A drop in the bucket: when is a pay raise a pay raise?

Although merit pay continues to receive much theoretical and practical attention, little systematic effort is devoted to determining how large a pay raise must be before employees see it as a pay raise. This study uses psychophysical reasoning and techniques in a sample of 192 student 'employee...

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Bibliographic Details
Published in:Journal of organizational behavior 1997-03, Vol.18 (2), p.117-137
Main Authors: MITRA, ATUL, GUPTA, NINA, JENKINS, JR, G. DOUGLAS
Format: Article
Language:English
Subjects:
Base pay
Disappointment
Employees
Estimation methods
Fractions
Increases
Judgment
Mental stimulation
Merit increases
Organizational behavior
Pay
Pay structure
Perceptions
Psychophysics
Raises
Responses
Sensory discrimination
Statistical median
Studies
Weber Fechner law
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Summary:Although merit pay continues to receive much theoretical and practical attention, little systematic effort is devoted to determining how large a pay raise must be before employees see it as a pay raise. This study uses psychophysical reasoning and techniques in a sample of 192 student 'employees' to establish the size of pay raise thresholds in a relatively controlled setting. Results indicate that, below about the 7 per cent level, increases in pay amounts are unlikely to evoke positive perceptual and attitudinal reactions among employees. Theoretical, methodological, and practical implications of these results are highlighted.
ISSN:0894-3796
1099-1379
DOI:10.1002/(SICI)1099-1379(199703)18:2<117::AID-JOB790>3.0.CO;2-1