Embed Size (px)
Citation preview
The Impact of Better-than-Average Bias and Relative Performance Pay on
Performance Outcome Satisfaction
Prior research in psychology has documented the existence and causes of the Better-than-
Average (BTA) bias in individuals (Alicke, 1985; Alicke, Klotz, Breitenbecher, Yurak
and Vredenburg, 1995). The BTA bias is an individual’s perceived ability to contribute to
an organization relative to that of a peer. There is also an extensive literature on the topic
of job satisfaction (Lawler 1971, 1990; Crosby 1976; Society for Human Resource
Management [SHRM] 2012). Job satisfaction is a multi-faceted concept encompassing an
individual’s satisfaction with various aspects of the job such as the job or the task itself,
compensation, the job environment, safety, variety of work, supervision, training,
knowledge and capabilities of the individual and management’s evaluation and
recognition of the performance outcomes. Our study is an attempt to connect these two
streams of research as posited in the following research questions:
(1) Do entry-level accountants display a better-than-average (BTA) bias?
(2) Does the BTA bias affect their perceived performance outcome satisfaction (POS)?
(3) How is the impact of BTA bias on POS moderated by relative performance pay?
Performance outcome satisfaction is a construct comprising of the following two
components of job satisfaction: the satisfaction of an employee with his or her relative
performance pay and his or her relative performance evaluation (SHRM 2008, 2012;
Vidal and Nossol, 2011).
The research questions we explore in our study were motivated by a number of
factors. Recruitment and retention of qualified accountants is a growing challenge facing
2
accounting firms and other organizations wanting to hire accountants (AICPA, 2003;
Lornic, 2006). The current market for those entering the profession has been termed as a
“buyer’s market” (Robinson, 2006: 47). In this type of environment organizations that are
successful in enabling their employees to achieve job satisfaction are more likely to
overcome the challenges of recruitment and retention.
An improved understanding of the factors which can affect the job satisfaction of
its employees can also help an organization avoid the negative consequences that can
result when employees are dissatisfied. Examples of negative consequences include
absenteeism, poor quality work, and an increase in employee turnover. The cost to the
accounting organization to address these types of challenges and restore customer
confidence can be significant.
There are several important factors that underscore our belief in the contextual
appropriateness and relevance of the accounting industry for our research. The existence
of the BTA bias in accountants and the impact of the BTA bias on the POS of
accountants are both open questions that need to be verified by empirical research and the
answers to which cannot be directly inferred from the results of prior research. The
practice of accounting and the nature of the accounting profession possess characteristics
that contribute to viable null hypotheses.
Like any other organization, an accounting organization has the need and desire to
understand the factors that can affect the performance outcome satisfaction of its
employees. Accounting organizations are also unique in that they sell professional
services—knowledge and expertise—with a cadre of employees who are a high
3
achieving, highly educated group with a clear sense of self identity. Accounting firms
represent knowledge-based organizations (Sheehan, Vaidyanathan and Kalagnanam,
2005), which rely exclusively upon the capabilities, knowledge and expertise of their
employees. Generally speaking like most other professionals accountants are likely to
have a heightened sense of their potential to contribute and a greater sense of self-worth,
and therefore have higher expectations of the performance pay that they should receive.
Consequently, the population of professional accountants is one in which we expect its
members to have strong perceptions that they are better-than-average when comparing
themselves to individuals from the general population. But will accountants exhibit a
BTA bias when the comparison other is a fellow accountant who has also undergone a
similar educational and professional training?
Professional accountants are trained to believe in the role and importance of
exercising professional judgment. Education and training as auditors and controllers will
have highlighted the imperfect nature of the judgement process endemic in performance
evaluation and in the application of accounting principles in decision making. The
consequence of this training and exposure to exercising and being subjected to
professional judgement is that the existence and the strength of the BTA bias is a-priori
an open question.
Second, the impact of the BTA bias on performance outcome satisfaction, a
priori, is also an open question worthy of empirical study. Performance evaluation in
knowledge-based organizations is largely subjective because the capabilities of the
employees and their application of those capabilities in performing their job are less
4
easily measurable. This implies that performance evaluations and the performance pay
may be less predictable resulting in a higher frequency of divergences between
expectations and actual outcomes. By contrast, in industrial organizations the knowledge
and expertise of frontline employees and their application of their capabilities in
performing their jobs is more easily measurable because the association between an
individual’s contribution and the output is better defined (Sheehan et al., 2005). This
implies that performance evaluations and performance pay may be more predictable in
this organizational environment and consequently there is limited scope for BTA bias to
impact POS and overall job satisfaction.
In addition to the foregoing, there has been a call for more research in the area of
performance pay in the accounting profession (Ross and Bomeli, 1971, Strawser,
Ivancevich and Lyons, 1969) and the economics of job satisfaction (Clark and Oswald
1996). Research outside of accounting has recently focused on the link between
performance pay and job satisfaction (Green and Heywood, 2008) but this research did
not consider the impact of BTA bias.
From a research motivational perspective, the possibility that the performance
evaluation process (Fletcher, 2001; Gabris and Ihrke, 2001; Sudin, 2011) for accounting
firms may produce undesirable results due to the presence of BTA bias among employees
is worthy of investigation. The potential findings of our study should be of interest to
management because when forewarned management may be able to take corrective
actions that are sensitive to the existence of the BTA bias among employees. For
example, if confirmed, the negative influence of BTA bias on POS is evidence that the
5
BTA bias should be on management’s radar. Similarly, a finding of positive influence of
relative performance pay on POS would be evidence that pay matters to accountants: the
higher the relative performance pay received, the higher the reported POS. Moreover, a
positive interaction effect if it exists would be evidence that relative performance pay can
be a strategic tool that management can use to positively influence at least two
components of job satisfaction or to at least counteract the potential negative influence of
the BTA bias on job satisfaction.
To summarize, our study seeks to contribute to the literature on the use of
performance pay by focusing on the antecedents of performance outcome satisfaction
(POS), an important component of job satisfaction. Our study is unique in that our
measure of an individual’s perceived contribution focuses on the capabilities side through
the use of the BTA bias rather than the output side such as an individual’s productivity.
We used a hybrid research method comprised of a survey followed by an
experiment involving two case studies and concluding with a questionnaire. We used the
survey to collect BTA scores and establish the existence of BTA bias among the study’s
participants. The purpose of the experiment was to provide us with performance outcome
satisfaction (POS) data on the participants. In the experiment we asked each participant to
read two case studies which placed our study’s participants in a realistic scenario
occurring in an accounting firm.
Our results provide strong evidence and support for the first two questions, and
moderate support for the third. The results indicate that (1) entry-level accountants
6
exhibit a BTA bias, (2) BTA bias negatively influences POS and (3) relative performance
pay moderates the negative impact of BTA bias on POS.
The paper is organized as follows. In the next section we develop our hypotheses,
following which we describe our research methodology and then present our results.
Finally, we conclude the paper with a summary of our findings and their potential
implications. We also discuss some of the study’s limitations and provide suggestions for
future research.
