group incentives & pay satisfication, understanding the relationship through an identity theory...

8/11/2019 Group Incentives & Pay Satisfication, Understanding the Relationship Through an Identity Theory Perpective

1/23

Cornell University ILR SchoolDigitalCommons@ILR

CAHRS Working Paper Series Center for Advanced Human Resource Studies(CAHRS)

10-1-1993

Group Incentives and Pay Satisfaction:Understanding the Relationship Trough an

Identity Teory PerspectiveTeresa M. WelbourneCornell University

Daniel M. CableCornell University

is Article is brought to you for free and open access by the Center for Advanced Human Resource Studies (CAHRS) at DigitalCommons@ILR. Ithas been accepted for inclusion in CAHRS Working Paper Series by an authorized administrator of DigitalCommons@ILR. For more information,please contact [email protected].

Please take our short DigitalCommons@ILR user survey.
http://digitalcommons.ilr.cornell.edu/http://digitalcommons.ilr.cornell.edu/cahrswphttp://digitalcommons.ilr.cornell.edu/cahrshttp://digitalcommons.ilr.cornell.edu/cahrsmailto:[email protected]://cornell.qualtrics.com/SE/?SID=SV_0vPcL4LVvkEETgEhttps://cornell.qualtrics.com/SE/?SID=SV_0vPcL4LVvkEETgEmailto:[email protected]://digitalcommons.ilr.cornell.edu/cahrshttp://digitalcommons.ilr.cornell.edu/cahrshttp://digitalcommons.ilr.cornell.edu/cahrswphttp://digitalcommons.ilr.cornell.edu/http://digitalcommons.ilr.cornell.edu/http://digitalcommons.ilr.cornell.edu/


2/23


3/23

GROUP INCENTIVES AND PAY SATISFACTION:

UNDERSTANDING THE RELATIONSHIP THROUGH

AN IDENTITY THEORY PERSPECTIVE

by

THERESA M . W ELBO URN E, PH .D .D epartm ent of H um an R esource StudiesS cho ol of In dustrial an d L ab or R elatio ns

Cornell University393 Ives H all

Ithaca, N Y 14853-3901

and

DANIEL M . CABLEDepar tment o f Human -R eso urce S tu die sS cho ol o f In dustrial an d L ab or R elatio ns

Cornell University393 Ives H all

Ithaca, N Y 14853-3901

Wo rk in g P ap er 9 3-10

This paper has not undergone formal review or approval of the faculty of the ILR School. It isin ten ded to m ak e resu lts o f C en ter research , con ferences, an d p ro jects available to oth ers in terestedin hum an resource m anagem ent in prelim inary form to encourage discussion and suggestions.


4/23

.~

The goal of th is paper is to develop a conceptual model based on

identi ty theory to specify the relationship between group incentives and pay

sati sfac tion . Pay sati sfaction, as current ly measured, does not include items

that di rec tly assess group-based rewards, therefore, any changes in pay

sati sfac tion associated with group incentive implementation would be the

result of some spi llover effect . Identi ty theory is employed to model this

effect by delineating how group incentives tap salient work-related roles; the

theory a lso has implications for various behavioral consequences.

The research described in this paper tests two hypotheses derived from

the conceptual model. These hypotheses are tested in two quasi-exper imental

field studies conducted in a high technology f irm and a consumer products

company that both implemented gain sharing programs. The findings indicate

that gainsharing plans can be viewed as e ither a benefit or as par t of

individual pay based on the abi l i ty of the incentive plan to activate sa lien t

work ro les.

