Incorporating individual-difference, monetary-based constructs into a multi-dimensional pay satisfaction model

An historical review of the literature on and models of pay satisfaction found a void in the investigation or inclusion of individual-difference variables. This study considers and tests several variables that are hypothesized to affect an employee's overall satisfaction with total compensation.; Building on the summaries of Lawler (1930–1971), Heneman (1971–1985), and Miceli and Lane (1985–1991), this study first updated the summaries of pay satisfaction literature from 1991 through 2002. In 1976, Lawler proposed that (1) pay contributes to total organizational effectiveness, and (2) pay is important to workers. In 1999, Shaw, Duffy, Jenkins, and Gupta basically stated the same: (1) pay is a significant organizational expense and (2) pay is a valued individual outcome. The issues of pay satisfaction have not seemed to change. This research posits that an explanation for the lack of progress in identifying some antecedents of pay satisfaction might be that none of them address monetary issues. Several monetary-based, individual-difference variables were identified as potential variables that could be tested. These included money importance, pay equity sensitivity, materialism, and raise threshold. Overall job satisfaction was also included.; Five organizations in two states in the southeastern United States were surveyed, including a municipality, a major energy supplier, a small natural gas company, a government agency, and a snack foods manufacturer. The resulting sample size was 458.; Confirmatory factor analysis was used to test the scales used to measure pay satisfaction, money importance, equity sensitivity, and materialism. Individual models were constructed for each, resulting in models with acceptable fit measures. Summated scores were then used to combine these variables in a model with job satisfaction and pay raise threshold. Exploratory factor analysis and structural equations modeling were used to build and test the final model.; Results of this study found an indirect relationship from money importance to job satisfaction, through equity sensitivity, then pay satisfaction. Contrary to previous findings, there was no reciprocal relationship between pay and job satisfaction. Materialism and pay raise threshold did not successfully fit in this model and could not be included.; This study identifies one construct (equity sensitivity) that has a direct effect and another (money importance) that has an indirect effect on pay satisfaction. Both had indirect effects on the four dimensions of pay satisfaction. Further study of these and other monetary-based, individual-difference variables is needed. Results also indicate that the various, monetary-based scales measure many of the same constructs. It is suggested that development of a more concise scale is needed.