THEORY AND HYPOTHESES DEVELOPMENT
Pay for performance is considered a critical component of an organization’s management
control system (Kaplan and Norton, 2001; Merchant and Van der Stede, 2003; Otley,
2003) and is widely used in organizations. For example, Long (2002) reported that 94%
of Canadian organizations use some type of performance pay, with individual
performance pay being the most common (88%). Organizations use pay for performance
to increase goal congruence, employee motivation and ultimately job satisfaction
(Lawler, 1971; Long, 2002, 2010; Otley, 2003; SHRM, 2012).
Recent surveys by the Canadian Institute of Chartered Accountants (CICA) of its
members indicate that compensation, including performance pay, ranks among the top
five factors that respondents consider important (CICA, 2006, 2007). In fact, it can
matter to such an extent that, according to Parker and Kohlmeyer (2005) and the SHRM
survey (2012), negative perceptions regarding pay can lead to lower job satisfaction,
decreased organizational commitment and increased turnover in organizations. However,
7
recent research also suggests that the role of pay for performance as it pertains to job
satisfaction has not been resolved (Green and Heywood 2008).
Job satisfaction is a multi-dimensional construct which pertains to satisfaction
along several dimensions such as (1) performance evaluation, (2) performance pay, (3)
promotion, (4) supervisors, (5) co-workers, (6) work environment and (7) the job itself
(Smith, Kendall and Hulin, 1969). Lawler’s (1971, 1990) research suggests that job
dissatisfaction most likely occurs when an individual receives less pay than what he/she
expects to receive. Moreover, respondents to a job satisfaction survey conducted by the
Society for Human Resource Management (SHRM) ranked Compensation/Pay among
the top three factors contributing to job satisfaction in seven out of ten years between
2002 and 2012 and among the top five in all ten years. For example, in 2008 (2012) 92%
(98%) of the respondents rated compensation/pay as important or very important.
Additionally, 37% (39%) rated opportunities for variable pay (including bonuses,
commissions and other forms) as very important. Similarly, 82% (90%) of the
respondents to the survey in 2008 (2012) rated management’s recognition of employee
performance as important or very important to achieving job satisfaction (SHRM, 2008,
2012). These results reinforce the importance of satisfaction with performance pay and
satisfaction with performance evaluation as critical dimensions of job satisfaction, and
our research focuses on these two dimensions.
Crosby’s (1976) research suggests that pay dissatisfaction occurs under six
different conditions: (1) when there is an inconsistency between the outcome individuals
desire and the amount they actually receive, (2) when they are aware that their peer (the
8
target used in their comparison) received more than they did; (3) when they believe that
they are entitled to more, (4) when, based on past experience, they expected more than
they received, (5) future expectations for achieving better outcomes are unlikely, and (6)
they absolve themselves of any personal responsibility for the lack of better outcomes.
In addition to the above Vroom (1964), Adams (1965), and Lawler (1973)
introduce an employee’s perception of his (or her) contribution and the reward they
receive (or do not receive) as determinants of job satisfaction. This is the key tenet of
equity theory. The theory suggests that most employees will not object to performance
pay if it is consistent with what they perceive as equitable, is in line with their
expectations, and is clearly in addition to their base pay. Schein (1965) states that when
individuals join an organization, they do so based on the expectations of their inputs or
contributions (i.e., effort), and the rewards (e.g., performance pay) they will receive for
those contributions. In doing so, they implicitly develop a contribution-reward ratio. The
literature on equity theory (Adams, 1965), informs us that an individual’s satisfaction
with performance pay is largely contingent upon the comparison(s) of his or her
perceived contribution-reward (C-R) ratio with his or her perception of the C-R ratio of
similar others. Accordingly if an individual’s perception of his or her C-R ratio is higher
than his or her perception of the C-R ratio of a peer, then the individual’s satisfaction
with the performance pay received will be lower than it would otherwise be. An
individual’s feeling regarding the link between his or her perceived relative ability to
contribute and reward will likely be stronger when there is a higher level of subjectivity
in the performance evaluation process. This is because subjectivity potentially reduces
9
the predictability of performance evaluations and rewards, thereby increasing the
potential for dissatisfaction following a performance evaluation.
In summary, individuals use at least two filters in determining whether the
contribution-reward ratio is fair. The first filter is an internal or intangible calculation of
the contributions made and rewards received. The second filter is an assessment of the
same contribution-reward ratio, but this time in comparison with select peers. This
contribution-reward ratio impacts an individual’s job satisfaction level. Recent research
also suggests that fairness of performance evaluation procedures has at least an indirect
effect on job satisfaction (Lau, Wong and Eggleton, 2008).
Equity theory, however, is silent on the factors that can affect an individual’s
perception of his or her C-R ratio relative to that of a peer. Expectancy theory (Vroom
1964), on the other hand, includes three components: expectancy, instrumentality and
valence. Expectancy includes self-efficacy, goal difficulty and control. Self-efficacy,
which is the individual’s belief about their ability to successfully perform a particular
behaviour, is particularly relevant to our paper; our variable ‘perceived relative ability to
contribute’ (i.e., BTA bias) is very similar in nature. Instrumentality is the belief that a
person will receive a reward if the expectation is met; the receipt of performance pay
aligns with this component of the theory. Valence is the value an individual places on
rewards; our POS variable attempts to capture valence.
Drawing upon equity and expectancy theories we develop our model (see Figure
1), wherein we establish a relationship between an individual’s perceived relative ability
to contribute and satisfaction with performance pay and satisfaction with performance
10
evaluation (i.e., POS). As shown in the lower half of Figure 1, we operationalize
perceived relative ability to contribute as the BTA bias.
The BTA bias was first reported by Alicke (1985) and subsequently by Dunning,
Meyerowitz and Holzberg (1989), Alicke et al. (1995) and Suls (2002). The existence of
BTA bias as first reported by Alicke was based on using 362 traits adopted from a list of
555 personality traits words used by Anderson (1968). Findings from the studies cited
above report the existence of the BTA bias, as well the fact that the degree of bias
diminishes as the comparison group becomes more defined. However, none of these
studies examined the potential impact of the BTA bias on job satisfaction (or its
individual components).
Individuals with a BTA bias are likely to make high assessments of their own
abilities relative to peers. Consequently such an individual will believe that they can
contribute more to the job than the peer and meet the expectations of the job, and also
receive a relatively more favourable performance evaluation and a reward; this aligns
with the component of instrumentality within expectancy theory.
How satisfied an individual is with their performance evaluation and performance
pay depends on the value they place on rewards; this aligns with the valence component
of expectancy theory. Our dependent variable, POS, indirectly measures the valence
component. Individuals with a higher degree of BTA bias who place a high value on
rewards are more likely to be dissatisfied with their performance outcomes, relative to
peers, because they have higher expectations. In other words, when BTA bias is high the
performance evaluation and performance pay received will likely be inconsistent with the
11
expectations that have been formed about them and consequently the POS will be low.
This leads to our first hypothesis:
H1. Performance outcome satisfaction (POS) is negatively related to BTA bias.