PAY S AT IS FA CT IO N I G RO UP I NC EN TI VE S I GAINSHARING I I DE NT IT Y T HE ORY

Property of

MARTIN P.CATHERWOOD U B R . J \R Y

N E W '{ O R:: S U :E S C H O U l

IN O U ST m M ;;;-J D L AS I~ ~: R tlA nn ; SCr;-- np;1 tJ ;'\)8rs;tv

2


5/23

Businesses today are altering the ways in which employees receive

rewards by decreasing the use of tradi t ional pay-for-performanceplans such as

merit pay and implementing more creative forms of pay that are based on group

rather than individual performance (Long, 1989; Ost, 1990). For example, team

incentives, gainsharing, and profi t sharing are all currently being uti l ized

by firms interested in redirecting their workers toward group rather than

individual goals (Lawler, Ledford & Mohrman, 1989). This trend is occurr ing

because group incentive plans are being hailed as result ing in significant

productivity gains for employers (Schuster, 1984) in addit ion to decreases in

grievances and increases in product quality (Hatcher & Ross, 1991). In fact,

Milkovich and Wigdor (1991: 86) suggest that the adoption of group incentive

plans may provide a way to accommodate the complexity and interdependence of

jobs, the need for work group cooperation, and the existence of work group

performance norms and sti ll offer the motivational potential of clear goals,

clear pay-for-performance links, and relatively large pay increases .

Although interest is escalat ing, very li tt le is known about how

employees covered by various group incentives perceive and respond to the

programs. In general, the focus has been on the outcomes of group bonus plans

(bonus payment, profi t, quali ty, costs, job satisfaction, etc.) rather than

the behavioral process that must occur to achieve these results .

In many cases it is not clear how the employer expects the incentive

package to interact with the currently established pay system. This is a

cri t ical point because while some group incentives replace individual rewards

programs and aggressively send a message that performance expectations have

changed, others simply supplement current pay and benefi ts with group

incentives. When this is done, the previously established behavioral

expectations are retained and augmented with new performance goals that might

Or might not be consistent with those insti tuted in the past (Lawler, 1990;

Welbourne & Gomez-Mejia, 1991).

This paper develops a conceptual model that focuses on employee

responses to group incent ives by consider ing the relat ionship between th e

3


6/23

implementation of group-based bonus systems and pay satisfaction. Pay

satisfaction, as tradit ionally measured, does not address satisfaction with

group incentive programs. Therefore, if pay satisfaction is affected by a

group bonus plan, the change would be the result of some s pil lover effect .

The proposed model suggests that by employing identi ty theory the

proCeSS by which employees evaluate group incentives can be better understood.

Identi ty theory describes the way in which individuals respond to events, and

it provides a framework for understanding the types of psychological or

emotional responses that should be expected when an event occurs (Pearlin,

1989) . Pay satisfaction has been studied in some detail and is understood to

be an emotional or affective state towards various components of pay (Heneman,

1985; Heneman & Schwab, 1985; Miceli & Lane, 1992). Therefore, identi ty

theory will be used to predict how an organizational event (group incentive

plan implementation) should affect a part icular emotional response (pay

satisfaction) . Although the overall conceptual model is developed, only two

hypotheses from that model will be tested and presented in this paper.

In order to test these hypotheses pay satisfaction data were collected

at two companies that implemented gainsharing systems. The data were

collected before gainsharing plan implementation and ten months after the two

programs were in place; during that period of time, both firms held other pay

and benefi ts systems constant.

PAY S AT IS FA CT IO N

Conceptual models of pay satisfaction have included the consequences of

and determinants of pay satisfaction. To date, the outcomes studied represent

individual behaviors such as turnover, absenteeism, and union voting

(Motowidlo, 1983; Schrieshiem, 1978; Weiner, 1980).

Research exploring antecedents of pay satisfaction has focused on

individual differences such as age, gender, socioeconomic status, race,

education, skil ls , experience, and job performance (Berkowitz, Cochran, Fraser

& Treasure, 1987; Dreher, 1981; Shank, 1986; Shapiro & Wahba, 1978). Job

character is tics such as diff icul ty , responsibi l i ty , occupat ional level , an d

4


7/23

shifts worked have also been considered as determinants of pay satisfaction

(Ash, Lee & Dreher, 1985; Berkowitz et. al ., 1987; Shank, 1986). I n ad di tio n,

some research suggests that pay system characteristics (pay level, benefi ts ,

and rules) affect pay satisfaction (Dyer & Therialut, 1976; Berger & Schwab,

1980; Jenkins & Lawler, 1981).

