Does the Size of the Organization Affect Compensation Strategies? An Empirical Analysis


  • Nancy E. Day University of Missouri - Kansas City


Little is known about how compensation strategies in sn1all businesses differ from those in large firms. Based on past research involving organizational characteristics and pay strategies, assumptions were initially made that small firms would exhibit more flexible, egalitarian and non-traditional pay strategies, serving to maximize pay-at-risk  and minimize pay levels to reduce the fixed costs of employment. Consequently, data on compensation policies were analyzed from 148 successful small and large businesses. Contrary to predictions, there were no differences between small and large organizations in pay level, pay structure, emphasis on market competitiveness or emphasis on paying for performance. Implications of these findings are discussed in terms of their relevance to the small business decision maker.


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