The second factor that can influence POS is the amount of performance pay (the
reward) received relative to that of a peer (Long, 2010; SHRM, 2012). High relative
performance pay can potentially narrow the gap between an individual’s expected and
actual performance outcome. This is because the individual perceives a higher relative
performance pay as an acceptable outcome given their perceptions about their own ability
to contribute and what they believe they should receive as a reward. Consequently, a high
relative performance pay will contribute to reducing the degree of inconsistency between
expected and actual performance outcome which, in turn, will result in a greater
likelihood of the individual reporting increased satisfaction with their performance
outcome. This leads to our second hypothesis.
H2. Performance outcome satisfaction (POS) is positively related to relative
performance pay.
It is possible for the relative performance pay received to mitigate the negative
impact of BTA bias; whether it does or not will likely depend upon the amount of the
performance pay (relative to what peers) received. While a substantially higher relative
reward may result in a significant increase in the level of POS sufficient to overcome the
negative effect of BTA bias on POS, a relative reward which is only slightly higher may
not have the same effect. In other words, the amount of the relative performance pay
received has the potential to temper the negative effect of BTA bias on POS. We
12
conjecture the existence of a positive interaction effect between BTA bias and relative
performance pay on POS; this leads to our third hypothesis.
H3. Relative performance pay positively interacts with BTA bias in influencing
POS.
RESEARCH METHODOLOGY
In this section we present the research methodology, including the study’s design, its
participants, and the variables used. Two groups of 80 and 84 (total 164) entry-level
accountants in public practice, who were also students in a graduate accounting program,
participated in the study. We adopted a hybrid design comprised of a survey followed by
an experiment involving two case studies and concluding with a post-experimental
questionnaire.1
Survey
We used the survey to collect BTA scores and establish the existence of BTA
bias. Participants assessed themselves, relative to two target peer groups, on the 24 traits
identified by Libby and Thorne (2004) as essential for auditors to possess (see Table 1).
The two peer groups were as follows: (1) a particular individual representing an
immediate work associate like a fellow classmate and (2) a general comparison target—
the average professional auditor—representing a broad comparison group. The use of two
1 Prior to designing and developing the instruments, we collected information from four senior managers,
two partners, and twelve entry-level accountants employed with four different accounting firms to enhance
the construct and face validity of the instrument planned for use in the study. The information we collected
concerned the frequency of performance pay usage for entry-level accountants, the person/position in the
firm responsible for determining the amount of performance pay that entry-level accountants receive, and a
description or list of the primary daily duties of entry-level accountants including the percentage of time
spent on audit related duties and tasks performed by them. We also collected information about the types
of metrics commonly used to evaluate entry-level performance when determining their performance pay
and the range of performance pay amounts used for entry-level accountants working in accounting firms.
13
peer groups was to confirm findings in prior research that the BTA bias diminishes as the
peer group becomes more focused (Alicke 1985; Suls 2002).
We use these specific traits because they are considered as important for auditors
to possess, i.e., they are relevant to the entry-level accountant’s job which is primarily
audit-related.2 Following from our discussion of expectancy theory in the previous
section, we believe that possessing these traits, rather than other general traits, will
potentially increase an individual’s self-efficacy with respect to the audit function. We
used a 9-point Likert scale anchored as follows: 0 = much less than the target group or
individual, 4 = about the same as the target group or individual, and 8 = much more than
the target group or individual.
As a form of control the order of the self-assessment peer groups was varied
between the surveys completed by the participants. The rationale for this manipulation in
the ordering sequence was to ensure construct validity of the BTA scores and the POS
measures we would be obtaining. By providing a well-defined and familiar peer, such as
a fellow classmate seated next to them, we believed that the BTA scores and the POS
measures would be more strongly anchored than if they were based on comparisons with
a general target group. At this point the participants were unaware that the primary BTA
scores used in our research study would be those that required them to compare
themselves specifically to their adjacently seated classmates.
2 According to Libby and Thorne (2004, 460) these traits are “… required, at minimum, to ensure auditors’
formulation of professional judgment in accordance with Generally Accepted Accounting Principles
(GAAP).” Moreover, results from our research conducted prior to developing the research design as well
as those from the post-experimental questionnaire confirmed that approximately 70% of the entry-level
accountant’s duties are audit related.
14
Furthermore we believed that this was more representative of the process that
would occur in accounting firms when performance evaluation outcomes were awarded.
It was likely that an employee would be more inclined to choose the peer to be a familiar
work associate similar to themselves rather than someone they did not know. It should be
noted that the participants in our study knew each other very well; this put them in a
better position to compare themselves with their similar other relative to the condition
used in Alicke (1985) where participants came to know their comparison other only
subsequent to a three-minute conversation with the comparison target with whom they
had not previously met. Consequently our experimental condition allows us to have a
greater degree of confidence in the BTA scores we elicited from the participants.
Moreover the fact that BTA bias exists despite each participant being strongly familiar
with the peer is very telling of one’s perceived self-efficacy relative to a peer.
Experiment
The purpose of the experiment was to provide us with performance outcome
satisfaction (POS) data. Each participant read two case studies which placed them in a
realistic scenario occurring in an accounting firm. Each scenario described the
participant’s performance as well as the performance of their immediate work associate
and the results of the subsequent performance evaluation including the amount of
performance pay awarded to the participant (the respondent) and his or her work
associate. The two cases differed only with respect to information about the amount of
the performance pay awarded to the participant (the respondent) and his or her immediate
work associate. In Case 1 (2), we stated that as an outcome of the performance
15
evaluation the participant received performance pay of $1,500 ($500) whereas the
participant’s immediate work associate (i.e., the individual they were asked to compare
themselves to) received $500 ($1,500).3 Thus in Case 1 (2) , the participant would be
able to infer that he or she received $1,000 more (less) than their immediate work
associate.
After reading each case study the participant responded to 31 questions using a 9-
point scale. The questions were distributed as follows: 16 pay and work related
questions, two manipulation check questions and 13 general information and background
type questions. The purpose of the questionnaire was to elicit the participants’ ratings of
their satisfaction with their performance pay, and the satisfaction with their performance
evaluation, which when combined provided us with a measure of their performance
outcome satisfaction (POS). To reduce the possibility of creating a demand effect we
randomly distributed the questions addressing the variables of interest throughout the
questionnaire section of the case study.
Post-Experimental Questionnaire
Finally, as a validation check, participants completed a questionnaire through
which we obtained their assessment of the importance of the 24 traits (Libby and Thorne
2004) that we use to measure BTA bias. Using a 10 point scale (anchored at both ends
by 0 = Not at All Important and 9 = Very Important), participants rated how important it
was for auditors to possess each of the 24 traits. In addition participants answered a few
general questions addressing demographic information.
3 These amounts were based on our research conducted prior to developing the experiment (see foot-note
#1).
