Workgroup Pay Dispersion And Employees’Psychological Outcomes:Individual Differences,Contextual Boundaries,and The Underlying Mechanisms

Pay distribution plays a critical role in the employee-organization relationships (EOR) between employees and the organization. With the rapid development and transision of China’s economy, both the distributive rules of organizations and individuals’ preferences and values toward the resource allocation have changed significantly. Under such a economic and cultural context, this study focuses on the pay distribution practice in workgroups of the contempary Chinese organizations, and examines the relationship between workgroup pay dispersion and employees’ psychological outcomes, as well as its underlying mechanisms and boundary conditions.A narrative literature review was included in the first part of this dissertation. It consisted of three major parts. Part one outlined the definition, conceptual nature, and operationalizations of pay dispersion, as well as the relevant theoretical perspectives. Part two reviewed the empirical studies regarding the effects of pay dispersion on collective outcomes at the organizational level. Part three reviewed the extant empirical research regarding the effects of pay dispersion on employee attitudes and behaviors. Based on this literature review, several theoretical voids were disuccsed and the main purposes of this dissertation were also identified.Three empirical studies were conducted to systematically investigate the cross-level effects of group pay dispersion on employees’ affective organizational commitment, angturnover intention, and pay satisfaction. The first study analyzed the effect of pay dispersion on employee affective organizational commitment, and explored under what conditions a dispersed pay structure would jeopardize affective commitment of employees. Inconsistent with what the behavioral theories have suggested, empirical results found that workgroup pay dispersion had no significant corrosive effect on employee affective commitment in general; instead, this corrosive effect was found to be existed in situations when group pay level was relatively low, pay-for-performance intensity was relatively weak, and group diversity was relatively small.The second study examined the cross-level effect of workgroup salary dispersion on employee turnover intention contingent on indiviudal differences (i.e., Chines traditaonlity and actual salary level), and tested a dual-deprivation path explanation for the corrosive effect of pay dispersion. Empirical evidence based on data from370employees in51workgroups demonstrated the cultural predictions, showing that a positive relationship between workgroup salary dispersion and employee turnover intention only existed among employees with high Chinese traditionality, and those with low salary levels. Moreover, results further suggested that feelings of relational deprivation mediated the effect of salary dispersion on turnover intentions of high Chinese traditionlists, whereas feelings of economic deprivation mediated the effect of salary dispersion on turnover intentions of lowly paid employees. These results extended the pay dispersion literature to the Chiense context, underscoring the contingent role of individual cultural value.The last study paid closer attention to the underlying mechanism of horizontal social comparison among group members, and examined how salary and benefit comparison affect employees’ pay and benefit level satisfaction, respectively, as well as the moderating effect of group size. Empirical findings suggested that pay comparison had a robust and significant effect on individual pay level satisfaction at the individual level, and this effect was not moderated by group attributes; instead, the effect of benefit comparison on indiviudal benefit level satisfaction was weak at the individual level and was a function of group size such that a significant effect existed in groups with relatively small group sizes. These results not only demonstrated the critical role of horizontal pay comparison in triggering the corrosive effects of pay dispersion on employees, but also revealed the differentiated forming mechanisms of individual pay and benefit satisfaction.Finally, the main findings of this dissertation were concluded and limitations and future research directions were discussed as well.