An Under-Met and Over-Met Expectations Model of Employee Reactions to Merit Raises

• Published in: Journal of applied psychology 2008-03, Vol.93 (2), p.424-434
• Main Authors: Schaubroeck, John, Shaw, Jason D, Duffy, Michelle K, Mitra, Atul
• Format: Article
• Language: English
• Subjects: Adult; Applied psychology; Attitude; Biological and medical sciences; Economics; Employee Attitudes; Employee Performance Appraisal; Employee Turnover; Employees; Expectations; Female; Fundamental and applied biological sciences. Psychology; Happiness; Hospitals; Human; Humans; Incentives; Job performance; Job Satisfaction; Male; Merit increases; Merit Pay; Motivation; Motivation. Job satisfaction. Attitude; Occupational psychology; Pay for performance; Payment systems; Perceptions; Performance related pay; Psychology; Psychology. Psychoanalysis. Psychiatry; Psychology. Psychophysiology; Raises; Reward; Salaries; Salaries and Fringe Benefits; Satisfaction; Studies; Turnover; Wage incentives
• ISSN: 0021-9010; 1939-1854
• DOI: 10.1037/0021-9010.93.2.424

The authors developed a model of how raise expectations influence the relationship between merit pay raises and employee reactions and tested it using a sample of hospital employees. Pay-for-performance (PFP) perceptions were consistently related to personal reactions (e.g., pay raise happiness, pay-level satisfaction, and turnover intentions). Merit pay raises were strongly related to reactions only among employees with high raise expectations and high PFP perceptions. The interactive effects of under-met/over-met expectations and PFP perceptions were mediated by the extent to which participants saw the raise as generous and they were happy with the raises they received. The authors discuss the implications of these findings for expectation-fulfillment theories, merit pay research, and the administration of incentives.