16
Variables Used in the Study
The BTA bias is defined as the difference between their actual total BTA score and the
total BTA scale mean. In our scale, the maximum possible score for each trait is 8, so the
maximum total score for the 24 traits is 192 (24 × 8). The scale mean for each trait is 4,
so the total BTA scale mean is 96 (24 × 4). However, we use the total BTA scores as our
measure of the BTA bias to test the study’s hypotheses.
Relative amount of performance pay, the other independent variable, was
constructed as a dichotomous variable and was set at either an amount of $500 or $1,500
consistent with the information provided in the cases (coded as 0 and 1 for the purpose of
the analysis).
The dependant variable, POS, is constructed as the sum of an individual’s
satisfaction with his or her relative performance pay and the individual’s satisfaction with
his or her relative performance evaluation. The logic behind this construction of POS is
that in situations where pay for performance exists the overall outcome of the
performance evaluation process (i.e., performance outcome) consists of two separate, but
related, components: (1) the relative performance evaluation rating, i.e., how one’s
performance is rated relative to others, and (2) the consequence of the evaluation which is
a reward or a punishment (higher or lower relative performance pay).
Performance outcome, logically, cannot occur without both events having taken
place. Therefore, when attempting to ascertain an individual’s satisfaction with their
performance evaluation it would be inappropriate to elicit a response regarding
satisfaction with just the performance pay without allowing the respondent to associate
17
the amount with a performance evaluation that logically would have preceded the reward.
Similarly, it would be inappropriate to elicit a response regarding satisfaction with just
the performance evaluation rating without the respondent being able to associate that
evaluation with the relative amount of their performance pay. Consequently, we believe,
and have adopted the view of Green and Heywood (2008) that satisfaction with the
performance outcome cannot be established without considering both the satisfaction
with the evaluation rating and satisfaction with the consequence of the evaluation (i.e.,
the performance pay). The following comments provide assurance to our decision to
combine the effects of performance evaluation and the consequence of the evaluation into
a single variable (Vidal and Nossol, 2011, 1721):
In addition to the usual difficulties in obtaining data from organizations,
there is the additional difficulty that, when relative performance is
communicated in firms, it typically has explicit or implicit monetary
consequences. For instance, a worker being informed that he has
performed better than his colleagues may reasonably conclude that he has
a chance of receiving a promotion to a better paid position, which could
translate into higher effort. This makes it difficult to disentangle the direct
effect of relative performance feedback from the effect of the monetary
reward to which such feedback is often linked.
For this reason we provided participants both the information regarding the outcome of
their performance evaluation and the performance pay ($500 or $1,500) at the same time
(i.e., together).4
For the reasons cited above we do not deconstruct our POS construct and
analyze the impact of our independent variables upon each of its individual POS
4 We asked participants to provide separate satisfaction scores rather than just one because we were
concerned that the term “performance outcome” may have been confusing to the participants; to avoid any
such confusion and to ensure that the participants understood the questions asked of them we decided to
have them rate the two satisfaction scores separately with the plan of combining them into a single score
for the purposes of our analysis.
18
components separately (i.e., performance pay satisfaction and performance evaluation
satisfaction).
RESULTS
First we present general descriptive data regarding the participants, followed by the
results of our preliminary tests to examine: (1) how our participants rated the 24 traits
considered as important for auditors to possess and (2) the existence of the BTA bias.
Next we present the results for each of the three hypotheses in the order in which they
were posed. We use the data collected from all 164 participants in conducting our
preliminary tests and from 162 participants in testing our hypotheses (two participants
failed the manipulation check).
Prior to combining the data collected from the 80 and 84 participants (adding up
to 164), we did a number of tests to ensure that the data between the two groups were
compatible. We tested for differences in the BTA scores by gender, year of study (first
versus second year student), and alphabetical versus reverse alphabetical order of listing
the traits. We found no statistically significant differences between the two groups with
respect to gender, year of study, order of pay manipulation in the two cases (i.e., whether
the amount of performance pay in the first or second case was less or more than their
immediate work associate) and ordering of traits when they compared themselves to their
immediate work associate.5
5 We found a moderately statistically significant difference in the BTA scores between the two groups,
when comparing themselves to the average professional auditor, with respect to the ordering of the traits.
This difference could potentially impact our findings with respect to the second preliminary test; however,
it has no effect with respect to the results pertaining to the three hypotheses because the BTA scores we use
19
The average age of the 164 participants was 25.29 years; 97 (59%) were female,
and 67 (41%) were male. All but two were employed as entry-level accountants with an
average length of work experience of 13.1 months as accountants. One hundred and fifty
six (95.1%) participants indicated that they were employed in public practice. Moreover,
162 (98.8%) participants reported that they plan to pursue a professional accounting
designation. One hundred and twenty six participants (77.8%) reported that performance
pay was used in their accounting firms at the entry accountant level, and 145 (88.4%)
reported that performance pay was used at some level in the accounting firm where they
were employed. One hundred and twenty eight participants (78%) responded to the
question “generally speaking were you aware of the amount of performance pay received by
others working at the same level as you in your firm.” Of these 128 respondents, 91 (71.1%)
indicated that they were aware of the amount of performance pay received by others in
their accounting firm6. The descriptive statistics highlight both the predominant use of
performance pay and a fairly high level of awareness among participants of the amount of
performance pay received by their work associates. We believe that the combination of
both the high level of performance pay usage and general awareness of the amount of
performance pay received by others enhances the validity of our study.
Preliminary Tests
to test the hypotheses are those that participants report when comparing themselves to their immediate
work associate. 6 This finding is important as it demonstrates that even though the amount of performance pay awarded to
employees may not be publicly announced they are able to obtain information about the performance pay
received by others in their firm.
20
We conducted two preliminary tests to examine: (1) how our participants rated the 24
traits considered as important for auditors to possess and (2) the existence of a BTA bias
among our participants (entry-level accountants).
Importance of the 24 Traits
The 164 entry-level accountants rated each of the 24 traits on a 10 point scale (0 =
Not at All Important, 9 = Very Important). The results, as shown in Table 1, indicate that
entry-level accountants rated 21 of the 24 (91.7%) traits as important (i.e., they assigned a
score that was statistically significantly higher than the mid-point score of the scale (as
per Alicke et al. (1995)); the difference between mean scores of the 164 participants and
the mid-point of the scale was positive and statistically significant for 21 of the 24 traits.
The difference for the trait “benevolent” was positive, but not statistically significant (t =
0.576, p = 0.566). The trait “sensitive” had a negative difference but it was not
statistically significant (t = -0.574, p = 0.567). Finally the difference for the trait “warm,”
although statistically significantly different from zero, was negative thereby suggesting
that participants did not rate it as important (t = -2.579, p = 0.011). Collectively since 21
out of 24 traits were rated as important (i.e., statistically significant) we interpret this as
providing overall support for the findings of Libby and Thorne (2004), and ultimately
providing support for their usage in our study.
