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Some determinants of compensation decisions.

S M Freedman

    Academy of Management Journal. Academy of Management
    |August 10, 1978
    PubMed
    Summary
    This summary is machine-generated.

    Compensation decisions are influenced by an employee's pay equity and their equity outside of work. An employee's demand for a raise also impacts these decisions, especially when combined with other factors.

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    Area of Science:

    • Organizational Behavior
    • Human Resource Management
    • Psychology

    Background:

    • Compensation decisions are complex and influenced by multiple factors.
    • Understanding these factors is crucial for fair and effective human resource management.
    • Previous research has explored various elements impacting pay and raise decisions.

    Purpose of the Study:

    • To investigate the impact of subordinate pay equity on compensation decisions.
    • To examine the effect of subordinate off-the-job equity on compensation decisions.
    • To analyze the interaction between subordinate raise demand and other equity factors in compensation decisions.

    Main Methods:

    • A simulated personnel task was employed to assess decision-making.
    • Subjects' compensation decisions were recorded and analyzed.

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  • Statistical methods were used to determine the significance of each variable and their interactions.

    • Main Results:

    • Subordinate pay equity was found to directly influence compensation decisions.
    • Subordinate equity off the job also directly affected compensation decisions.
    • The strength of a subordinate's demand for a raise interacted with both pay equity variables, influencing decisions.

    Conclusions:

    • Both internal pay equity and external equity perceptions significantly shape compensation decisions.
    • Employee's expressed desire for a raise, in conjunction with equity considerations, plays a critical role.
    • These findings have implications for designing equitable compensation strategies and managing employee expectations.