Although there is an abundant amount of research on individual-based

criteria, studies on the effects of group based incentives on pay satisfaction

~re fairly scarce. Campbell (1952) examined the effect of pay system

understanding and group size on pay satisfaction, and several authors have

studied individual vs.group incent ives as predictors of pay sat isfaction

(Farr; 1976; Gomez-Mejia & Balkin, 1989; Schwab & Wallace; 1974). However,

the results of theses studies are mixed, and the definition of pay

satisfaction util ized varied between studies. While one examined overall pay

satisfaction another considered satisfaction with base pay. The goal of this

research was to understand what might increase or decrease pay satisfaction

rather than to discern the process by which individuals evaluate group

incentive plans.

Eve~ though there appears to be some evidence that group incentives

impact pay satisfaction, due to the fact that pay satisfaction is measured as

a multi-dimensional construct, the question becomes which component of pay

satisfaction (e.g. level , raise, or benefits) should be affected by which type

of group bonus system (e.g. gainsharing, profi t sharing, or team-based). To

date, there is nothing in this l iterature to suggest how various group

incentive plans might affect pay satisfaction.

IDENTITY THEORY PERSPECTIVE

Identity theory will be used to delineate the process of evaluation

employees engage in after group incentives are implemented and how this

process affects pay satisfaction. Identi ty theory has been employed in social

psychology to study a variety of l ife events, how these events are interpreted

and thus internalized by individuals, and the effect of these events on

individual behaviors (Burke, 1991; Thoits , 1992). Although the theory has not

5


8/23

been uti lized within an organizational setting to understand and interpret the

implementation of events, Simon (1992) has recently suggested that this

perspective of identity theory appears to be developed to a point where it

should be expanded to additional domains, in particular, to employment

si tuations.

According to the theory, the identity process is an internal control

system used by individuals to fil ter information about events and interpret

these events, whereby the interpretat ion leads to an emotional response and

ult imately to behaviors (Burke, 1991). This interpretat ion process is done

through the lens of a salient role. Stryker and Serpe (1982: 206) note that

persons have as many identit ies as the number of dist inct sets of structured

relat ionships in which they are involved. Thus, a person may hold the

identi t ies of doctor, mother, churchgoer, friend, skier etc., al l of which

collectively make up her self . Given the number of roles that each person

has, social psychologists have suggested that certain roles become more

salient than others as a result of 1) characterist ics of the event, and 2)

self conceptions (Stryker & Serpe, 1982; Thoits, 1991).

Therefore, the fi ltering system described in identity theory is governed

part ly by the saliency of given roles in relat ion to an event. If an event

affects a salient role, then the likelihood for a significant emotional and

behavioral response increases (Stryker, 1987). According to Thoits (1991:

106), the more salient the role identity, the more meaning, purpose, and

behavioral guidance the individual should derive from its enactment, and thus

the more that identi ty should influence psychological well being .

As mentioned earl ier, identi ty theory has been applied to help explain

individuals' reactions to stressful events (Burke, 1991; Hammen et aI, 1985;

Simon, 1990). This l ine of research holds the event constant; although events

are characterized as stressful , the research to date has not specifically

considered varying characterist ics of the event itself, such as degrees of

st ress . These studies have uti lized an array of measures to assess individual

Psychological reactions to events, including measures of depression (Constance

6


9/23


10/23

The model (See Figure 1) proposed here suggests that the characterist ics

of the incentive plan will activate one of the work-related roles. Even

though an individual might not hold a certain role as particularly salient

before group incentive implementation, i t is suggested that the

characterist ics of the event i tself will result in workers reordering the

sal~ence of various work-related roles. The characteristics will then not

only determine if the event (group incentive) will be identi ty relevant or

identi ty irrelevant, but i t wil l also affect which specific work-related role

will be most salient .

