Variable Pay - Syroit and Grumbkow

8/9/2019 Variable Pay - Syroit and Grumbkow

http://slidepdf.com/reader/full/variable-pay-syroit-and-grumbkow 1/27

The Role of Trust in Management and Supervisor Fairness in Employees’ Acceptance

of Variable Pay Systems

Jef E.M.M. Syroit 1

Jasper von Grumbkow 1

1) Department of Psychology, Open University

Heerlen, The Netherlands

RUNNING HEAD: Acceptance of variable pay

Address of correspondence: J. SyroitDepartment of PsychologyOpen UniversityPOB 29606401 DL Heerlen (The Netherlands)

tel: +31-45 – 5762404fax: +31-45 - 5762939 [email protected]



Acceptance of variable pay - 2 -

Abstract

This study examines the relation between employees’trust in management and

perception of fair treatment by their supervisors on the one hand, and

employees’acceptance of two different variable pay plans. Based on an analysis of the

different roles played by supervisors and higher management in determining

individual based pay and company based pay, respectively, it was expected that (1)

acceptance of individual based pay is dependent on the perceived fairness of the

supervisor, while (2) acceptance of company based pay is dependent on trust in

management.

Data were gathered by means of a questionnaire in a Dutch sales office (N = 120).

Results of the hierarchical logistic regressions largely confirm the hypotheses. In the

discussion attention is given to the theoretical and practical implications of these

findings.

KEYWORDS: trust, fairness, variable pay




The Role of Trust in Management and Supervisor Fairness in Employees’ Acceptance

of Variable Pay Systems

In this study we examined the relation between employees´ trust in

management and perceived fairness of their supervisors on the one hand, and

employees’ choice of company results (gain sharing) and of individual performance

as criteria for partially determining their pay, on the other hand.

In his classic work on pay and organizational effectiveness, Lawler (1971)

concluded that a pay system “must, above all, fit the human relations climate of that

organization” (p. 276) which is greatly determined by the management style

(autocratic versus participative), i.e. by the way that persons in leadership positions

treat their employees. He stressed the importance of trust in management and of good

subordinate – superior relations as preconditions for performance based pay systems

to be effective. Studies referred to by Lawler (1971, p.159 – 162) show that workers,

just as salesmen and managers, are not opposed to an incentive plan (in general) “if it

were fairly run” (1971, p. 160), and that a company wide productivity gain-sharing

plan (such as the Scanlon plan) works best “when the employees trust management”

(p. 159). More recently, Silverman (1983) showed that one of the reasons why a

merit-pay system failed in the federal government was inconsistent employee

treatment. Patton and Daley (1998) found that a gainsharing plan failed because

employee involvement and communication were overlooked. Heneman and Young

(1991) concluded that adequate communication of pay system’s policies and

procedures is necessary for a merit award program to be accepted by teachers. Some

studies reported a positive relation between participation in the development of a

merit pay system and satisfaction with merit pay and commitment to the system

(Bullock, 1983; Bullock & Tubbs, 1990; Gilchrist & White, 1990). Miceli et al .




(1991) found that two of the factors that predicted pay system satisfaction among

2000 managers were that performance appraisals adhered to written standards and

that the distribution of rewards was consistent with the policy of the organization.

Finally, in a study among college faculty Siegall and Worth (2001) found that

respondents saw more positive outcomes from a new merit pay system the more they

trusted the administration.

The factors that are found to be related to pay system acceptance and pay

system satisfaction in the studies cited above are similar to characteristics of fair

procedures (Leventhal, 1980), or characteristics of fair interactional patterns between

management and employees (Bies and Moag, 1986): participative decision making or

voice, consistent treatment, adherence to written standards, or to the organization’s

policy which might imply bias suppression and consistency, adequate communication

of policies which might be considered as an operationalization of account giving. Pay

system satisfaction and pay system acceptance seem thus to be dependent on

perceived fairness (see also Folger & Greenberg, 1985), which in turn is a strong

determinant of trust in authorities (see e.g. Lind & Tyler, 1988; Konovsky & Pugh,

1994; Korsgaard & Roberson, 1995; Korsgaard, Schweiger & Sapienza, 1995;

Brockner et al ., 1995; Brockner & Siegel, 1996; Cohen-Charash & Spector, 2001;

Saunders & Thornhill, 2004). It seems justified to conclude that to date, there is at

least much indirect empirical evidence that supports Lawler’s conclusion about the

importance of trust in management and of fair treatment by one’s immediate

supervisor in explaining satisfaction with pay-for-performance plans and the

acceptance of these pay plans by employees.

