Dow Scott

Pay Perceptions and Their Relationships with Cooperation, Commitment, and Intent to Quit

This study examines how perceived in-role (or horizontal) pay differences and understanding of the pay system influence three key performance-related attitudes, namely, organizational commitment, willingness to cooperate, and intent to quit, both directly and indirectly via perceived pay fairness. Toward this end, we apply structural equation modeling to self-report survey-based evidence collected from full-time employees in a major United States supermarket licensing group (n = 159). As expected, perception of wide pay differences was negatively related to pay fairness, while pay understanding was positively related to it. Pay fairness played a pivotal mediating role in strengthening organizational commitment and reducing intent to quit. Cooperation was also influenced directly and negatively by pay differences. Contrary to predictions, however, we found that pay fairness did not mediate the relationship between pay differences and cooperation. Implications for compensation theory and practice are considered.

Rewards Communication in Australia and the United States: A Survey of Policies and Programs

Human resources (HR) and compensation professionals in Australia were surveyed to determine how they communicate rewards information to employees. The rewards communications survey examined five reward components: organization reward strategy and philosophy, base pay, base-pay increases, short-term variable pay and benefits. This research found that HR and compensation professionals believe that rewards communication is important, even to the degree that it affects organizational performance, employee satisfaction with pay, employee retention and employee motivation. They also believe that most employees have limited understanding of the purpose of reward programs and how they work; in fact, many do not understand aspects of the pay system that directly affect them such as pay ranges, average pay rates and performance targets. Comparisons between Australian and United State reward communication policies and practices are reported.

A Global Study of Pay Preferences and Employee Characteristics

Companies are managing more diverse work forces, and pay systems must be designed to attract, retain and motivate employees who may have very different pay preferences from employees of even a decade ago. This study examines how employee characteristics (i.e., gender, age, education, work experience, annual pay and number of dependents) are related to pay preferences. We found that older respondents with more education and more dependents had a stronger preference for variable pay than did respondents who were younger, less educated and had fewer dependents. Older respondents and those with higher pay preferred less pay transparency than did younger and lower paid respondents. Pay differences based on capability were preferred by better educated employees. When controlling for the other demographic characteristic, we found significant differences among nationalities for all four measures of pay preferences, that is, pay differences, pay variability, bonus plans and pay transparency.