Injustice is a common phenomenon which has a negative impact on not only the employees’ job involvement, but also their career success, and ultimately has an undesirable impact on the organization. Furthermore, managers and employees mostly are concerned about pay situation among many factors that cause the perception of unfairness. Nowadays, the majority of studies empirically verified how pay dispersion between subordinate relationship affects employees’ behavior. Few scholars explained the relationship between perception of justice affected by pay dispersion and job involvement based on equity theory. Thus, this study helps enterprises to understand the employees’ psychological perception of pay dispersion, so that managers can balance the internal salary gap and ameliorate the employees’ justice perception, and motivate employees to involve into work.
Recently, establishing a motivating salary system related to employees working motivation is one of the core competitive capabilities in organizations. Especially, scholars mainly pay attention to the level and dispersion of salary. Pay dispersion is defined as a difference in the amount of compensation among employees caused by salary structure, reflecting the difference in income among different individuals or groups [
Although numerous scholars studied about how pay dispersion affects employees and organizations, there is no consensus about the result caused by pay dispersion. After a deep research on related literature, it found that studies on consequences on employees and organizations of pay dispersion were based on different theories which explain how pay dispersion affects individuals or groups. In the past few decades, the majority of studies focused on pay dispersion between supervisors and subordinates based on tournament theory which points out that the wage increase associated with a given promotion will affect the motivation of employees who are below the job level. In other words, as long as the employee does not fully understand the outcome of the promotion, they will be incentive to work harder to get promoted [
In the past few decades, job burnout has attracted the attention from scholars in organizational behavior, human resource management, and psychology disciplines, but in recent years, scholars are more concerned about employee behavior in some positive ways, such as job involvement. According to job demands-resources model, organizational fairness is a resource in company. When employees can’t receive adequate perception of justice, they will reduce their job involvement at work [
Pay dispersion is defined as a difference in the amount of compensation among employees caused by salary structure, reflecting the difference in income among different individuals or groups [
Furthermore, scholars examined how different kinds of pay dispersion affect employees and organization by way of related mechanisms such as Tournament theory and Equity theory. Tournament theory refers that under the condition of team activities with cooperative production and task interdependence, when the homogeneous workers in the market are risk-neutral takers, with the difficulty increasing of supervision, the larger salary dispersion between the levels can reduce the supervision cost and induce efforts from agents (competitors) as well as provide a strong incentive for principals and agents to achieve the optimal distribution of social resources. Therefore, increasing the salary dispersion can improve the performance of competitors and the companies.
On the other hand, this study verifies how pay dispersion affects employees’ behavior from Equity theory, which states that the motivation of employees is not only related to the actual amount of payment they get, but also to employees’ perception of fairness in the distribution of rewards. Employees always consciously or unconsciously compare their labor costs and rewards with others, and make judgments about whether they are treated fairly or not. The perception of Justice directly affects employees’ work motivations and behaviors. However, based on three reference point theory, the process of employees comparing their salary with others reflects how individuals perceive the justice in company. After comparing their salary with others, individuals can perceive their minimum salary requirement in current position (MR) and the salary goal (G), so figure out how is current salary status quo (SQ) they are receiving. Besides, Laurie and Michae pointed out that salary situation affects the way employees perceive fairness [
Hypothesis 1: pay dispersion between minimum salary requirement in current position (MR) and current salary status quo (SQ) is positively related to employees’ perception of justice.
Researches related to justice perception is relatively thriving, Early Adams stated that when employees perceive unfair, they will change their input to maintain fairness [
Hypothesis 2: Perception of justice has positive impact on employees’ job involvement.
According to Equity theory, when employees perceive injustice, they will reduce their labor input to maintain fairness. How pay dispersion affects employees behavior depends on how they perceive the current salary and relative and perceived pay dispersion. Equity theory as one of the explanation mechanisms of the pay dispersion, when employees perceive that the current salary dispersion is unfair, motivation at work will be declined to maintain a fair perception. Similarly, economic benefits is one of resources of motivation of employees’ justice perception [
Hypothesis 3: pay dispersion between minimum salary requirement in current position (MR) and current salary status quo (SQ) is positively related to employees’ job involvement.
Hypothesis 4: Perception of justice mediates the relationship between pay dispersion and job involvement.
Finally, we conclude a model below in
The formal survey was from July to November 2018, electronic questionnaires were distributed in Guangzhou, Shenzhen, Foshan and Zhuhai in Guangdong Province. The questionnaires were mainly distributed by the Internet-tech communications, finance, banking, trade and institutions and other industries. During the survey, 524 questionnaires were sent, 502 valid questionnaires and 22 invalid questionnaires were collected, and the effective questionnaire rate is up to 95.8%.
• For measuring pay dispersion, we cited reference point theory, examine pay dispersion as the perception of the employee’s self-level relative pay dispersion between the employee’s current salary status quo (SQ) and the reference points (minimum salary requirement in current position (MR) and the salary goal (G) [
• For measuring perception of justice, we used scale developed by Schminke, which is divided into 3 dimensions: Procedural justice, Distributive justice and Interactional justice, 16 items in total [
• For measuring job involvement, we used scale developed by Schaufeli, which is divided into 3 dimensions: Vitality, Dedication and Vigor. 17 items in total [
• We took Gender, Education, Marital Status, working years, industry, company’s size and percentage of performance-based salary as control variables.