No study is known to us that directly tests hypotheses concerning the role of

trust in management and of perceived fair treatment by one’s supervisor on




acceptance of individual or company performance based pay systems. Besides the

empirical evidence cited above, that only indirectly supports the hypothesized impact

of trust on pay system preferences, there exist also conceptual grounds for justifying

such a relation. According to Rousseau et al . (1998) scholars on trust do

fundamentally agree on the meaning of trust which they define as: “a psychological

state comprising the intention to accept vulnerability based upon positive expectations

of the intentions or behavior of another” (p. 395). The conditions that must exist for

trust to arise, or to be relevant, are: risk, or the perceived probability of loss, and

interdependence between the parties involved.

These two conditions, risk and interdependence, are met in organizations in

which pay is (partially) dependent on individual performance or on company results.

Choosing for a variable pay system involves the risk of “losing” money in case that

personal or company targets are not met (Miceli, 1993). The larger the proportion of

performance based pay (or pay increase), and the less the performance is under

control of the individual the higher is the risk involved (Kuhn & Yockey, 2003).

Variable pay is thus a risky alternative as compared to fixed wage scales or time

based pay, especially for low performing employees. But also high performing

employees run the risk of not being paid in accordance with their performance level.

Managers seem to be reluctant to grant extraordinary increases to high performers,

and they are also perceived that way by 560 federal managers studied by Perry and

Pearce (1983). Managers also will become more egalitarian and less meritocratic

when budgets become limited (Montemayor, 1995), thereby decreasing the

contingency between performance and pay increase. Moreover, as Lawler (1971)

argued, even the most “objective” performance based pay systems such as piece rate

and sales bonuses, contain problems that need to be resolved between employees and




their supervisors, or between employees and management. In most individual

performance based pay systems and in gain sharing plans, there is not a direct link

between performance (of the individual, the group, or the company) and the amount

of pay received. The administration of these systems involve the evaluation of

individual performances by supervisors (e.g. merit rating), or the evaluation of

company results by management and stakeholders, and decisions by management

about the range of merit increases and about the translation of company results into

pay increase (e.g. in profit or productivity gain sharing plans). The fact that individual

performance or company results are linked to pay increase through a process of

subjective evaluations and human decision making, makes employees dependent on

supervisors and management for obtaining a deserved pay increase. These subjective

components of variable pay systems entail another risk, namely that the deserved pay

increase will not be obtained because of the (inevitable) imprecision of the appraisal

system, and/or evaluator bias in the administration of the appraisal. The conclusion

seems warranted that trust in management, and perceived fairness of one’s immediate

supervisor, being the main decision makers in pay-for-performance systems, are

important determinants of employees’ preferences for pay-for-performance plans.

This generally formulated expectation need some qualification because of the

different roles played by higher management and by immediate supervisors in

company based pay systems and in individual based pay-for-performance plans,

respectively.

In individual based pay-for-performance plans such as merit rating or personal

goal setting, rates for pay increase are determined by the outcome of some kind of

appraisal of employee performance. Traditionally, immediate supervisors play the

most important role in this appraisal process: they evaluate the performance of their




subordinates, and discuss the outcomes with their subordinates in appraisal

interviews. In case that pay raise is dependent on the degree of reaching personal

targets, the supervisor also plays an important role in setting these individual goals.

