How do cultural values influence compensation decisions? This research examines the role of equity, equality, and need as determinants of pay allocations among Chinese and US managers in a role-play scenario. The study reveals distinct differences in distributive justice principles across cultures, highlighting the importance of cultural sensitivity in designing compensation systems. The study involves a role-play in which Chinese and US managers allocate a hypothetical bonus to a work group. The results indicate that Chinese managers prioritize equality, employing equity, equality, and need rules. US managers emphasize equity, utilizing equity and equality rules. Chinese managers also placed greater emphasis on the need rule than did US managers. These findings underscore the importance of considering cultural values when designing pay systems to ensure fairness and motivation across diverse workforces. Understanding the relative importance of equity, equality, and need in different cultures can inform effective compensation strategies that align with employee expectations and promote a positive work environment. Appropriate pay design is essential.
As a publication in Employee Relations, this paper aligns with the journal's focus on workplace dynamics and human resource management. The examination of cultural differences in pay allocation contributes to the journal's exploration of fairness and equity in the workplace. The citations reflect the paper's engagement with existing literature in organizational behavior and cross-cultural management.