We also conducted reliability tests to ensure that we could add the individual
BTA scores for the original group of 24 traits as well as for the subset of 21 traits. Our
reliability tests resulted in Cronbach’s Alpha scores of (0.896 and 0.914) and (0.883 and
0.905) respectively, for comparisons with the average professional auditor and with their
21
immediate work associate. In their totality these results support the observation that the
24 (21) trait ratings, for each respective comparison group, consistently reflect the
construct (i.e., BTA bias) that it is measuring. Essentially we interpret the results to
indicate that the 24 (21) traits included in the instrument provide a reliable measure that
can be used to test for presence of the BTA bias. Nonetheless, as mentioned above, we
aggregate the BTA scores for the subset of 21 traits that were considered important by the
participants, and use these scores in all the subsequent tests.
Finally a t-test was performed on the entire set of the 21 traits which were rated as
important by the sample subjects, to examine their overall (combined) importance. The
results show that collectively the 21 traits were rated as statistically significant or
important (t = 8.536, p = 0.000), which again corroborates the findings of Libby and
Thorne (2004), and also provides additional support for using the 21 traits in our study to
investigate the presence of a BTA bias for entry-level accountants.
Existence of BTA Bias
Our next preliminary test investigates the existence of BTA bias among entry-
level accountants, and whether the degree of BTA bias diminishes as the group becomes
more focused. The method used in our study to address this question, similar in principle
to the one used by Alicke et al. (1995), involved computing, for each of the 164
participants, the BTA bias measure when participants compared themselves to the
average professional auditor and when they compared themselves to their immediate
work associate. Within each comparison group the BTA bias was measured as the
22
difference between the total BTA score for 21 traits and the total scale mean adding up to
84 (21 × 4).
The results presented in Table 2 provide evidence of a BTA bias regardless of the
comparison group (p = 0.000 for both comparison groups). We also find a statistically
significant difference between the entry-level accountant’s comparisons to the average
professional auditor and to their immediate work associate (t = 20.36, p = 0.000). This
finding suggests that the BTA bias diminishes as the peer group becomes more focused
(see Table 2). This finding was originally reported by Alicke (1985) and Alicke et al.
(1995) and our result corroborates that finding for the accounting profession.
Hypothesis Tests
H1 and H2 investigate whether the BTA bias and performance pay, respectively,
influence POS; H3 investigates the interaction effect. We used regression analysis to test
the three hypotheses. We used the following model for H1 and H2
iidummyiibiasdummyi eGenWkExpBTAPerfPayoPOS )()()()()(4321
where,
POS = Performance outcome satisfaction
PerfPaydummy = 0 (relatively lower pay) or 1 (relatively higher pay)
BTAbias = BTA bias
WkExp = Length of work experience in months
GENdummy = A gender dummy, 0 = male 1 = female
e = error term
23
The regression results, shown in Table 3 indicate that the model is statistically
significant (F = 293.883, p = 0.000), and that the adjusted R-squared is 78.4%. We also
find that both the performance pay (t = 34.044, p = 0.000) and the BTA bias (t = -3.057, p
= 0.000) are statistically significant, while gender (t = 0.114, p = 0.909) and length of
work experience (t = -0.492, p = 0.623) are not statistically significant. The statistically
significant negative coefficient of the BTA bias is evidence that H1 is supported. We
interpret this result to mean that as an individual’s degree of BTA bias increases, their
POS will decrease. The more an individual believes that their ability to contribute,
relative to peers, is higher (i.e., that they are better-than-average), the greater their
expectations about their performance outcome (i.e., evaluation ratings and performance
pay). At high levels of BTA, holding everything else constant, the satisfaction with the
performance outcome is likely to be lower. The positive coefficient value for
performance pay suggests that as performance pay increases, POS will also increase,
which supports H2.
To test H3, we expanded the previous model to include an interaction variable
between performance pay and BTA bias; the model is shown below.
The regression results in Table 4 indicate that the model is statistically significant
(F = 237.631, p = 0.000), and the adjusted R-squared is 78.6%. We find a significant
main effect for both performance pay (t = 2.842, p = 0.005) and the BTA bias (t = -4.113,
p = 0.000)). We also find a moderately statistically significant interaction effect (t =
i i bias i dummy
i dummy i i bias dummy i
e BTA PerfPay
Gen WkExp BTA PerfPay o POS
) * (
) ( ) ( ) ( ) ( ) (
5
4 3 2 1
24
1.866, p = 0.063). Gender (t = 0.114, p = 0.909) and length of work experience (t = -
0.494, p = 0.662) are not statistically significant. Our results for the interaction term
provide modest support for H3. The result suggests that the negative impact of BTA bias
on POS is somewhat tempered by the level of performance pay. A more detailed analysis
suggests that the difference between the satisfaction levels reported by the high BTA
group and the low BTA group is lower under the ‘high relative performance pay’
condition as compared to the same difference under the ‘low relative performance pay’
condition. In other words the difference in POS levels for the high BTA and the low BTA
groups, although present, is not as pronounced under the ‘high relative performance pay’
condition compared to the ‘low relative performance pay’ condition. This finding leads
us to believe that performance pay can be viewed as a moderating variable which
influences the relationship between BTA bias and POS.
ADDITIONAL TESTS
As noted previously, with regard to H3, the results show that there is modest statistical
support for this hypothesis (p = 0.063). To better understand this finding we tested H1
again, by regressing POS on BTA bias separately for each of the two performance pay
conditions (i.e., where the participant’s performance pay was less (more) than their
immediate work associate). Table 5 presents the results for these two regressions. Our
model for these two tests is as follows:
iidummyiibiasi eGenWkExpBTAoPOS )()()()(32
1
25
Table 5 indicates that the BTA bias significantly influences POS (t = -5.663, p =
0.000) in the condition where the relative performance pay is less than that of the
immediate work associate. We also find a significant effect for gender (t = -3.178, p =
0.002). The overall model is statistically significant (F = 13.870, p = 0.000), with an
adjusted R-squared of 19.3%. However, the test results shown in Table 5, for the
condition where the relative performance pay is more than that of the immediate work
associate, reveal that the BTA bias does not have a statistically significant effect on POS
(t = -1.150, p = 0.252). Similar to the previous test, we found a significant effect for
gender (t = 2.155, p = 0.033). We found this model to be moderately significant (F =
2.245, p = 0.085), and the adjusted R-squared was 2.3%.
A comparison of the above two results suggests an explanation for the moderate
significance of the interaction variable. Providing a relatively higher performance pay
somewhat mitigates the impact of BTA on POS. It would appear that when the relative
performance pay is larger it has the ability to confirm for individuals their perception that
they are better than average, and this BTA bias has a reduced influence on POS.
Collectively our results strongly support H1; the important point here is that when an
individual perceives their relative ability to contribute (proxied by their BTA bias) as
being higher, but is rewarded less than their immediate work associate (proxied by the
relative performance pay), they are less satisfied with their performance outcome (i.e.,
satisfaction with their performance evaluation and with their performance pay).