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

Insert Figure 1 About Here

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

Although a number of work-related roles could be considered, due to the

fact that the research q~estion focuses on the relat ionship between group

incentives and pay satisfaction only two salient roles, which might be viewed

as points on a continuum, will be uti lized. The two roles included are the

more personal role of job holder and the more distant role of organizational

member, which each should have associated emotional and behavioral

expectations.

Consistent with considering only two work-related roles (job holder and

organizational member), the characterist ic of group incentives that will be

pursued in this part icular study is the distr ibution rule. T he d is tr ib ut io n

rule seems to parallel the two work-related roles because it also can be

designed to be extreme points on a continuum where distribution can be based

on individual differences (or based on performance/skil ls) , or it can be based

on organizational membership where all employees in the work group receive

equal payments (as with an enti t lement) . In addit ion, the distr ibution rules

mUst be determined for any group incentive system, not merely the one studied

in this research (Graham-Moore & Ross, 1990).

Of course, the impact of distribution rule depends on the existence of a

bonus pool, therefore, amount i tself will determine whether the group

8


11/23


12/23

(e.g. rules used to derive mer it increases or job level) .

H2 : Distribution rules based on indiv idual diffe rences should resultin changes in components of pay sati sfact ion that address personalpay (such as pay level) .

In addition, i t is always possib le that a group incent ive could be

developed such that i t taps absolutely no salient work-rela ted roles, and the

result . would be an identi ty irrelevant event (at least with respect to work-

related roles) with no subsequent behavioral changes. This should be the case

when no bonus pool results from the group incentive program.

METHOD AND RESULTS

Measures of pay sa tisfaction were collected in two fi rms tha t

implemented gainshar ing programs. Firm A, a high technology organizat ion,

insti tuted the gainshar ing plan in its corporate services department, which

consists of a varie ty o~ groups provid ing service to other employees within

the firm. Personnel worked in the fo llowing functions: facil i t ies, security ,

food services, administrat ion, and real estate. Fi rm B is a manufactur ing

plant that is part of a larger consumer products organizat ion. Employees in

this plant engage in production, engineer ing, and genera l sta ff functions

(acc ounti ng and admi nistra tion) .

The two gainshar ing plans uti l ized different dis tribut ion rules. Firm A

implemented an equal distribution rule (each employee received equal bonus

checks) while Firm B used an equity-based dist ribution ru le (each employee

received the same percentage of base pay). Therefore, employees in Firm 8 did

not receive equal bonus amounts; higher paid employees received larger bonus

checks. Pay sati sfaction measures were collected via surveys that were

distributed on site both before and after (10 months) ga inshar ing plan

implementation. Table 1 summarizes character ist ics of both samples and

gainsharing plans.

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

Insert Table 1 About Here

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


13/23

Heneman's (1985) modif ied four factor pay sat isfact ion scale was used

for the analysis . This scale has been successfully util ized in several other

studies and contains measures of the sub-scales of interest for this research;

it measures sat isfact ion with: pay level , ra ise , s tructure and

administ ra tion, and benefits with a 1 to 5 Liker t scale where 1 represents

very dissatis fied and 5 indicates very satis fied.

appropriate because both fi rms involved in this research had similar pay

These measures are

systems prior to gainshar ing, and these programs were retained and held

constant dur ing the durat ion of this study. Both fi rms considered satisfaction

with level , raise, and structure/administrat ion to represent individual ly

determined pay. This is due to the fact that merit pay programs based on

formal performance appraisal were in place at both companies . In ad di tio n,

both companies had benef i t s progr~s tha t were del ivered to al l employees

based on membership, therefore they were seen as entit lements. Table 2

indicates the standardized Cronbach alpha coeff icients for the four factors in

addit ion to corre lat ions, means , and standard deviations for Firms A and B.

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


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

Individual employees could not be identif ied over time in this research,

because in order to encourage part icipat ion, workers needed a guarantee of

confidentiality. Therefore, the results report overall change in pay

sat is faction between the pre- treatment and post- treatment time periods for the

gainsharing uni ts . Al though surveys were not identi fied, a Chi-Square test of

the dis tributions of the two samples over age, education, gender , and tenure

revealed no significant di fferences (p < .05) .

