Between Consistency and Adaptation: How Middle Managers Shape Compensation System Implementation

Abstract

The success of a human resource management (HRM) system or subsystem, such as a compensation system, hinges on its implementation—yet the microfoundations of this process remain underexplored. To address this gap, we conducted two studies. Study 1 surveyed middle managers and employees in six organizations to examine their attributions of problems with compensation systems and their perceptions of compensation system effectiveness. We found that both groups identified design problems; managers emphasized administrative problems, whereas employees focused on implementation problems. These differing attributions shaped their views of compensation system effectiveness. To further unpack the challenges middle managers face, we analyzed data from Study 2, a 6-year long in-depth case study, exploring how and why middle managers varied in their implementation strategies. We found that middle manager identification with the system and their perceived agency explained their implementation strategies, ranging from championing to compliance, and from appropriation to resignation. Together, the studies reveal persistent tensions between consistency and adaptation in HRM implementation. To address these tension, we introduce the concept of internal flexibility—the capacity of middle managers to adjust formal HRM practices during the implementation process to align them with their work unit's needs—as a critical yet underexplored dimension of HRM effectiveness.