A question that may arise regarding our POS construct is whether an individual is
likely to rate their performance evaluation satisfaction as high (low) and their
26
performance pay satisfaction as low (high). This question could arise because participants
provided separate responses to each aspect of the overall performance evaluation. To
examine for the possibility of such an occurrence, we computed the Pearson correlation
between the two satisfaction ratings. Should individuals rate one of their satisfaction
scores high (low), and the other as low (high) the Pearson correlations should not be
significant. The Pearson correlations, between satisfaction with performance evaluation
and satisfaction with performance pay under the two conditions of performance pay,
show that in the condition where performance pay is lower (higher) than that of the
immediate work associate, the correlation coefficient was 0.458 (0.570). Both
coefficients are statistically significant at the 1% level (p = 0.01). This finding reinforces
the use of a single variable, POS, by combining the two separate but related components.
In addition to the correlation analysis, we tabulated the number of participants
who provided similar satisfaction ratings for each component of performance evaluation.
The results, in tables 6 and 7, show that the subjects are clustered in two groups: those
that are satisfied with both components and those that are dissatisfied with both
components. In the condition where pay was less than that of their immediate work
associate, 94% of the subjects were generally dissatisfied with both their performance
evaluation and the amount of their performance pay. Similarly, in the condition where
pay was greater than that of their immediate work associate, 70% of the subjects were by
and large satisfied with both their performance evaluation and the amount of their
performance pay. The combined results further support our use of the POS variable.
27
DISCUSSION
Our study focused on the link between an individual’s perceived ability to
contribute relative to their peers (operationalized as the better-than-average-or BTA-bias)
and the individual’s satisfaction with the outcomes of the performance evaluation process
(i.e., with the evaluation as well as the associated reward); we operationalized this
construct as performance outcome satisfaction (POS). We also examined the impact of
performance pay upon that link. The use of BTA bias as a proxy for an individual’s
relative ability to contribute is an important methodological contribution of this study.
We are not aware of any other study that has examined the relationship between BTA
bias and POS or used BTA scores as a proxy for BTA bias.
We found that in general our participants, i.e., entry-level accountants, rated
themselves as better than the average audit professional and their immediate work
associate. We also found that both the BTA bias and relative performance pay
individually influenced POS; finally we found a moderately significant interaction effect.
In their entirety, the results indicate that the greater an entry-level accountant believes
they are better-than-average the more likely their performance outcome satisfaction will
fall.
The implications of each hypothesis for accounting firms and management
accountants are as follows. The importance of H1 is that it draws attention to the role of
an intangible factor—BTA bias—in determining POS. Empirical support for H1 is a
signal for an accounting firm, hoping for high levels of POS among the employees from
its performance evaluations and pay for performance programs, to recognize that POS is
28
being influenced by its employees’ BTA Bias. If the performance evaluation and
compensation processes ignore BTA Bias then it is highly likely that the performance
outcomes resulting from the organization’s performance evaluation process will be
inconsistent with the expectations of the employees and low levels of POS (and
potentially job satisfaction) will result. In other words H1 may provide an explanation for
an accounting firm that is already experiencing low levels of POS and job satisfaction
among its employees.
But what comfort is there to be had in the knowledge that POS of employees is
being influenced in part by factors external to management control systems? What is
management to do in such situations? This is a challenging question for accounting firms.
Since the perceptions that are formed by employees are about their own abilities relative
to that of peers one strategy for managers and management control systems designers,
wishing for employees to experience high levels of POS and job satisfaction, will be to
attempt to influence the formation of such perceptions and expectations. This can be
possible if management creates opportunities for employees to better understand the
capabilities of their peers. Whether or not management can provide such opportunities is
an open question. Our H2 and H3 may offer a potential (although different) solution.
Finding support for H2 implies that when accountants receive a larger relative
performance pay, other things held equal, there will be an increase in their level of POS.
Consequently one would infer that for accountants (the employees), relative performance
pay matters since for these individuals a large relative reward is effectively
acknowledging their contributions and confirming their high expectations.
29
The key hypothesis for our paper is H3. The finding of a moderately significant
positive interaction effect is evidence that relative performance pay could mitigate the
negative influence of BTA bias on POS and amplifies the positive influence of relative
performance pay on POS. Such a finding would be relevant to management since it
reveals relative performance pay as one tangible factor that can be used to counter the
negative influence of BTA bias. As well it suggests that the positive impact which high
relative performance pay will have on POS will be even further enhanced when
performance pay is provided to employees who have high self-efficacy. Given our
assertion that accounting firms are examples of organizations where such employees will
be prevalent, support for H3 is a clear indication that relative performance pay matters to
accountants and that accounting firms should care about the amount of performance pay
they dispense to their employees. In other words relative performance pay can become a
strategic tool by which management can seek to establish higher levels of POS and job
satisfaction among the employees, especially when those employees have high levels of
self-efficacy exhibited through high levels of BTA bias.
If self-assessments and the use of performance pay in accounting firms influence
POS for entry-level accountants, as suggested by our research, the implication is that
firms should strive to avoid incongruences between the expectations that employees form
based on their sense that they are better-than-average and the performance evaluation
being provided to them. If the outcome of the performance evaluation is congruent with
the expectations formed by employees it can result in improved POS. Since expectations
are unobservable it poses a major challenge for firms as to the steps that can be taken to
30
close the gap between employee expectations and the performance outcome. Our finding
that performance pay mitigates the BTA bias on POS suggests that performance pay can
become a management tool to diminish the lack of congruency that might otherwise exist.
The preceding suggests an interesting direction for future research which is to
study the scope for directly confronting the BTA phenomenon during the performance
evaluation process or even through periodic communication. Given that communication
between employees and senior management has been ranked as one of the most important
factors affecting job satisfaction (SHRM, 2012), it is tempting to conclude from our work
that if a firm was to communicate to its employees during the performance evaluation
process a rationale that directly focused on the employee’s sense of BTA, it would allow
the employees to revise their sense of BTA and thereby rationalize the evaluation. This
would consequently lead to an improvement in POS from what it would have been
otherwise. Our research does not test this conjecture and thus such a test can form the
basis of a future study.
A related issue is the potential benefit to firms to pre-empt the BTA formation
process in its employees by directly managing the formation of the BTA bias in
employees. Through on-going feedback and mentoring and training it may be possible for
firms to reduce the BTA bias in its employees, thereby managing individual expectations.
Following from expectancy theory a change in one’s self-efficacy should lead to a change
in expectations. Perhaps one way of reducing this bias is to create an environment where
high levels of interaction exist among peers. Alicke (1985) and Alicke et al. (1995) also
state that the BTA scores will fall (i.e., become smaller) as the peer group becomes more
31
well-defined – going from a large peer group to a specific work associate (our results
corroborate these findings). This change can also be interpreted to mean that the BTA
bias declines as the comparison group becomes more focused. Miceli and Lane (1991)
suggest that a critical component in equity theory is the selection of the peer group; they
state that any individual comparing themselves to a peer must perceive the target as being
similar. Therefore, organizations that encourage mutual collaboration and team work can
expect individual employees to alter their perceptions, relative to peers, due to the fact
that individuals have a better understanding of their peers’ abilities, relative to
themselves. Consequently an important future direction for research in this area
suggested by our study is to investigate how firms might manage the BTA formation in
its employees and to test if the BTA bias can be reduced and the BTA effect on POS can
be overcome.
