Pay‐Level Satisfaction and Employee Outcomes: The Moderating Effect of Employee‐Involvement Climate

• Published date: 01 May 2013
• Date: 01 May 2013
• Author: Bert Schreurs,Désirée Schumacher,IJ. Hetty Van Emmerik,Guy Notelaers,Hannes Guenter
• DOI: http://doi.org/10.1002/hrm.21533

PAY-LEVEL SATISFACTION

AND EMPLOYEE OUTCOMES:

THE MODERATING EFFECT

OF EMPLOYEE-INVOLVEMENT

CLIMATE

BERT SCHREURS, HANNES GUENTER, DÉSIRÉE

SCHUMACHER, IJ. HETTY VAN EMMERIK, AND

GUY NOTELAERS

The present study examined employee-involvement climate (i.e., information-

sharing and decision-making climate) as a moderator of the relationship be-

tween pay-level satisfaction and employee outcomes (i.e., job satisfaction,

affective commitment, and turnover intention). Survey data were collected

from 22,662 Belgian employees, representing 134 organizations. The hy-

potheses derived from distributive justice theory and from research on the

meaning of pay received partial support. Multilevel analyses revealed that a

decision-making climate buffered the negative effects of low pay-level sat-

isfaction, and that an information-sharing climate exacerbated the negative

effects of low pay-level satisfaction. Theoretical and practical implications of

this differential moderating effect are discussed.

Keywords: compensation and benefi ts; employee attitudes; organizational

justice; organizational climate; high-involvement HRM; information shar-

ing; participation in decision making

Correspondence to: Bert Schreurs, Department of Organization and Strategy, Maastricht University School of

Business and Economics, Tongersestraat 53, 6211 LM Maastricht, The Netherlands, Phone: +31 43 3883776,

Fax: +31 43 3884893, E-mail: B.Schreurs@MaastrichtUniversity.nl.

Introduction

“He that wants money, means and con-

tent is without three good friends.”

William Shakespeare (As You Like

It, 1599)

Pay level is an important motivator for

most employees (Locke, Feren, McCaleb, Shaw,

& Denny, 1980; Rynes, Gerhart, & Minette,

2004). One’s salary not only has an economic

and instrumental value, but it also carries an

important symbolic/emotional value for the

assessment of one’s self-worth and status (Blader

& Tyler, 2009). Research has indeed shown that

pay-level satisfaction—an employee’s satisfac-

tion with his or her current base pay (Miceli

Human Resource Management, May–June 2013, Vol. 52, No. 3. Pp. 399–421

© 2013 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21533

400 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2013

Human Resource Management DOI: 10.1002/hrm

Organizations

cannot simply

improve pay-level

satisfaction by

throwing money

at the problem,

and low pay-level

satisfaction of some

employees may well

be an inevitable part

of organizational life.

& Lane, 1991, p. 245)—is associated with

numerous outcomes, including employee

performance, affective commitment, turn-

over intention, voluntary turnover behavior,

and absenteeism (Heneman & Judge, 2000;

Kinicki, McKee-Ryan, Schriesheim, & Carson,

2002; Williams, McDaniel, & Nguyen, 2006).

Pay-level satisfaction to a large extent

results from employees comparing their

actual pay level with the pay level they

think they are entitled to. What employees

think they deserve depends on several fac-

tors, including employees’ perceived input

(e.g., tenure, work effort) and the perceived

input and pay levels of referent others (e.g.,

coworkers). The fact that pay-level satisfac-

tion depends on different factors

explains why pay level and pay-

level satisfaction are only mod-

estly correlated (Williams et al.,

2006). Therefore, organizations

cannot simply improve pay-level

satisfaction by throwing money

at the problem, and low pay-level

satisfaction of some employees

may well be an inevitable part of

organizational life.

An important question then

is, what can organizations do to

limit the adverse impact of low

pay-level satisfaction? In the pres-

ent study, we propose that low

pay-level satisfaction is less detri-

mental to employees working in

organizations characterized by a

high employee-involvement (EI)

climate. We propose that, simi-

lar to pay level, EI practices (i.e., informa-

tion sharing, participatory decision making)

communicate a positive message to employ-

ees about their value to the organization

(M. Brown & Cregan, 2008), and that shared per-

ceptions of these EI practices (i.e., information-

sharing and decision-making climate) may

act as compensatory factors for unsatisfying

pay levels. In this study, we focus on three

outcomes that have been theorized as impor-

tant effects of pay-level satisfaction—that is,

job satisfaction, affective commitment, and

turnover intention (Williams, Brower, Ford,

Williams, & Carraher, 2008; Williams et al.,

2006; Witt & Nye, 1992).

By examining EI climate as a moderator

of pay-level satisfaction, we attempt to make

three specific contributions to the litera-

ture. First, there appears to be no systematic

research on moderators of the relationship

between pay-level satisfaction and employee

outcomes (Williams et al., 2006). This study

starts filling this gap in the compensation

literature by being the first to examine EI

climate as a moderator to the relationship

between pay-level satisfaction and employee

outcomes. Second, with few exceptions,

EI has been studied as an individual-level

perceptual construct. This is rather surpris-

ing since EI is typically conceptualized as a

property of the organization (e.g., practices

employed by the organization). The pres-

ent study makes a contribution to the EI

literature by measuring and modeling EI as a

shared attribute among organizational mem-

bers. In doing so, EI is treated as a “collective

phenomenon” (Kuenzi & Schminke, 2009),

representing an environmental rather than

an individual property. Third, EI practices

are typically assumed to operate similarly

(Mackie, Holahan, & Gottlieb, 2001); schol-

ars thus rarely investigated differential effects

of EI. In this study, we examine the possibil-

ity that two dimensions of EI, information

sharing and participation in decision mak-

ing, have a differential moderating effect on

the association between pay-level satisfaction

and employee outcomes.

Theoretical Background and

Hypotheses

Pay-Level Satisfaction and

Employee Outcomes

The relationship between pay-level satisfac-

tion and employee outcomes can be theoreti-

cally understood, in part, by distributive jus-

tice theory, which has its roots in Adams’s

(1965) equity theory and Blau’s (1964) social

exchange theory. Distributive justice has been

defined as “the perceived fairness of the re-

sources received” (Cropanzano & Ambrose,