Marketing Executives’ Perceptions of a Salary Increase

by Charles Futrell, Patrick Schul



This article focuses on research which attempts to answers the nature of perceptions that executives hold regarding compensation. With continued escalation in the costs of maintaining an effective executive compensation program, the nature of executive compensation, and the overwhelming problems inherent in the turnover of the executive personnel, it is imperative that management be provided applicable recommendations on which to base its executive compensation planning. The objective of the research was to further investigate the nature of perceptions regarding salary increase, specifically, the perceptions of marketing executives. The proposed relationship between estimates of differential levels of salary increase and current salary level was analyzed. Organizational and individual characteristics of marketing and its executives were explored and linked to perceptions regarding salary increase in an attempt to further explain variations in pay perceptions. The nature of executive pay perception was further analyzed with respect to the individual effects of selected organizational and individual characteristics. The primary data analysis employed a three-way cross-classification. The Chi-square statistic was used to assess the statistical significance of the proposed relationship between executive perceptions and various demographic factors. Many firms continue to neglect consideration of organizational and personal characteristics in formulating their compensation policy, basing their pay increases on a constant, universally applied percentage of current salary. With continued work in the psychological meaning of pay, pay policies can be constructed to maximize cost considerations in terms not only of absolute dollar outlay but also of differences in executive expectations.

California Management Review

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