Salary Increase Criteria according to French Canadian, English Canadian and American Managers

The present study was designed to obtain information on each of the following questions: first, is there any significant differences between managerial perceptions regarding how their pay increases should be and actually are determined? Second, is there any differences between the criteria that should be and actually are used to determine salary increases of managers from different cultural milieu? Finally, which individual organizational characteristics may explain managerial perceptions regarding the criteria that should be used to determine their salary increases?

SAMPLES

Data to answer the research questions posed were gathered through questionnaires sent to three groups of American, French Canadian and English Canadian managers. The 180 American managers who answered the questionnaire come from 72 different organizations located in northern New York state. The 130 French Canadians and 79 English Canadians were from the Greater Montréal Metropolitain area.

The American managers were slightly older than both of the other two groups (mean ages were 41,38 and 32 years respectively). The Americans had more seniority with their firms (13 years) than the French Canadians (9 years) or the English Canadians (7 years). All samples were rather well educated. The American averaged 1.5,36 years of schooling, while the French averaged 14,78 years, and the English 16,12 years. The Americans were slightly better paid than the other groups. For instance, 26 percent of the Americans earned more than $2 000 per month while this is the case for only 14 percent of the French Canadians and 3 percent of the English Canadians.

MEASURES

Nine salary criteria were considered in this study: level of job performance, nature of job (difficulty and responsibility), amount of effort expended, cost of living, training and experience, budgetary considerations (financial condition of the organization), increases given to others inside the organization, increases given to similar other outside the organization, and seniority within the organization. Scales ranging from 1 to 7 (1 = minimum importance and 7 = maximum importance) were used to measure each of these criteria.

Managers were also asked for self-ratings (in comparison to co-workers) on the following dimensions: experience and education, seniority, effort, performance level and nature of job (difficulty and responsibility).

Finally, the following questions were included in the study: the immediate superior's influence on salary increases, the degree of accuracy with which the immediate superior measures performance, the nature of the relationship between the respondent: and his immediate superior, and finally the extent to which managers know the criteria that are actually used by their organizations to determine their salary increases.

RESULTS

Table 1 shows the mean ratings of the importance managers feel is placed on each of the nine salary criteria in determining the size of their salary increases.

The three populations share the same feelings in many respects. All of them feel that their performance is the most important criteria used to determine their salary increases. Following, in order of importance, are the financial situation of the firm, the nature of the job, and effort expended. Cost of living and seniority are perceived to be the least important.

The only major difference between the three groups pertains to the fact that French Canadian managers feel that their organizations weigh salary increases given to similar others outside the organization more heavily than the American or English Canadian managers do.

Table 2 shows the mean ratings of the importance managers feel should be placed on each of the nine salary criteria in determining the size of their salary increases.

Again, we find many similarities across the groups studied. Nevertheless, relative to the other two groups French Canadians feel that greater importance should be given to their effort, the financial condition of their organizations, and to salary increases given to others inside as well as outside the organization. Furthermore, Americans and French Canadian managers feel that seniority should be given more importance than the English Canadians do (although all three groups rate this as a relatively unimportant factor).

Clearly most of the values in Table 2 are higher than those in Table 1, suggesting that managers generally feel that greater importance should be given to most salary criteria than currently is given. However, three exceptions can be noticed. First, American as well as English Canadian managers feel that less importance should be given to budgetary considerations. Second, these same two populations think that too much importance is given to salary increases given to others inside the organization. Finally, all three populations feel that seniority should be accorded less importance than it is.

In conclusion, although similarities and differences exist across the three groups, some general patterns are evident. First, performance is clearly the criterion managers feel should be the most important in salary increase decisions. Second, managers feel that budgetary considerations should be one of the least important criteria ; certainly not more important than the nature of the job or amount of effort expended. Third, they feel that noi enough importance is given to the cost of living. Finally, in their views seniority should be the least important criterion to be considered in determining managerial salary increases.

Table 3 shows the results of multiple regressions where the dependent variables are the criteria that should be used to determine salary increases. The independent variables are the self-ratings, demographical and organizational characteristics, and the criteria that are used to determine salary increases according to managers. Finally, dummy variable was used for the populations.

The selected demographical and organizational variables and the cultural milieu of the groups account for seven to fifty percent of the importance that should be given to the different salary increase criteria.

Generally, the cultural variable is not very much related to the different criteria. Specifically however, the fact of being French Canadian as opposed to American or English Canadian is related to the importance that should be given to salary increases given inside as well as outside the organization. The fact of being American as opposed to French or English Canadian is related to the importance that should be given to the financial conditions of the firm and to seniority.

CONCLUSION

The results of this study suggest the following conclusions:

1. Even though managers across populations tend to weigh the salary increase criteria that are used practically the same way, this is not the case for the criteria that should be used :

a. Americans feel that the most important criteria should be performance, nature of the job, effort, cost of living and training and experience. Following these should be the size of salary increases given outside of the organization and budgetary considerations. Size of salary increases given to others inside the organization is farther down the hierarchy while seniority is at the bottom.

b. French Canadians think that performance, nature of the job and effort should be the most important salary increase criteria. Cost of living, training and experience, budgetary considerations and size of salary increases given to others outside as well as inside the organization should come second. Seniority, alone, is in the last tier of criteria.

c. The English Canadians would like that their organizations consider first their performance, the nature of their job, the cost of living, the effort that they expend in their job and their training and experience in determining their salary increases. Second should come size of salary increases given outside the organization and budgetary considerations. Size of salary increases given to others inside the organization should be third. Finally, should come seniority.

2. Even though the cultural variable is generally not much related to the different criteria that should be used to determine salary increases, it explains part of the feelings expressed concerning certain criteria. On one hand, the fact of being American as opposed to French or English Canadians is related to the importance that should be given to the financial conditions of the firm and to seniority. On the other hand, the fact of being French Canadian as opposed to American or English Canadian is related to the importance that should be given to salary increases given inside as well as outside the organization. French Canadians thus seem to be relatively more concerned about equity than Americans and English Canadians seem to be.

Overall, the present study suggests that researchers and practitioners in the area of compensation may do well to give greater attention to managerial perceptions regarding salary increase criteria. At stake here would seem to be not the mere satisfaction of managers' whims and fantasies but rather important implications for motivation, pay satisfaction and decisions regarding a more useful allocation of organizational rewards.