On the basis of the important role of a supervisor in evaluating employees

performance it is expected that acceptance or rejection of the individual based pay-

for-performance is more dependent on the perceived fairness of the supervisor than on

trust in higher management (Hypothesis 1). It is also expected that the more

supervisors are perceived as being fair by the employees, the higher the percentage of

individual performance based pay they choose (Hypothesis 2).

In pay-for-performance, based on company wide results, general

management plays a more central role than first-line supervisors. Management

evaluates the company performance and decides on the amount of pay increase to be

granted to members of their organization. Perhaps that employees hold higher

management more responsible for company wide results than their supervisors.

Hence, it is expected that acceptance or rejection of the company based pay-for-

performance is more dependent upon trust in management than on perceived fairness

of the supervisor (Hypothesis 3). Finally, we expect that the more employees have

trust in management, the higher the percentage of company based pay they choose

(Hypothesis 4).

Adequate testing of these hypotheses requires that some other, important

variables related to trust in authorities and to pay system satisfaction are controlled

for. Has evidenced before, there is a strong positive relation between trust in

authorities and perceived procedural and interactional fairness of these authorities.

Thus perceived fairness of the way employees are treated by the company and

perceived (structural) fairness of the performance appraisal procedure could directly,




and indirectly affect employees’ choice of a performance based pay plan. Also the

perceived distributive fairness of the actual salary and salary growth, and the outcome

of the most recent performance appraisal, which are main determinants of pay

satisfaction (Lawler, 1971; Heneman, 1985), and pay system satisfaction (Miceli,

1993) might be directly related to future pay system preferences. Finally, personal

characteristics of employees such as gender, age, and seniority are, according to

Heneman’s (1985) discrepancy model indirectly related to satisfaction with pay and

thus, probably with pay system preferences.

This study was carried out in a Dutch sales office of an international firm. A

sample of 120 employees were asked to fill out a questionnaire regarding their

preferred percentage of pay to be based (1) on individual performance and/or (2) on

company results. Those who rejected the performance based pay plans could answer

“zero” percent. Employees were also asked about how much trust they had in

management, and how fair their supervisor treated them. They evaluated the fairness

of the performance appraisal system, the fairness of the way they were generally

treated by their company, and the perceived distributive fairness of their actual pay

and pay increase.

Method

Design of the study

The study was carried out in a Dutch sales office of an international trade

organization with ca. 300 personnel. A representative sample of 120 employees filled

out the questionnaire. One third (n=40) were female employees. The modal age

category was 30 – 38 years. Length of service varied from less than five years to more

than 20 years, with approximately 20% in each category. Fifty-seven employees




worked in the field organization, while the remaining 63 were employed in the indoor

service. Employees in the field organization were, on the average, somewhat younger

and they had less seniority than employees in the indoor service.

All employees received a base wage, a merit raise, and a bonus up to 4% of

the annual income based on the profits of the organization (gain sharing) which was

paid at the end of each calendar year. The merit raise is based on the evaluation of

employees’ performance by the supervisor, which can result in either a U-score

(Unsatisfactory), a G-score (Good), or an E-score (Excellent). The higher the score,

the higher is the merit increase. The highest merit increase is given to those

employees who ranked lowest within their wage scale.

The actual pay system of the field workers was different from that of the

indoor service employees. Field workers start with a lower base wage than

comparable indoor service personnel, but they can earn an extra bonus based on the

achievement of personal targets, defined in terms of quarterly turnover rates. Targets

are set by the supervisor. No bonus is received if the turnover rates are less than 80%

of the target. For each percent between 80% and 100% of the target, the field worker

receives 1% bonus of the base wage, so that on accomplishment of the personal target,

wages of field workers are the same as those of comparable indoor service workers.

For exceeding the personal target, bonuses raise up to a maximum of 50% of the base

wage. On the average, a bonus of 20% is obtained.

Measures

Preferences for variable pay increase criteria were measured by two open

questions regarding the preferred percentage of base wage pay to be dependent on (1)

the achievement of personal targets (individual based pay), and (2) the achievement of




company targets (company based pay). Answers to these questions were used to

construe the other main dependent variables in this study.

