A policy capturing investigation of the effects of organizational justice dimensions on pay satisfaction
Pay matters to most employers and their employees, and given that pay has important organizational consequences (Heneman & Judge, 2000), most companies have an interest in understanding how their employees assess pay satisfaction. Given this recognized importance of compensation, pay satisfaction has been an area of interest among scholars for many years, and organizational justice theory provides a framework for considering how people make pay satisfaction assessments. The primary purpose of this study was to investigate the impact of several organizational justice constructs on pay satisfaction. Variables of interest included are: internal equity, individual equity, external equity, procedural justice, and interactional justice. Using a policy capturing approach, fifty-two middle and senior level managers at a large financial organization evaluated thirty-two hypothetical pay situations. The findings revealed that each of the justice constructs had a positive relationship with pay satisfaction. The three forms of distributive equity (individual, external, and internal equity) were viewed as more influential than procedural equity or interactional equity, and individual equity had the greatest influence. The cluster analysis established distinct clusters of managers who employed different decision policies, but all clusters had individual equity as the greatest influence. Some of the clusters had a more balanced approach while other clusters relied much more on the distributive equity components. These results support the early exchange theories, which were derived from social comparison theory, and reveal the overriding importance of similar comparisons when establishing pay models in organizations.