Our study is not without limitations. Our first limitation is the use of
questionnaires/surveys and cases to collect information. Case studies may not adequately
reflect the impact of actual, real world performance pay differences. Simply stated, if
individuals know that the performance pay differences and performance appraisal results
are not real, but rather they are only fictitious, questions designed to investigate
satisfaction levels may not reflect the participants’ actual degree of (dis)satisfaction.
A second limitation of our study relates to the problems associated with self-
evaluations. The self-evaluation questionnaires/surveys used in our research are subject
to participants providing answers which they may perceive as either socially desirable, or
32
what they believe the researcher is trying to find. Either of these conditions could bias
the results.
A third limitation of our study stems from the small sample size. Although
conducting an experiment in a controlled setting (i.e., classroom) provides certain types
and levels of control, it also limits us from generalizing the results of the study to
populations other than the one being represented by our participants. A fourth and final
limitation in our study relates to the ability to design reasonable survey questions and
cases that adequately probe performance outcome satisfaction levels, while balancing
between using instruments that are too complex and not overly transparent. Although a
number of steps were taken to develop and implement a questionnaire/survey and cases
that addresses both challenges, it should be noted that they are not without their inherent
risks.
In summary, the results of our study are important to the accounting profession as
they fill a gap, both in the accounting literature and at the operations or practical level for
any accounting firms using or contemplating the use of performance pay. Our study
provides accounting firms, their partners, managers and employees with valuable
information regarding the influence of performance pay and self-assessments upon POS.
33
REFERENCES
Adams, J. S. 1965. Inequity in social exchange. In Advances in Experimental Social
Psychology, ed. L. Berkovitz, Vol. 2. New York: Academic Press.
Alicke, M. D. 1985. Global self-evaluation as determined by the desirability and
controllability of trait adjectives. Journal of Personality and Social Psychology
49(6): 1621-1630.
Alicke, M. D., M. L. Klotz, D. L. Breitenbecher, T. J. Yurak, T. J., and D. S.
Vredenburg. 1995. Personal contact, individuation, and the better-than-average
effect. Journal of Personality and Social Psychology 68(5): 804-825.
American Institute of Certified Public Accountants (AICPA). 2003. Top CPA firm
concern: recruitment and retention. The Practicing CPA (online publication),
December.
Anderson, N.H. 1968. Likableness ratings of 555 personality-trait words. Journal of
Personality and Social Psychology 9(3): 272-279.
Canadian Institute of Chartered Accountants (CICA). 2006. Findings: The Price of
Happiness. CA Magazine (September): 7.
Canadian Institute of Chartered Accountants (CICA). 2007. What CAs want. CA
Magazine (August): 9.
Clark, A.E. and A.J. Oswald. 1996. Satisfaction and comparison income. Journal of
Public Economics 61: 359-381.
Crosby, F. 1976. A model of egoistical relative deprivation. Psychological Review 83:
95-113.
Dunning, D., J.A. Meyerowitz and A. D. Holzberg. 1989. Ambiguity and self-evaluation:
The role of idiosyncratic trait definitions in self-serving assessments of ability.
Journal of Personality and Social Psychology 57(6): 1082-1090.
Fletcher, C. 2001. Performance appraisal and management: The developing research
agenda. Journal of Occupational and Organizational Psychology 74: 473-487.
34
Gabris, G.T. and D. M. Ihrke. 2001. Does performance appraisal contribute to heightened
levels of employee burnout. Public Personal Management 30(2): 157-172.
Green, C. and J. S. Heywood. 2008. Does performance pay increase job satisfaction.
Economica 75:710-728.
Greenberg, J. 1990. Organizational justice: Yesterday, today, and tomorrow. Journal of
Management 16(2): 399-432.
Kaplan, R.S. and D. P. Norton. 2001. The strategy focused organization: How scorecard
companies thrive in the new business environment. Boston, MA: Harvard
Business School Press.
Lau, C.M., K.M. Wong and I.R.C. Eggleton. 2008. Fairness of performance evaluation
procedures and job satisfaction: the role of outcome-based and non-outcome-
based effects. Accounting and Business Research 38(2): 121-135.
Lawler, E.E. 1971. Pay and organizational effectiveness: A psychological view. New
York: McGraw Hill.
Lawler, E.E. 1973. Motivation in work organizations. Monteray, CA: Brooks/Cole.
Lawler, E.E. 1990. Strategic pay: Aligning organizational strategies and pay systems.
San Francisco, CA: Jossey Bass.
Libby, T., and L. Thorne. 2004. Auditors’ virtue: A qualitative analysis and
categorization. Business Ethics Quarterly 14(3): 479-98.
Long, R. J. 2002. Performance pay in Canada. In Michelle Brown and John S. Heywood,
(Eds.). Paying for performance: an international comparison. Armonk, NY: M.E.
Sharpe.
Long, R. J. 2010. Strategic compensation in Canada. Fourth edition. Scarborough, ON:
Nelson Thomson Learning.
Lornic, J. 2006. The war for talent. CA Magazine (August): 24-29.
35
Merchant, K.A., and W. A. Van der Stede. 2003. Disciplinary constraints on the
advancement of knowledge: The case of organizational incentive systems.
Accounting, Organizations and Society 28(2): 251-286.
Miceli, M.P. and M. C. Lane. 1991. Antecedents of pay satisfaction: A review and
extension. Research in Human Resources Management 9: 235-309.
Otley, D. (2003). Management control and performance management: whence and
whither. The British Accounting Review (35): 309-326.
Parker, R.J. and J. H. Kohlmeyer. 2005. Organizational justice and turnover in
accounting firms. Accounting, Organisations and Society (30): 357-369.
Robinson, G. 2006. Why fair pay? CA Magazine (December): 47-48.
Ross, T.L. and E. C. Bomeli. 1971. A comment on accountants’ job satisfaction. Journal
of Accounting Research 9(2): 383-388.
Schein, E. 1965. Organizational psychology. Englewood Cliffs, NJ: Prentice-Hall.
Sheehan, N.T., G. Vaidyanathan and S. Kalagnanam. 2005. Value creation logics and the
choice of management control systems. Qualitative Research in Accounting and
Management 2(1): 1-28.
Smith, P.C., L. Kendall and C. Hulin. 1969. The measurement of satisfaction in work and
retirement. Chicago, IL: Rand McNally.
Society for Human Resource Management. 2008. 2008 employee job satisfaction:
Meeting the needs of a multi-faceted workforce. SHRM, Alexandria, VA.
Society for Human Resource Management. 2012. 2012 employee job satisfaction and
engagement: How employees are dealing with uncertainty. SHRM, Alexandria,
VA.
36
Strawser, R.H., J. M. Ivancevich and H. L. Lyons. 1969. A note on the job satisfaction of
accountants in large and small CPA firms. Journal of Accounting Research 7:
339-345.