In order to tes t whether pay satisfaction changed as a result of

gainshar ing plan insta l la t ion a MANOVA analys is was performed on the data for

all four sub-scales. Signif icant main effects were found for both f irms. The

data from Firm A indicated a s igni ficant main ef fec t , F(4 ,299) , a t th e .0 0 5

1 1

I


14/23

babil i ty level . The data from Firm B also indicated a signif icant main

ect , F(4,151}, at the .001 probabil i ty level .

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


~------------

Subsequent univariate analysis for Fi rm A data showed that on ly

is fact ion with benef i ts changed (mean va lue changed from 3.71 to 4.08),

ni f icant ly (See Table 3). However, in Firm B sati sfact ion wi th pay

ministrat ion ( from 2.53 to 2.97) and to a somewhat lower degree pay level

om 2.54 to 2.83) (See Table 3) were affected.

DISCUSSION

The data analys is seems to provide ini t ial support for the applicat ion

ident i ty theory toward understanding the re lat ionship between group

centives and pay sat i sfact ion. The resul ts show that in Firm A, where the

tr ibut ion rule was based on equa l payments , ga inshar ing was viewed as a

nefi t . In fact , in feedback sessions with employees, when asked why

nef i ts sat isfact ion increased, they ind icated that ga inshar ing is a

nefi t . Fi rm B, where the dis tr ibu t ion rule was based on individual

rformance , experienced a s i tuat ion where sat is fact ion with pay

ministrat ion/st ructure and pay level were affected by the gainsharing

ogram. This indica tes that employees in Firm B viewed the gainsharing plan

part of their personal pay package rather than as an employee benefi t ; this

s conf irmed during interviews with employee groups.

Sat isfact ion with raise was not affected by gainsharing at ei ther plant .

is is no t surpri s ing in tha t both companies have formal performance

prai sal programs that a re direc t ly t ied to raises. Therefore , the term

aise ' might be so specif ic to these workers that no sp il lover effect was

und.

Consis tent with identi ty theory, the model presented in this paper

edic ts that events considered iden ti ty relevant should resul t in behavioral

anges associated with the needs of the mos t sal ien t ro le in ques t ion. T h e

1 2


15/23

del suggests that if the event is considered identity relevant for the job

lder role, then changes in job-related behaviors might be expected. These

haviors would depend on the specif ic job in question, but, in general, the

odel predicts that people will respond by altering the ways in which they

rform the tasks associated with their particular job. On the other hand, if

e event is viewed as being identity relevant for the organizational member

le, a different set of behavioral reactions should be expected. Rather than

anges in individual job-specific behavior, it is suggested that behaviors

sociated with organization membership, such as cit izenship behaviors, might

expected to occur (Smith, Organ, & Near, 1983).

Although individual job behavior data were not available, a review of

e overal l results of the gainsharing programs might lend some evidence

ward understanding the behavioral consequences. Firm A, a~ter four quarters

perience with the gainsharing program, decided to discontinue the plan due

lack of impact on revenue or costs. However, over the 12-month period of

me that the plan was in effect, 341 suggestions were presented to the

in sharing co mmittees .

In contr ast, Firm B continues to utilize the gainsharing program because

re sulted in s ignifica nt improve ments in quali ty and safety in addition to

xpanded production and increased revenue. The result has been production at

vels higher than previously ant icipated and bonus payouts exceeding the

mp lo ye es ' e xp ec ta ti on s. However, this company received only 20 suggestions

om their committees during the same initial 12-month time period.

If suggest ion making can be considered a cit izenship behavior, then

ere is some evidence, although limited, that changes in benefits

atisfaction were associated with suggestion making activity. Also, if i t is

ssumed that production, quality, and safety improved at Firm B due to changes

n job specific behaviors , then one might interpret the data as indicat ing

at changes in components of pay satisfaction that address personal pay are

elated to job specific behaviors.

