Incorporating Pay Basis into Pay Comparison: The Relationships among Over/Underpayment, Pay for Performance and Pay Level Satisfaction

Abstract

Drawing on the discrepancy model, we re-examine the impact of pay comparison on employees’ pay level satisfaction by taking pay basis and pay program into account. Actual pay data from 382 Chinese employees, along with their self-reported pay level satisfaction, provides support for our research model. Specifically, results show that the positive effect of over/underpayment on pay level satisfaction is more robust than that of internal pay standing, indicating the importance of pay basis for pay satisfaction perception. In addition, the positive relationship between internal pay standing and pay level satisfaction is weaker among employees who are in a pay program of high pay-for-performance intensity. We conclude by discussing the theoretical and practical implications of these findings.

Keywords

pay basis / pay comparison / pay level satisfaction / pay for performance

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2017 Higher Education Press and Brill