After analyzing by SPSS 19.0, we found that the Cronbach’s α value of perception of justice is 0.953, CR is 0.573, Cronbach’s α value of job involvement is 0.971, CR is 0.772. Consider that Pay dispersion is a direct variable, it is unnecessary to analyse its’ reliability.
The CFA was conducted to test construct validity among all variables. The original CFA or perception of justice was not satisfying, after deleting 2 items, it had a better fit (X2/df = 4.424, RMSEA = 0.084, GFI = 0.904, NFI = 0.933, CFI = 0.947, SRMR = 0.0388). And job involvement had a good fit (X2/df = 4.332, RMSEA = 0.096, GFI = 0.912, NFI = 0.925, CFI = 0.925, SRMR = 0.0449).
As is shown in
Furthermore, as is shown in
As is shown in Model 4
This study examines the relationship between pay dispersion and job involvement by verifying its mediating variable perception of justice which is one of the mechanisms of pay dispersion. Specifically, this study examines how pay dispersion negatively affects perception of justice, perception of justice has a positive influence on job involvement, as well as how perception of justice mediates the relationship between pay dispersion and job involvement so that explore one of the mechanisms of pay dispersion, equity theory.
In reality, managers can’t just pay attention to the exact amount of pay dispersion level, but should consider the perceived pay dispersion of employees. They
Variables | M | SD | Pay Dispersion | Perception of Justice | Job Involvement |
---|---|---|---|---|---|
Pay Dispersion | 4.57 | 2.528 | 1 | ||
Perception of Justice | 3.42 | 0.655 | −0.283** | 1 | |
Job Involvement | 3.50 | 0.859 | −0.257** | 0.606** | 1 |
Note: *p < 0.05; **p < 0.01; ***p < 0.001.
Variables | Perception of Justice | |
---|---|---|
Model 1 | Model 2 | |
β | β | |
Gender | −0.026 | −0.003 |
Education | 0.021 | −0.015 |
Marital Status | 0.155* | 0.111 |
Working Years | −0.058 | −0.030 |
Industry | −0.158** | −0.153** |
Company’s Size | −0.148* | −0.171*** |
Percentage of performance based salary | 0.191*** | 0.150** |
Pay dispersion | −0.251*** | |
R2 | 0.074 | 0.129 |
∆R2 | - | 0.055*** |
Note: *p < 0.05; **p < 0.01; ***p < 0.001.
should communicate with employees mutually and investigate market salary level when making salary management. Besides, human resources department should provide employees for a considerable amount of compensation which is consistent with their input at work, as well as try to make the compensation decision process fair and transparent, and leaders should treat employees fairly to strengthen employees’ perception of fairness, so as to enrich employees’ job involvement at work, so that employees are motivated to work harder for a better performance for the company.
Whereas, the scope of the study sample is limited. The samples in this study are mainly collected from employees in Guangdong. The samples are not sufficient to represent the characteristics of the overall Chinese employees, which will affect the stability of the theoretical model to some extent. Therefore, researches should expand the scope of the samples, so that it can improve the availability of this theory.
Variables | Job Involvement | |||
---|---|---|---|---|
Model 1 | Model 2 | Model 3 | Model 4 | |
β | β | β | β | |
Gender | −0.009 | 0.862 | 0.010 | 0.012 |
Education | 0.034 | 0.562 | 0.004 | 0.013 |
Marital Status | 0.226*** | 0.001 | 0.189*** | 0.125* |
Working Years | −0.162** | 0.002 | −0.139* | −0.122* |
Industry | −0.029 | 0.094 | −0.025 | 0.063 |
Company’s Size | −0.033 | 0.192 | −0.052 | 0.046 |
Percentage of Performance Based Salary | 0.149** | 0.337 | 0.115 | 0.029 |
Pay Dispersion | −0.208*** | −0.064 | ||
Perception of Justice | 0.588*** | 0.573*** | ||
R2 | 0.038 | 0.073 | 0.281 | 0.316 |
∆R2 | - | 0.035*** | 0.208*** | 0.035*** |
Note: *p < 0.05; **p < 0.01; ***p < 0.001.
Secondly, in terms of measurement, for measuring of the pay dispersion, this study uses a psychological perception method. Although it is more innovative, simple and applicable than directly measuring the absolute pay dispersion or the relative pay dispersion, it can be more scientific. Therefore, study in future can collect the specific salary information of ordinary employees to makes the research more quantitative and scientific.
Lastly, this study only uses the mediating role of perception of justice in pay dispersion and job involvement to explain the mechanism of pay dispersion, which is not scientific enough. In the future, in order to examine the mechanism of the pay dispersion, more manifest organizational performance variables can be used as the outcome variable to verify the mediating effect of perception of justice.
The authors declare no conflicts of interest regarding the publication of this paper.
Zhang, C.H. and Li, W.L. (2019) Perception of Justice Mediates Relationship between Pay Dispersion and Job Involvement. American Journal of Industrial and Business Management, 9, 561-568. https://doi.org/10.4236/ajibm.2019.93038