Peer‐group dependence in salary benchmarking: a statistical model

Eric Blankmeyer, James LeSage, J. R. Stutzman, Kris Joseph Knox and Kelley Pace

Managerial and Decision Economics, 2011, vol. 32, issue 2, 91-104

Abstract: Although salary benchmarking is widely used to help set compensation, there has been a lack of attention to the statistical implications of this practice on compensation patterns of peer institutions. We adapt some empirical tools from spatial econometrics to analyze compensation decisions exhibiting peer-group dependence, and apply the methods to compensation of administrators in Texas nursing facilities. We find evidence that this leads to dependence of administrators pay on average pay of administrators in ‘peer’ facilities, defined here as those having similar outlays on nursing services. This leads to a situation where changes in facility characteristics, such as the occupancy rate and the revenue received from Medicaid and from private‐pay residents, impact compensation of own‐institution administrators as well as that of administrators from other peer facilities. Our peer‐group model appears applicable to other areas of organizational, regulatory and behavioral research and can easily be implemented using publicly available software. Copyright (C) 2010 John Wiley & Sons, Ltd.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1519

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:32:y:2011:i:2:p:91-104

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().