Management compensation systems in Central and Eastern Europe: a comparative analysis

Abstract

Drawing upon a large scale comparative data-set we explore the preferred approaches to managerial compensation pursued by organizations operating in the Central and Eastern European (CEE) transition economies of Bulgaria, the Czech Republic, Estonia, Lithuania, Hungary, Slovenia, Slovakia and Serbia. In order to generate insights on the state of management compensation and the extent to which these transition economies are characterized by idiosyncratic elements, relative to their Western European counterparts, we compare management compensation practices in these CEE economies (N = 1147) with approaches pursued in more developed western European economies (N = 2698). Overall, our results suggest that organizations in the CEE region share some similarities with their western counterparts, most especially in terms of the individual level of determination of pay for managers. Within the CEE region, we find that financial participation is less common than performance-related pay in the composition of the overall managerial reward package, though there are some variations between countries. National culture does appear significant as a determinant of variations in the preferred approach to management compensation.