Although the init ial resul ts are encouraging, the model needs to be

13


16/23

ther elaborated to include addi t ional character ist ics of incent ives . For

tance, amount of payout might be an important cr i ter ia , par ticularly given

earch indicat ing that there is a threshold below which pay increases are

t meaningful to employees (Kreft ing & Mahoney, 1977; Worley, Bowen & Lawler,

92). There might also be a threshold effect for group incent ives , whereby

ow a certain level a bonus is not ident ity relevant . In addi tion, bonus

Qunt might affect which work-related role wil l be sal ient . The model should

o be expanded to take into considerat ion individual differences that might

derate the relat ionships that were developed, par ticularly given that

ent i ty theory suggests that not only characteris tics of the incent ive but

o self conceptions affect emotions and behaviors (Stryker & Serpe, 1982).

This s tudy was somewhat limited in that i t only considered two firms and

e type of group incent ive system. Future research including a large numb~r

companies in addit ion to other forms of group incent ives would be useful ;

wever, as the differences between group incent ives increase, i t is more

fficul t to isolate which character ist ics of the incentives drive identi ty

evance and saliency of roles .

The ini t ia l support for this model does not indicate that ei ther

s tr ibut ion rule is better; it simply suggests that the plans can be viewed

fferently , and this insight could be important to companies in the process

designing group incent ives . In addi t ion, the model does not predict the

rection of the change in pay sat isfact ion. Although sat isfact ion increased

these two firms, i t is quite possible that the resul t might be decreases in

y s at is fa ct io n.

Ident i ty theory appears to be useful for understanding the relat ionship

tween group incent ive implementat ion and pay sat isfact ion. The theory,

wever , is qui te generic and can be used to study any number of

ganizational interventions and how these programs affect employee emotional

psychological responses and subsequent behaviors.

14


17/23

REFERENCES

h, R.A., Lee, Y.L. & Dreher, G.F.. 1985. Explorinq the determinantsof pay satisfaction usinq better mousetraps. August. Paper presented atthe meeting of the American Psychological Association, Los Angeles.

kin, D.B. & Gomez-Mejia , L.R. 1983. Faculty pay satisfaction under unionand nonunion condi tions. Paper presented at the Academy of Management

meetings, Dal las, August.

rger, C.J. & Schwab, D.P. 1980. Pay incentives and pay satisfaction.Industrial Relations, 19: 206-211.

rkowitz, L., Cochran, S. , Fraser; C. & Treasure, F.P. 1987. Pay, equity,job gratif ications and comparisons in pay satisfaction. Journal ofApplied Psycholoqy, 72: 544-551.

rke, P.J. 1991. Identi ty processes and social stress.Socioloqical Review, 56: 836-849.

American

mpbell , H. 1952. Group incentives. Occupat ional Psycholoqy, 26: 15-21.

ok, K.S. & Hegtvedt, K.A. 1983. Distributive justice, equity, and equali ty.Annual Review of Socioloqy, 9: 217-241.

eher, G.F. 1981. Predicting the salary satisfaction of exempt employees.Personnel Psycholoqy, 34; 579-589.

er , L. & Theriault , R. 1976. The determinants of pay satisfact ion.of Applied Psychology, 61: 596-604.

Journal

rr , J .L. 1976. Incentive schedules, productivity, and satisfaction in workgroups: A laboratory study. Orqanizational Behavior and HumanPerformance, 17: 159-170.

eedman, S.M. & Montanari , J .R. 1980. A integrative model of managerialreward allocation. Academy of Manaqement Review, 5: 381-390.

neral Accounting Office. 1981. Productivity sharinq proqrams: Can theycontribute to productivity improvement? Washington, D.C.: U.S. GeneralA cc ou nt ing O ff ic e.

mez-Mejia, L.R. & Balkin, D.S. 1989. Effectiveness of individual andaggregate compensation strategies. Industrial Relations, 28: 431-445.

aham-Moore, S.E. & Ross, T.L. 1990. Gainsharinq: Plans for improvinqperformance. Washington, D.C. - BNA.

