1. Human resource executives' relative pay and firm performance.
- Author
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Chadwick, Clint, Guthrie, James P., Xing, Xuejing, and Yan, Shan
- Subjects
EVALUATION of organizational effectiveness ,PEARSON correlation (Statistics) ,STATISTICAL correlation ,PERSONNEL management ,EXECUTIVES ,LABOR productivity ,INCOME ,DATA analysis ,PROFIT ,EMPIRICAL research ,WAGES ,STRATEGIC planning ,DESCRIPTIVE statistics ,ORGANIZATIONAL structure ,STATISTICS ,THEORY ,QUALITY assurance ,MANAGEMENT ,REGRESSION analysis - Abstract
To operationalize the extent to which firms place a strategic emphasis on human capital and human resource management (HRM), we draw on the strategy field's dominant logic theory and on the emerging literature on executive compensation for the heads of major firm functions, such as HRM. Specifically, we investigate whether the pay of human resource executives (HREs) relative to other members of top management teams (TMTs) is related to firm performance. After controlling for the endogeneity of HRE status as one of the highest paid executives on the TMT, we find in a comprehensive sample of the largest US firms that HRE relative pay is positively related to firm financial performance, specifically Tobin's Q. We also find that the relationship of HRE relative pay with Tobin's Q is stronger in relatively smaller and younger firms in our sample. The findings suggest that a strategic emphasis on human capital and HRM leads to higher firm value. [ABSTRACT FROM AUTHOR]
- Published
- 2024
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