Acceptance or rejection of performance based pay plans : Answers to the two

questions mentioned before were dichotomized by giving a score 1 (= acceptance) to

those employees who filled out a percentage that was greater than zero, and a score 0

(= rejection) to those employees who filled out zero percent, thereby indicating that

they didn’t prefer that particular variable pay scheme.

Experience with variable pay : Only field workers (n = 57) had experience

with pay based on the achievement of personal targets. All employees have

experience with merit rating and gain sharing. This variable was dummy coded (1 =

experience; 0 = no experience).

Performance evaluation outcome (PEO) is based on self reports of the

outcome of the most recent performance evaluation. Twenty-one employees (18%)

reported that they received an E-score (Excellent) (score = 2), while 96 employees

(81%) received a G-score (Good) (score = 1). Three persons did not respond to this

question.

----------------------------------Insert Table I about here

---------------------------------

Items (5-point Likert type questions) (see Appendix 1) about trust in

management (2), perceived fairness of the supervisor (6), distributive fairness (6),

perceived fairness of performance appraisal (3), and perceived fair treatment by the

organization (4) were factor analyzed (Principal Component Analysis with Varimax

rotation) (See Table I). This analysis yielded 5 factors with eigenvalues larger than

1.0, explaining 72% of the total variance. Items grouped together as originally

intended. Only a few items loaded moderately high on some other factors. Factor I is




the distributive fairness factor; Factor II is the fairness of the supervisor factor; Factor

III is labeled the performance evaluation fairness; Factor IV contains the items

regarding fair teatment by the organization in general, and Factor V consists of the

two trust in management items. Factor scores of the 5 factors, transformed into T-

scores ( M = 50, SD = 10) were used as independent variables in subsequent (logistic)

regression analyses in order to avoid problems of multicollinearity.

Results

Descriptives

Seventy-six percent of the participants in this study are in favor of an

individual performance based pay plan, but only 58% are in favor of pay based on

company results ( F (1,118) = 17.60, p < .01). Male employees are significantly more

in favor of pay for performance plans (86% and 66%) than female employees (55%

and 40%) ( F (1,118) = 14.48, p < .01). No differences were found between employees

who have and who don’t have experience with the proposed individual performance

based pay, nor between employees whose prior performance was rated excellent vs.

good.

Those employees who accepted (one or both) pay for performance plans also

indicated how much percent of their salaries depend on either reaching their own

performance target or reaching the company goals. The mean percent for reaching

personal targets ( M = 12.48, SD = 5.84) is significantly higher than the percent for

reaching the goals of the company ( M = 9.26, SD = 4.17) ( F (1,58) = 17.31, p < .01).

No differences were found between men and women.

Acceptance – rejection of pay-for-performance plans

In order to test hypotheses 1 and 3 concerning the effect of perceived fairness

of one’s supervisor and trust in senior management and acceptance or rejection of the




individual based and/or company based pay-for-performance, respondents’ answers to

the two questions related to pay-for-performance percentages were dichotomized,

thereby creating two subgroups for each question: one, who rejected the respective

pay plan by answering zero percent; the other, who apparently accepted it by giving a

percentage greater than zero. These two dichotomized variables were used as

dependent measures in separate hierarchical logistic regression analyses in which

effects of trust in management and fairness of the supervisor were examined after

controlling for effects of personal characteristics (gender, seniority, most recent

performance appraisal outcome, and experience with variable pay) and variables that

might be related to pay system satisfaction (fairness of the organization, of the

performance evaluation process, and of the actual growth in salary).

----------------------------------Insert Table II about here

---------------------------------

Table II presents the summary of these analysis with repect to acceptance –

rejection of the individual performance based pay plan . All control variables together

(gender, length of service, type of service, performance appraisal outcome, fairness of

the organization, fairness of performance appraisal, fairness of salary growth)

significantly contribute to the goodness-of-fit (GOF). The GOF-index ( χ 2) of the nul-

model decreases with 15.24 ( df = 7; p < .05). Only the b-coefficient of gender ( b = -

1.42, p < .01) is significant, which means that significantly more men than women

accept the individual pay-for-performance plan. Also perceived fairness of the

supervisor and trust in management jointly contribute to the GOF ( Δχ 2(2)= 6.26, p <

.05) but only perceived fairness of the supervisor has a significant b-coefficient ( b =

.05, p < .05). The more employees perceive their supervisor as being fair, the more

likely they accept the individual pay plan, which is in support of hypothesis 1.




