Theorizing strategic IT compensation decisions: Coping with certainty in organizations through IT compensation

Date of Award

2007

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Information Management and Technology

Keywords

Information technology, Compensation, Coping, Organizations, Contingency theory, Agency theory

Subject Categories

Library and Information Science | Social and Behavioral Sciences

Abstract

With the advance of information technology, organizations of different kinds have increased their demands and reliance on skilled IT labor in order to compete in dynamic markets. IT compensation has been identified as a critical lever to attract and retain IT professionals, and to reduce IT turnover. IT compensation planning is also recognized as a viable vehicle for organizations to cope with uncertainty at different levels. Therefore, understanding how to compensate IT professionals leads to effectiveness of managerial decision-making in compensation planning, strategic management of IT human capital and IT service contract design.

The purpose of this dissertation research is to develop a theoretical framework that helps to explain the relationships between the configuration of IT compensation and multiple levels of decision factors.

This dissertation research draws on two approaches of theory building: cumulative literature review and case study research. The theory building process consists of three stages. In the first stage, an integrated theoretical framework is developed from cumulative literature across disciplines (organization theories and compensation studies). In this stage, the focus is on reducing redundant construct terms used in different literature, developing, and specifying precise definitions and level issues of constructs, and delineating relationships between constructs.

In the second stage, a pilot case study is used to elaborate and provisionally test the initial theoretical framework to gain novel slants that have not yet been found in the literature.

In the third stage, another four cross-nation cases are then used to replicate the theoretical framework. In sum, this dissertation research draws on five cases cross four industries: media, software and networking, civil construction consulting, banking and financial services. Each of these industries represents high levels of information intensity.

This dissertation research finds that practices in IT compensation planning focus largely on market-based, monetary rewards. The alignment between IT compensation and business strategies, as well as the utility of non-monetary rewards, was exhibited in different ways by the firms studied, and often with different rationale for how this helped the firm reduce IT uncertainty. The findings of this dissertation research also suggest that there can be internal compensation competition among knowledge workers such as between IT professionals and other types of professionals. The status of the IT division can also influence this internal competition and managerial IT compensation decisions. Findings also show that sourcing strategies are linked to IT compensation and coping with uncertainty.

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