eenberg, G. 1987. Reactions to procedural justice in p ay me nt d is tr ib ut io ns :Do the means justify the ends? Journal of Applied Psycholoqy, 72:55-61.

mmen, C., Marks, T., DeMayo, R. & Mayol , A. 1985. Self-schemas and risk fordepression: A prospect ive study. Journal of Personal ity and SocialPsycholoqy, 49: 1147-1159.

mmer, T. 1988. New developments in profit shar ing, gainsharing, and employeeownership. In: J . P. Campbel l & R. J. Campbel l (Eds.) Productivi ty inOrqanizat ions: New Perspectives from Industr ia l and OrqanizationalPsycholoqy: 328-366. SanFrancisco: Jossey-Bass .

15


18/23

atcher, L. & Ross, T.L. 1991. From individual incentives to anorganization-wide gainsharing plan: Effects on teamwork and productquali ty. Journal of Orqanizational Behavior, 12: 169-183.

eneman, H.G. 1985. Pay Satisfaction. Research in Personnel and HumanResources Management, 3: 115-139.

eneman, H.G. & Schwab, D.P. 1985. Pay sat isfact ion: I ts multidimensionalnature and measurement , Journal of Psycholoqy, 20: 129-141.

nkins, D.G. & Lawler, E.E. 1981. Impact of employee participation in payplan development. OrGanizational Behavior and Human Performance, 28:111-128.

reft ing, L.A. & Mahoney, T.A. 1977. Determining the size of a meaningful payincrease. Industrial Relations, 16: 83-93.

awler , E.E. 1971.McGraw-Hill.

Pay and orqanizat ional effectiveness . New York:

awler, E.E. 1981. Pay and orqanizational development.Addison-Wesley.

Reading, MA:

awler, E.E. 1988. Gainsharing theory and research: Findings and futuredirections. Research in Orqanizational ChanGe and Development, 2:323-344.

awler, E.E., Ledford, G.E. & Mohrman, S.A. 1989. Employee involvement inAmerica. Houston, TX: American Productivity and Quality Center.

awler, E.E. 1990. strateqic pay: AliGninq orGanizational strateqies and paysystems. San Francisco, CA: Jossey-Bass.

ong, R.J . 1989. Patterns of workplace innovat ion in Canada.Relat ions, 44: 805-820.

Industr ia l

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

extension. Research in Personnel and Human Resources Manaqement, 9:235-309.

ilkovich, G.T. & Wigdor, A.K. 1991.Nat ional Academy Press .

Pay for performance. Washington, DC:

Motowidlo, S.J. 1983. Predicting sales turnover from pay satisfaction andexpectation. Journal of Applied Psycholoqy, 68: 484-489.

st , E.J. 1990. Team-based pay: New wave strategy incentives.Manaqement Review, Spring: 19-27.

Sloan

earlin , L.I. 1989. The sociological s tudy of stress.Social Behavior , 30: 241-256.

Journal of Health and

chrieshiem, C.A. 1978. Job satisfaction, att i tudes towards unions, andoting in a union representation election. Journal of Applied

Psycholoqy, 63: 548-552.

chuster, M.H. 1984. The Scanlon plan: A longitudinal analysis.Applied Behavioral Science, 20: 23-28.

chwab, D.P. & Wallace, M.J. 1974. Correlates of employee satisfaction withpay. Industrial Relations, 13: 78-89.

Journal of

16


19/23


20/23

FIGURE 1

Group Incentives and Pay Satisfaction

Group Incentives Implementa tion

.Bonus Amount

.DistributionRule

A ctiv ate s S alie nc e o fWo rk -R ela te d R ole s

No Effect on Salience ofWork-Related Roles

Iden ti ty R e levant :

