Employees' preferences for the bases of pay differentials

Abstract

Purpose

The aim of this study was to investigate whether perceptions of fair pay are characterised by social norms about the appropriate bases of pay differentials.

Design/methodology/approach

In order that the employees could voice their opinions without the restrictions of pre‐coded categories individual interviews were carried out with employees from five private sector organizations. The design of the study allowed an examination of attitudes towards pay criteria in the context of changes in organizational pay structures towards more individualism in pay awards.

Findings

The most popular bases of pay were “responsibility”, “qualifications” and “performance”. The attitudes appeared to reflect widespread norms about the most appropriate bases of pay. There was some evidence for an interaction between employee attitudes towards pay determination and organizational characteristics on the design and implementation of pay policies.

Research limitations/implications

The interview methodology restricted the size of the sample and consequently the generalisations that can be made from the findings. Future research could use qualitative or quantitative methods to check whether the findings replicate with different types of groups of employees.

Practical implications

The paper contains useful information for human resource practitioners about maintaining “felt fairness” in the design of new pay systems.

Originality/value

The qualitative approach of this study produces rich information about employee perceptions of pay differentials in the context of current changes towards more individualised pay determination.

Citation

Dickinson, J. (2006), "Employees' preferences for the bases of pay differentials", Employee Relations, Vol. 28 No. 2, pp. 164-183. https://doi.org/10.1108/01425450610639383