----------------------------------Insert Table III about here

--------------------------------- Table III presents the summary of the logistic regression analysis with

acceptance – rejection of the company results based pay plan as dependent variable

(hypothesis 3). All control variables together significantly increase the goodness-of-fit

(Δχ 2 (7)= 14.67, p < .05). Only the contributions of gender ( b = -1.03, p < .05) and of

perceived fairness of salary growth ( b = .06, p < .05) are significant. Here also are

male employees more accepting of the company based pay plan than female

employees, and the more the actual increase in salary is perceived as equitable, the

more likely the company based pay plan is accepted. Fairness of the supervisor and

trust in management also significantly increase the goodness-of-fit ( Δχ 2 (2)= 9.35, p <

.01), but only trust in management has a significant b-coefficient ( b = .06, p < .05),

while the b-coefficient of fairness of the supervisor does not reach an acceptable level

of significance. This results supports hypothesis 3.

It was also hypothesized that the more one’s supervisor is seen as fair

(hypothesis 2) or the more management is trusted (hypothesis 4) the higher the chosen

percentage of performance based pay. In order to test these hypotheses two

hierarchical multiple regression analyses were performed using the same independent

variables. Dependent variables were the percentages of individual performance based

pay (hypothesis 2) and of company based pay (hypothesis 4). Only those employees

who accepted either of the two pay-for-performance plans were included in these

analyses. None of these MRA’s yielded significant results. Therefore, hypotheses 2

and 4 need to be rejected.

Discussion

In this study, indoor and outdoor sales personnel in the Dutch branche of an

international trade organization were asked how they felt about two different pay-for-




performance plans: one, in which salary was partially dependent on reaching personal

targets, and the other on reaching company goals. Based on the different roles played

by immediate supervisors and by senior management in the appraisal of individual

performance and of company results and in determining the amount of pay in both

plans, it was hypothesized that acceptance of a pay plan based on individual

performance would be more dependent on the perceived fairness of one’s supervisor

while acceptance of a company wide pay-for-performance plan would be more

dependent on trust in management (Hypotheses 1 and 3). We also expected that

supervisor fairness and trust in management were significantly related to the preferred

percentage of performance based salary in these two pay systems (Hypotheses 2 and

4). Our results only support hypotheses 1 and 3. The more these employees perceive

their supervisor as behaving fairly towards them, the more likely they will accept that

their salary be dependent on reaching their individual performance targets.

Acceptance of this individual pay-for-performance plan seems also dependent on the

perceived fairness of the organization as a whole. Employees are more likely to accept

this pay plan the more they think that their organization is a fair place where attention

is given to one’s opinion, complaints and suggestions, and where exists an open

climate. Factors related to possible self-interest motives such as the favorableness of

the most recent performance evaluation outcome and perceived equity of the recent

salary increase seem not to be that important.

A somewhat different picture shows regarding the acceptance of a pay plan in

which salary is made dependent on reaching company goals. Here we found, as

expected, that trust in senior management is an important determinant. Employees are

more likely to accept the risky alternative the more they are confident about the way

the organization is managed now and in the future. We also found that perceived




equity of one’s recent salary increase is a significant predictor of acceptance of this

company based pay system. Employees are more likely to accept such a pay plan, the

more they judged their latest salary increase as equitable.

Our results also provide some support for the idea that fairness and unfairness

characterize the quality of the relation between those who are (un)fairly treated and

the exchange partners who behave in an (un)fair way or, in other words, are held

responsible for the (un)fair treatment (Syroit, 1984). This conception of unfairness has

recently been elaborated by Folger and Cropanzano (2001) in an attibutional model.

