). Human Resources Management for Public and Nonprofit Organizations: A Strategic Approach (4th ed.). San Francisco, CA: Jossey-Bass, John Wiley & Sons.
- Shapiro, C., & Stiglitz, J. E. (1984). Equilibrium Unemployment as a Worker Discipline Device. American Economic Review, 74(3), 433-444.
- Sharma, S. (1996). Applied Multivariate Techniques. New York: Willey.
- Siahaan, E. (2017). The role of compensation: case of female workers. Polish Journal of Management Studies, 15(1), 197-205.
- Stachova, K., Stacho, Z., & Bartáková, G. (2015). Influencing organisational culture by means of employee remuneration. Business: Theory and Practice, 16(3), 264-270.
- Tabachnick, B. G., & Fidell, L. S. (2001). Using Multivariate Statistics (6th ed.). Pearson New International Edition.
- Taymaz, E. (2005). Are small firms really less productive? Small Business Economics, 25(5), 429-445.
- Trevor, J. (2008). Can Compensation be Strategic? A Review of Compensation Management Practice in Leading Multinational Firms (Working Paper Series 03/2008). University of Cambridge.
- Van Praag, C. M., & Versloot, P. H. (2007). What is the value of entrepreneurship? A review of recent literature. Small Business Economics, 29, 351-382.
- Wolfang, F., & Friedhelm, P. (2006). Reasons for wage rigidity in Germany. Labor – Review of Labor Economics and Industrial Relations, 20(2), 255-284.