Human Resource Issues among SMES in Eastern Europe: A 30 Month Study in Belarus, Poland, and Ukraine

Abstract

ABSTRACT In the present study we examine the applicability of some traditional human resource management theories to 374 owners of small to medium sized enterprises in border cities of Belarus, Poland, and Ukraine. We examine the relationships between facets of job satisfaction and annual income, and between facets of job satisfaction and performance. It is found that performance and annual incomes were relatively unrelated to facets of job satisfaction with multiple R's in the range of .05 to .34. We also found that within the time period studied that 17.4% of the owners left their businesses for greener pastures. We conclude that many findings based in traditional Western human resource management about the relationships between performance, income, and job satisfaction designed for use with employees do not seem to operate well with business owners in Eastern Europe. INTRODUCTION Compensation has long been a topic of interest to employees and employers alike. In fact, the use of compensation as a motivator has been traced to antiquity (Peach & Wren, 1992). The concept of an employment relationship implies that employees work in exchange for some reward, and this reward is often monetary compensation (Brockner, 2002). Satisfaction with pay satisfaction has been shown to exhibit significant relationships with organizationally important outcomes such as absenteeism (Weiner, 1980), turnover intentions (Griffeth & Gaertner, 2001), perceived organizational attractiveness for job seekers (Heneman & Berkley, 1999) organizational citizenship behaviors (Lambert, 2000), and job performance (Mulvey, LeBlanc, Heneman, & McInerney, 2002; Werner & Mero, 1999). As noted by Rice, Phillips, and McFarlin (1990), one of the most intriguing findings with respect to pay satisfaction is the strength of the relationship between how much an individual is actually paid and that individual's pay satisfaction. This relationship typically has been positive and statistically significant and able to explain around 25% of the variance in pay satisfaction. Interestingly while compensation costs have increased dramatically over the last fifty years, there is solid evidence that employees tend to grossly underestimate the total costs of their pay packages (Convey, 2000; Kerr, 1999). It would appear that instead of perceiving many parts of the packages as an added form of compensation, many employees perceive them as a right (Milkovich and Newman, 2002). Even if an employee undervalues a compensation package, this does not necessarily indicate that he/she will be dissatisfied with his/her compensation. The absolute value of compensation packages can be relatively easily calculated and communicated to employees to remedy the problem of undervaluation; however, establishing levels of satisfaction and the perceived importance of compensation is a more complex issue because they involve perceptual phenomenon (Carraher and Buckley, 1996; Carraher, Buckley, & Carraher, 2002; Lambert, 2000; Sparrow and Cooper, 1998). Assuming that employees consider nonpecuniary outcomes when determining satisfaction (Gomez-Mejia, Balkin, and Cardy, 1995; Lewis, 2000), it is possible that as has been suggested, compensation packages may have the ability to attract and retain employees (Heneman and Berkley, 1999), and perceived dissatisfaction with compensation packages may result in general job dissatisfaction, higher levels of absenteeism, lower levels of performance, and higher turnover rates and intentions (Lee, 2001) and less organizational commitment (Yousef, 2000; 2003). The extent to which this may occur is unknown. A 2001 state survey of small business owners in New York found that the rising cost of health insurance was their primary concern of doing business. Sixty-three percent of those surveyed cited health insurance costs as the most serious problem facing them (Coons, 2001). Small businesses are competing in a global marketplace for employees and face the difficult task of providing competitive compensation packages to employees in a cost effective manner (DiFiore, 2000; Simmons, 2001) while attracting employees with the needed knowledge, skills, and abilities in order to effectively perform their jobs (Heneman and Berkley, 1999) while still trying to remain profitable. …

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 30 citations exist upstream.