It was also found, in line with some other studies, that more men than women

are in favor of these riskier pay plans. Women seem to be more risk averse than men

when making financial decisions (Siegrist et al ., 2002). Chauvin and Ash (1994)

found that the pay advantage of male graduates over their female colleagues could be

explained by the fact that women tend to prefer less pay risk than do men.

Finally, we found that merit pay based on reaching personal targets was

endorsed by significantly more employees than merit pay based on reaching company

goals. Similar findings were reported by Kuhn and Yockey (2003) who found that

more participants were in favor of individual based plans than of team based plans

and than of organization based plans. A company based pay for performance plan

seems to be a riskier alternative than one based on individual performance. These

results are quite likely from an attribution theoretical point of view. Individual

employees have a more direct influence on their own performance than on the global

results of the company. Moreover, it might not be very clear to the employees what

the company goals are. And finally, different stakeholders might have conflicting

interests in defining the degree of “success” of the company, and in the decision

making about salary increase for employees. Stockholders might prefer larger




dividends over higher wages for employees, while management might prefer new

investments in the company thereby decreasing net profits (and also taxes). It is

perhaps this kind of uncertainty about how company results are defined and reached

that makes trust in management important.

Before drawing our final conclusion it seems fair to pay attention to some

possible weaknesses of our study. First of all, we used a very global measure of trust

in management, thereby ignoring perhaps important distinct aspects of trust such as:

integrity, competence, openess, loyalty and consistency (Butler & Cantrell, 1984). It

might be interesting to further explore which aspect of trust or which form of trust

(calculus-base, knowledge-based or identification-based trust) is more important in

these matters. Our sample of employees was also rather homogeneous, consisting of

only sales personnel. Different kinds of personnel might have different opinions about

pay for performance, depending on characteristics such as: hierarchical position,

direct or indirect contribution to the company results (support staff vs.line),

relationship with the core business of the organization (central vs. peripheral roles),

type of performance measure used, and the like.

Despite these – and perhaps some more – limitations, our study indicates that

perceived fairness of supervisors and trust in management in general are important

preconditions for pay-for-performance plans to be accepted, as stated before by

Lawler. Before implementing pay-for-performance plans, an organization should first

analyze existing levels of trust and of perceived fair treatment by those who play

important roles in the administration of such pay plans. In case, organizations shoukld

undertake actions to improve these important preconditions.






Perceived fairness of the performance appraisal

1) I accept my performance appraisal outcome (1 = CD; 5 = CA)

2) My performance appraisal adequately reflects my performance (1 = CD; 5 =

CA)

3) The appraisal of my performance was made in a fair way (1 = CD; 5 = CA)

Perceived fair treatment by the organization

1) In this company one listens to people’s opinions and complaints (1 = CD; 5 =

CA)

2) In this company people can voice their opinion about the firm (1 = CD; 5 =

CA)

3) The company is open towards its employees (1 = CD; 5 = CA)

4) The company treats its employees fairly (1 = CD; 5 = CA)




Acknowledgement

The authors like to thank Drs. Meijert Schenk for his assistance in collecting the data

for this study




References

Bies, R.J., & Moag, J.S. (1986). Interactional justice: Communication criteria of

fairness. In: R.J. Lewicki, B.H. Sheppard, & M. Bazerman (Eds.), Research on

Negotiation in Organizations (Vol. 1, 43-55). Greenwicht, CT: JAI Press.

Brockner, J., & Siegel, P. (1996). Understanding the interaction between procedural

and distributive justice. In: R.M. Kramer, & T.R. Tyler (Eds.), Trust in

Organizations: Frontiers of Theory and Research (pp.390-413). Thousand

Oaks, CA: Sage.

Brockner, J., Wiesenfeld, B.M., & Martin, C.L. (1995). Decision frame, procedural

justice, and survivors’reactions to job layoffs. Organizational Behavior and

Human Decision Processes, 63 , 59-68.

Bullock, R.J. (1983). Participation and pay. Group and Organization Studies, 8 , 127-

136.

