RESEARCH Business Industry

MANAGEMENT PHILOSOPHY
Study compares employee bonus systems in China and United States

Mark Reutter, Business Editor
(217) 333-0568; mreutter@uiuc.edu

6/1/2001

CHAMPAIGN, Ill. — A stereotype about Chinese is that they prize group harmony and cooperation; a stereotype about Americans is that they have sharp elbows and always put the individual first.

Like many cultural stereotypes, both have elements of truth: Experts have rated China as the most "collectivist" society in the world and the United States as the most "individualistic." But broad measures sometimes mask similarities of behavior across the cultural divide, especially in a rapidly globalizing economy.

Joseph J. Martocchio, a University of Illinois professor of labor and industrial relations, wanted to find out how Chinese and American managers made decisions to award bonuses to employees. He and Jing Zhou, a professor of management at Texas A&M University, developed a survey written in Chinese that was answered by 71 Chinese managers. The professors canvassed 218 U.S. managers with an English version of the survey.

Not surprisingly, Chinese managers put more stress on how well an employee worked with others. But what was striking to Martocchio were some of the continuities between the two groups. Both Chinese and American managers used individual performance as the primary measure in determining bonuses and singled out the best performers for the highest bonuses.

On average, Chinese managers awarded a bonus of 15.9 percent (above base salary) to employees with excellent performance, and U.S. managers awarded a bonus of 12.1 percent. Where the groups differed was in how they handled poor performers. Chinese managers paid an average 8.1 percent bonus to poor performers, while their U.S. counterparts paid only a 0.51 percent bonus.

The interest of state-owned Chinese enterprises in individual performance was attributed by the researchers to the changes coming from western-style capitalistic values seeping into the communist country. Conversely, American managers expressed interest in the kind of group cooperation and collective accomplishment that has long been associated with Chinese society. This came up in questions regarding non-monetary rewards for employees.

American managers said that good worker relationships were very important to them, though cooperation was viewed by the Americans more as a means of accomplishing the work at hand than as a moral value. Chinese managers stressed the importance of using "objective and impartial measures" to determine such recognition as placing an employee's picture on an exhibition wall. American managers, on the other hand, considered non-monetary rewards as morale-building tools and were more casual in developing objective criteria to determine who should be rewarded.

The researchers' findings were published in the spring issue of Personnel Psychology.