Internal Wage Structures and Organizational Performance

• Published in: British journal of industrial relations Vol. 41; no. 1; pp. 53 - 70
• Main Authors: Beaumont, P. B., Harris, R. I. D.
• Format: Journal Article
• Language: English
• Published: Oxford, UK and Boston, USA Blackwell Publishing Ltd 01.03.2003; Blackwell
• Subjects: Economic models; Economic performance; Hypotheses; Job performance; Labour productivity; Labour relations; Organization theory; Organizational structure; Professional relations. Trade unions; Sociology; Sociology of work; Sociology of work and sociology of organizations; Studies; United Kingdom; Wage & salary administration; Wage structure; United Kingdom > UK; Productivity; Hierarchy; Work Organization; Salary; Professional Relation; Industrial Sociology; Income; Sociology of work; Performance; Statistics
• ISSN: 0007-1080; 1467-8543
• DOI: 10.1111/1467-8543.00261

This paper considers whether a hierarchical or compressed wage structure is positively associated with relatively high levels of organizational performance. To date, there has been little empirical research in this area (especially in the UK). Thus we present an operational measure of a compressed/hierarchical wage structure, using UK manufacturing micro–data in five industrial sectors, and examine its relationship with labour productivity. We find that the wage compression argument holds in one sector but not for the majority of sectors and that taking into account other, intra–industry characteristics, namely size and ownership differences, further weakens the relationship.