Bullock, R.J., & Tubbs, M.E. (1990). A case meta-analysis of gainsharing plans as

organization development interventions. Journal of Applied Behavioral

Science, 26 , 383-404.

Butler, J.K., & Cantrell, R.S. (1984). A behavioral decision theory approach to

modeling dyadic trust in superiors and subordinates. Psychological Reports,

55 , 19-28.

Cohen-Charash, Y., & Spector, P.E. (2001). The role of justice in organizations: A

meta-analysis. Organizational Behavior and Human Decision processes, 86 ,

278-321.

Folger, R., & Cropanzano, R. (2001). Fairness theory: Justice as accountability (pp. 1-

55). In J. Greenberg & R. Cropanzano (Eds.), Advances in Organizational

Justice . Stanford, CA: Stanford University Press.




Folger, R., & Greenberg, J. (1985). Procedural justice: An interpretive analysis of

personnel systems. In: K.M. Rowland & G.R. Ferris (Eds.), Research in

Personnel and Human Resources Management (Vol. 3, pp. 141-183).

Greenwich: JAI Press.

Gilchrist, J.A., & White, K.D. (1990). Policy development and satisfaction with merit

pay: A field study in a university setting. College Student Journal, 24 , 249-

254.

Heneman, H.G., & Young, I.P. (1991). Assessment of a merit pay program for school

district administrators. Public Personnel Management, 20 , 35-47.

Heneman, H.G. (1985). Pay satisfaction. In: K.M. Rowland & G.R. Ferris (Eds.),

Research in Personnel and Human Resources Management, (Vol.3, pp.115-

139). Greenwich: JAI Press.

Konovsky, M.A., & Pugh, S.D. (1994). Citizenship behavior and social exchange.

Academy of Management Journal, 37 , 656-659.

Korsgaard, M.A., & Roberson, L. (1995). Procedural justice in performance

evaluation: The role of instrumental and non-instrumental voice in

performance appraisal discussions. Journal of Management, 21 , 657-669.

Korsgaard, M.A.,Schweiger, D.M., & Sapienza, H.J. (1995). Building commitment,

attachment, and trust in strategic decision-making teams: The role of

procedural justice. Academy of Management Journal, 38 , 60-84.

Kuhn, K.M., & Yockey, M.D. (2003). Variable pay as a risky choice: Determinants of

the relative attractiveness of incentive plans. Organizational Behavior and

Human Decision Processes, 90 , 323-341.

Lawler, E.E. (1971). Pay and Organizational Effectiveness: A Psychological View .

New York: McGraw-Hill.




Leventhal, G.S. (1980). What should done with equity theory? New approaches to the

study of fairness in social relationships. In: K. Gergen, M. Greenberg, & R.

Willis (Eds.), Social Exchange: Advances in Theory and Research (pp. 27-55).

New York: Plenum.

Lind, E.A., & Tyler, T. (1988). The Social Psychology of Procedural Justice . New

York: Plenum.

Miceli, M.P. (1993). Justice and pay system satisfaction. In: R. Cropanzano (Ed.),

Justice in the Workplace: Approaching Fairness in Human Resource

Management . (pp. 275-283). Hillsdale, NJ: Lawrence Erlbaum Associates.

Miceli, M.P., Jung, I., Near, J.P., & Greenberger, D.B. (1991). Predictors and

outcomes of reactions to pay-for-performance plans. Journal of Applied

Psychology, 76 , 508-521.

Micelli, M.P., & Lane, M.C. (1991). Antecedents of pay satisfaction: A review and

extension. In G.R. Ferris & K.M. Rowland (Eds.), Research in Personnel and

Human Resource Management, ( vol. 9. pp. 235-309), Greenwich, CT.:

JAIPress.

Montemayor, E.F. (1995). Situation or person? Contrasting the effects of budget

constraints and individual values on pay-for-performance norms. Journal of

Psychology, 129 , 531-541.

Patton, K.R., & Daley, D.M. (1998). Gainsharing in Zebulon: What do workers want?

