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Reference compensation: a transfer of reference price theory to human resource management

Abstract

The topics of compensation in human resource management and pricing in marketing theory both involve a monetary component that is important for companies to manage. While the role that price perceptions play for consumers is the subject of the well-established reference price theory, human resource management theory lacks any related concept for the compensation perceptions held by employees. This paper transfers reference price theory to HR management in the form of reference compensation, conceptualized as an individual’s compensation norm, including normative and predictive compensation expectations. Possible measures to influence employees’ reference compensation are suggested and avenues for further establishing the concepts in research and practice are developed. As a first empirical attempt to support the relevance of the concept, we present results of an exploratory study among 88 part-time students. We show that employees apply references when judging compensation, and that the applied references vary with different employment situations.

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Notes

  1. Intracoder reliability describes one single coder’s consistence in transferring data into code. Intercoder reliability describes the degree to which two independent coders produce the same results when coding source data.

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Acknowledgments

This paper has strongly benefitted from very useful suggestions made by three anonymous referees. Moreover, the authors are thankful to the participants of the European Reward Management Conference 2007 in Brussels. The empirical part of this paper has been realized at the Salzburg University of Applied Sciences in Austria.

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Correspondence to Dirk C. Moosmayer.

Appendix

Appendix

Table 3 Empirically identified reference compensation elements (in alphabetical order)

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Siems, F.U., Goelzner, H. & Moosmayer, D.C. Reference compensation: a transfer of reference price theory to human resource management. Rev Manag Sci 6, 103–129 (2012). https://doi.org/10.1007/s11846-010-0055-0

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Keywords

  • Reference compensation
  • Compensation satisfaction
  • Reference price
  • Exploratory study

JEL Classification

  • M31
  • J33