ABSTRACT
Decision makers face a number of choices in setting compensation levels and establishing other pay practices. Some organizations appear to prefer “tried and true” practices, consulting specific, detailed, and well-accepted encyclopedias for designing compensation systems and adopting common approaches (e.g., Milkovich, Newman, & Gerhart, 2013). On the other hand, some organizations prefer to innovate and experiment with alternative forms for base pay, benefits, and different types of incentives. Recent years have seen a number of changes in compensation practices in Asia, as more organizations appear to be experimenting voluntarily or, in some cases involuntarily, with so-called Western or global-style compensation practices. These practices shift the historical emphasis away from seniority, status, hierarchy, and respect, and toward merit, effort, and performance measures (hereafter, pay-for-performance). For example, South Korean organizations had been known to rely mostly on a seniority-based compensation practices, but by 2005 nearly one-half of all Korean organizations adopted some form of pay-for-performance compared to 1.6 percent in 1996, according to the Korean Ministry of Labor (Yang & Rowley, 2008).