Public Personnel Management, 27 , 117-131.

Perry, L.L., & Pearce, J.L.(1983). Initial reactions to federal merit pay. Personnel

Journal, 62 , 230-237.

Rousseau, D.M., Sitkin, S., Burt, R., & Camerer C. (1998). Not so different after all:




A cross disciplinary view of trust. Academy of Management Review, 23 , 393-

404.

Saunders, M.N.K., & Thornhil, A. (2004). Trust and mistrust in organizations: An

exploration using an organizational justice framework. European Journal of

Work and Organizational Psychology, 13 , 493-515.

Siegall, M., & Worth, C. (2001). The impact of trust and control on faculty reactions

to merit pay. Personnel Review, 30 , 646-656.

Siegrist, M., Cvetkovich, G., & Gutscher, H. (2002). Risk preference predictions

and gender stereotypes. Organizational Behavior and Human decision

Processes, 87 , 91-102.

Silverman, B.R. (1983). Why the merit pay system failed in federal government.

Personnel Journal, 62 , 294-302.

Syroit, J.E.M.M. (1984). Interpersonal Injustce : A Psychological Analysis Illustrated

with Empirical Research . Doctoral Dissertation. Tilburg: Tilburg University.




Table I. Summary of the PC analysis on the independent measures:

Varimax rotated component matrix

FACTORS

items h2 I II III IV V

distr. fair1 .84 .88 a

distr. fair2 .71 .83




distr. fair6 .50 .64 .26

supervisor1 .72 .79

supervisor2 .72 .79 .25

supervisor3 .65 .76

supervisor4 .66 .76

supervisor5 .74 .25 .69 .33 .27

supervisor6 .59 .68

appraisal1 .89 .91

appraisal2 .89 .88

appraisal3 .82 .82 .29

organization1 .72 .77

organization2 .67 .33 .75

organization3 .70 .71 .35

organization4 .73 .34 .60 .47




trust1 .80 .86

trust2 .65 .73

eigenvalue 7.52 2.62 1.95 1.67 1.07

% variance 35.8 12.5 9.3 8.0 5.1

a)factor loadings < .25 are omitted




Table II. Summary of the logistic regression on acceptance of individual based pay

Model 1 Model 2

Variable b S.E.b Exp(b) b S.E.b Exp(b)

constant -2.06 2.29 .13 -5.83 2.85 .00

gender -1.42* .52 .24 -1.68* .57 .19

seniority -.07 .18 .94 -.11 .20 .90

experience .13 .55 1.14 .22 .63 1.24

outcome .62 .73 1.85 .58 .76 1.79

distr.fair .02 .03 1.02 .02 .03 1.02

company .05 .03 1.05 .06* .03 1.06

appraisal .01 .03 1.01 .00 .03 1.00

trust .03 .03 1.03

supervisor .05* .02 1.05

Model χ 2[df] 15.24* [7] 21.50*[9]

Block χ 2 [df] 6.26*[2]

% correct 77 80

Nagelkerke R 2 .20 .27

* p < .05




Table III. Summary of the logistic regression on acceptance of company based pay

Model 1 Model 2

Variable b S.E.b Exp(b) b S.E.b Exp(b)

constant -3.96 2.12 .02 -8.62 2.92 .00

gender -1.03* .48 .36 -1.36* .53 .26

seniority .06 .16 1.07 .01 .16 1.01

experience .35 .47 1.42 .05 .54 1.05

outcome -.85 .56 .43 -.88 .59 .42

distr.fair .06* .02 1.06 .06* .02 1.06

company .02 .02 1.02 .02 .02 1.02

appraisal .01 .02 1.01 .01 .03 1.01

trust .06* .02 1.06

supervisor .04 .02 1.04

Model χ 2[df] 14.67* [7] 24.02* [9]

Block χ 2 [df] 9.35* [2]

% correct 65.4% 72.9%

Nagelkerke R 2 .17 .27

* p < .05

Documents

Variable Pay - Syroit and Grumbkow