Sudin, S. 2011. Fairness of and satisfaction with performance appraisal process. Journal
of Global Management 2(1): 66-83
Suls, J., K. Lemos, and S.H. Lockett. 2002. Self-esteem, construal, and comparisons with
self, friends and peers. Journal of Personality and Social Psychology 82(2): 252-
261.
Vidal, J.B., and M. Nossol. 2011. Tournaments without prizes: Evidence from Personnel
records. Management Science 57(10): 1721-1736.
Vroom, V.V. 1964. Work and motivation. New York: Wiley.
37
Figure 1 Equity Theory, Performance Outcome Satisfaction and Job Satisfaction Model
(combining Adams (1965) and Smith et al. (1969))
Individuals's perception of their ability to contribute relative
to a peerJo
PerformanceOutcome
Satisfaction
Job Satisfactoin
PerformancePay
OPERATIONAlIZED AS
Invidual Better-Than-Average (BTA) Bias
As either $500 or $1,500
Satifaction with Performance Evaluation +
Satisfaction with Performance Pay
Job Satisfaction
38
TABLE 1
Libby and Thorne’s 24 Traits & Individual Trait Rating t-tests
This table provides a list of the traits used to measure the existence of BTA bias. The t-values pertain to
the ratings provided by participants with respect to the importance of each trait for their job as entry-
level accountants.
Trait: t-value
Alert 17.040***
Altruistic 4.644***
Benevolent 0.576
Careful 30.006***
Cheerful 2.975***
Concerned with public interest 32.345***
Cooperative 13.561***
Courageous 10.481***
Diligent 27.885***
Enlightened 5.128***
Even-handed 10.804***
Farsighted 11.737***
Healthy scepticism 37.503***
Independent 28.483***
Integrity 52.195***
Objective 37.950***
Polite 5.787***
Principled 24.087***
Resourceful 16.280***
Sensitive -0.574
Tactful 8.580***
Thoughtful 5.270***
Truthful 25.059***
Warm -2.579**
N = 164
df = 163
* significant at p ≤0.10, ** significant at p ≤0.05, ***significant at p ≤0.01
39
TABLE 2
t-test of Mean Trait Ratings for Different Comparison Groups (using ratings for 21
traits)
TABLE 3
Regression of POS on Performance Pay, BTA Bias, Work experience and Gender
(under both conditions of relative performance pay)
Total BTAScore In Comparison to: Mean Score
Difference
from the Mean
Score of 84 t value p value*
Average Professional Auditor 106.043 22.043 17.530 0.000
Immediate Work Associate 88.884 4.884 4.993 0.000
N = 164
df = 163
* Reported p-values are for 2-tailed tests
Unstandardized
(Standardized)
Beta's t-value p-value*
Performance Pay
9.049
(0.773) 34.044 0.000
BTA Bias
-0.043
(-0.103) -3.057 0.000
Length of Work Experience (months)
-0.013
(-0.013) -0.492 0.623
Gender
0.031
(0.003) 0.114 0.909
N = 324 293.883 0.000
df1 = 4 df2 = 319
Adj R-Sq =
0.784
Dependent variable = POS
Gender = Dummy Variable (0 = male & 1 = female)
Performance Pay: Dummy Variable (0 = $500 (lower relativepay); 1 = $1,500 (higher relative pay))
* Reported p-values are for 2-tailed tests
40
TABLE 4
Regression of POS on Performance Pay, BTA Bias, Work experience, Gender and
an Interaction Term (under both conditions of relative performance pay)
TABLE 5
Regression of POS on BTA Bias, Work experience and Gender (when relative
performance pay is lower and greater than their immediate work associate)
Unstandardized
(Standardized)
Beta's t-value p-value*
Performance Pay
5.484
(0.534) 2.842 0.005
BTA Bias in Comparison to their Immediate Work
Associate
-0.063
(0-.151) -4.113 0.000
Length of Work Experience (months)
-0.013
(-0.013) -0.494 0.622
Gender
0.031
(0.003) 0.114 0.909
Interaction Between Performance Pay & BTA Bias
0.040
(0.343) 1.866 0.063
N = 324 F = 237.631 0.000
df1 = 5 df2 = 318
Adj R-Sq =
0.786
Dependent variable = POS
Gender = Dummy Variable (0 = male & 1 = female)
Performance Pay: Dummy Variable (0 = $500 (lower relativepay); 1 = $1,500 (higher relative pay))
* Reported p-values are for 2-tailed tests
Unstandardized
(Standardized)
Beta's t-value p-value*
Unstandardized
(Standardized)
Beta's t-value p-value*
BTA Bias
-0.065
(-0.405) -5.663 0.000
-0.021
(-0.091) -1.150 0.252
Length of Work Experience (months)
0.005
(0.012) 0.165 0.87
-0.031
(-0.055) -0.699 0.486
Gender
-0.906
(-0.225) -3.178 0.002
0.968
(0.168) 2.155 0.033
N = 162 F = 13.870 0.000 N = 162 F = 2.245 0.085
df1 = 3 df2 = 158 df1 = 3 df2 = 158
Adj R-Sq =
0.193
Adj R-Sq =
0.023
Dependent Variable = POS
Gender: Dummy Variable (0 = male & 1 = female)
* Reported p-values are for 2-tailed tests
Performance Pay is less than their immediate
work associate
Performance Pay is more than their
immediate work associate
41
TABLE 6
Crosstab of Performance Pay Satisfaction and Performance Evaluation Satisfaction
(when relative performance pay is lower)
TABLE 7
Crosstab of Performance Pay Satisfaction and Performance Evaluation Satisfaction
(when relative performance pay is higher)
0 = Very
Dissatisfied 1 2 3 4 5 6 7
8 = Very
Satisfied Total
0 = Very
Dissatisfied 33 14 1 0 1 0 0 0 0 49
1 12 18 9 4 0 0 0 0 0 43
2 17 6 25 0 0 0 0 0 0 48
3 2 2 4 4 1 0 0 0 0 13
4 4 0 0 3 1 0 0 0 0 8
5 0 0 0 3 0 0 0 0 0 3
6 0 0 0 0 0 0 0 0 0 0
7 0 0 0 0 0 0 0 0 0 0
8 = Very
Satisfied 0 0 0 0 0 0 0 0 0 0
Total 68 40 39 14 3 0 0 0 0 164
Performance Evaluation Satisfaction
Performance pay
satisfaction
0 = Very
Dissatisfied 1 2 3 4 5 6 7
8 = Very
Satisfied Total
0 = Very
Dissatisfied 0 0 0 0 1 0 0 0 0 1
1 0 0 0 0 2 0 0 0 0 2
2 0 0 1 0 0 0 1 1 0 3
3 0 0 0 1 3 5 0 0 0 9
4 0 0 1 0 7 4 1 0 0 13
5 0 0 1 0 9 24 3 1 0 38
6 0 0 0 0 4 14 11 5 5 39
7 0 1 0 0 4 2 3 11 2 23
8 = Very
Satisfied 0 0 0 0 2 2 10 4 18 36
Total 0 1 3 1 32 51 29 22 25 164
Performance Evaluation Satisfaction
Performance pay
satisfaction