Identi ty Relevant: OrganizationM e m be r R ole

Ident ity I rrelevan t toWo rk R ole

Change in Componentsof Pay Satisfaction -

Individual Based Criter ia

Job-Specific

Behaviors

C ha ng e in C om po nen ts o fP ay S atis fa ctio n -

Organiza tion Wide Rewards

Organizational

Citizenship Behaviors

N o Wo rk R elate dEmotional React ion

No Behavior

Changes


21/23

TABLE 1

Sample and gain sharing plan character ist ics

FIRM A* FIRM B*

re- treatment Post- treatment Pre- t reatment Post-treatment= 172 N = 151 N = 92 N = 70

ull t ime = 15 0 Full time = 14 6 Full time = 89 Full time = 69

Male = 85emale = 85

Male = 71Female = 76

Male = 77Female = 13

Male = 59Female = 9

xempt = 36on-exempt = 114

Exempt = 27Non-exempt = 119



ainsharing payouts : Average gainsharing payouts :

otal

$380$ 63$ 31

$474

Quarter 1 =Quarter 2 =Quarter 3 =

$577$177$1,866

uarter 1 =uarter 2 =uarter 3 =

Total = $2,620

DIS TRI BU TIO N R ULE -Equal i ty

DISTRIBUTION RULE -Percentage of pay

G ai ns ha ri ng c al cu la ti onased on revenue andxpenses.

Calculat ion based onrevenue and expenses.

Customized component forus to me r s at is fa ct io n.

Customized component forsafety and qual i ty .

BOTH GAINSHARING PLANS SHARED THE FOLLOWING CHARACTERISTICS:

Once the bonus pool is determined, i t is divided so that 50% of the poolis al located to employees and 50% back to the company.

Gainsharing bonus is calculated and dis tr ibuted quarter ly with 50%retained in reserve unt i l the end of the year .

Gainsharing plans included suggest ion committees .

* Both firms indicated no signif icant turnover during the ten-month period oft ime between the pre- t reatment and post- t reatment.


22/23

Pay sat is fact ionPay level 1 .0 .04 .59** .55** 2.93 1.05 .95

Pay sat is fact ionBenef i ts .37** 1.0 .18* .17* 3.71 1.05 .95

. Pay sat is fact ionra ise .75** .39* 1.0 .60** 2.91 .90 .79

. Pay sat is fact ionst ructure &adminis t ra t ion .76** .36** .76** 1.0 2.89 .73 .83

Mean 2.54 3.87 2.62 2.53

S ta nd ar d d ev ia ti on 1.13 .87 .98 .76

Alpha .97 .95 .86 .84

. Pay sat is fact ionPay level 1 .0 .06 .71** .60** 2.85 1.11 .95

. Pay sat is fact ionBenef i ts .41** 1.0 .16* .17* 4.08 .65 .91

. Pay sat is fact ionraise .81** .50** 1.0 .71** 2.96 .89 .79

. Pay sat is fact ion

I

s t ructure &adminis t ra t ion .80** .51** .79** 1.0 2.99 .69 .84

Mean 2.83 4.06 2.82 2.97

Standard devia tion 1.04 .56 .89 .73

Alpha .96 .87 .87 .87

TABLE 2

Pay satisfaction summary statistics

PRE-TREATMENT DATAZero- order Correlations

1. 2. 3. 4. Mean st. dev. Alpha

m A = above diagonal; Firm B = below diagonal= < .05; ** = S .01

POST-TREATMENT DATA

Z er o- or de r C or re la ti on s

1. 2. 3. 4. Mean st. dev. Alpha

rm A = above diagonal; Firm B = below diagonalte: Standardized Cronbach alpha coefficients reported

= S .05;= < .01


23/23

PAY S AT IS FA CT IO N FIRM A FIRM BMeans MeansPre Post F Pre Post F

Pay level 2.93 2.85 .36 2.54 2.83 2.84

Benefits 3.71 4.08 13.35 3.87 4.06 2.26

Raise 2.91 2.96 .22 2.62 2.82 1.58

Structure and 2.89 2.99 1.31 2.53 2.97 12.93administrat ion

TABLE 3

Fol low up Univaria te Analysis

= ~ 10= ~ 01

group incentives & pay satisfication, understanding the relationship through an identity theory...

Documents