Gainsharing and women's and men's relative pay satisfaction

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<ul><li><p>Gainsharing and womens and mens relativepay satisfaction</p><p>MARY E. GRAHAM1* AND THERESA M. WELBOURNE2</p><p>1Department of Management Science, School of Business and Public Management,The George Washington University, U.S.A.2Department of Human Resource Studies, School of Industrial and Labor Relations,Cornell University, U.S.A.</p><p>Summary There is some evidence that women have equal or higher pay satisfaction than similarlysituated men, even though they may earn less than these men. Using Majors (1994)model of entitlement, this study examined gender dierences in pay satisfaction in twocompanies before and after gainsharing bonus programmes were introduced. Resultsindicated that women had higher pay satisfaction than men prior to the introduction ofgainsharing and there was some evidence that this dierence was greater among lower-paid employees. Women did not exhibit higher pay satisfaction after gainsharing wasintroduced. The potential association of gainsharing with changes in femalemale paysatisfaction is discussed. Copyright # 1999 John Wiley &amp; Sons, Ltd.</p><p>Crosby (1982) coined the term paradox of the contented female worker to describe a pheno-menon in which women tend to have equivalent or higher pay satisfaction than men, despite thefact that in many cases, women earn less than their male counterparts (Crosby, 1982; Major andKonar, 1984; Sauser and York, 1978; Steel and Lovrich, 1987). While there exists some empiricalevidence that womens pay satisfaction is higher than that of men, results are not conclusive, inpart because little research directly examines gender dierences in pay satisfaction. Moreover,researchers documenting this paradox have only been able to speculate about the stability, orpermanence, of gender dierences in pay satisfaction. Crosby (1982) suggested that because of theintransigence of gender dierences in individuals work and non-work experiences and psycho-logical barriers in recognizing inequity, nothing in the foreseeable future would equalize thesatisfaction of comparable women and men (Crosby, 1982, p. 171). Others speculate that elimina-tion of structural inequities such as occupational segregation, or workplace interventions thatencourage individuals to compare themselves with those in other occupations, would eliminate</p><p>CCC 08943796/99/07102716$17.50 Received 16 June 1997Copyright # 1999 John Wiley &amp; Sons, Ltd. Accepted 27 May 1998</p><p>Journal of Organizational BehaviorJ. Organiz. Behav. 20, 10271042 (1999)</p><p>* Correspondence to: Mary E. Graham, Department of Management Science, School of Business and Public Manage-ment, The George Washington University, 403 Monroe Hall, 2115 G Street, NW, Washington, DC 20052, U.S.A.E-mail:</p><p>This research was supported in part by a research grant from the College of Business Administration, Georgia StateUniversity. This research was also supported by the Center for Advanced Human Resource Studies (CAHRS), School ofIndustrial and Labor Relations, Cornell University.</p><p>We would like to thank Karl Aquino, Vida Scarpello, and Rick Welsh for comments on an earlier draft of this paper.</p></li><li><p>the paradox, particularly in todays workplace and society in which womens and mensexperiences are beginning to converge (Loscocco and Spitze, 1991; Major, 1989, 1994; Sauser andYork, 1978).This study examines gender dierences in satisfaction in a more contemporary setting than</p><p>previous studies. In addition, this research represents the first look at the stability of femalemalesatisfaction levels in the workplace. Specifically, we compare womens and mens pay satisfactionunder a traditional pay system, and later under a gainsharing pay system, to examine whetherthe latter system is associated with a smaller gender dierence in pay satisfaction. The benefits ofsuch a study are threefold. First, results will add to the empirical literature on pay satisfaction bystudying gender dierences in satisfaction with important variables held constant. Second, thisstudy will augment theory by providing initial evidence of the stability of femalemale paysatisfaction. Smaller or no dierences in womens and mens pay satisfaction levels under gain-sharing as compared to traditional pay systems would indicate that gender dierences in paysatisfaction may be alterable. Such information will be essential to employers assessing thepotential eects of gainsharing programmes. If womens andmens relative pay satisfaction levels1</p><p>are altered after implementation of such programmes, companies trying to support organizationalgoals through compensation changes may unknowingly hinder the achievement of these goals aswell as the survival of pay plan interventions themselves (Bowie-McCoy,Wendt and Chope, 1993;Brown and Huber, 1992; Milkovich and Milkovich, 1992; Santora, 1991; Welbourne, Balkin andGomez-Mejia, 1995). That is, if women experience a drop in satisfaction relative to men aftergainsharing interventions, theymight blame gainsharing for their dissatisfaction or exhibit greaterturnover and absenteeism than men. Such outcomes could reduce the viability of new payprogrammes (Gerhart, Trevor and Graham, 1996).Third, much of what scholars know about gainsharing is based on data on male employees</p><p>because gainsharing systems have typically been implemented in manufacturing environmentsthat tend to be staed by men (Bullock and Bullock, 1982; Bullock and Lawler, 1984). In thecontext of the growing use of gainsharing in non-traditional environments in which there aremany women, such as banks and hospitals (Welbourne and Gomez-Mejia, 1995), we oer a morecomplete understanding of the gender-related eects associated with such interventions.</p><p>Literature Review and Hypotheses</p><p>The paradox of the contented female worker refers to findings that womens satisfaction is higherthan it should be, given womens objective situations (Crosby, 1982).2 Major (1994) oered amodel to explain the existence of womens higher pay satisfaction, the key to which is womenslower feelings of entitlement regarding their pay, as compared to men. According to Majorsmodel, gender dierences in feelings of entitlement are a function of two factors. First the referent</p><p>1 By womens and mens relative pay satisfaction or relatively higher female pay satisfaction we mean comparisons ofwomens and mens pay satisfaction levels. We opt for this terminology over the term paradox of the contented femaleworker for the bulk of the paper, in order to assist readers in understanding our findings in satisfaction language.2 Although the paradox focuses on women, in actuality it reflects a dierence between womens and mens paysatisfaction levels. Lacking any objective standard for judging what the proper pay satisfaction level is for workersparticular situations, the literature discussing the paradox uses a male standard (Crosby, 1982). In fact, the paradox ofthe contented female worker could be relabelled the paradox of the discontented male worker and still describe the samesatisfaction rates found in the literature.</p><p>Copyright # 1999 John Wiley &amp; Sons, Ltd. J. Organiz. Behav. 20: 10271042 (1999)</p><p>1028 M. E. GRAHAM AND T. M. WELBOURNE</p></li><li><p>standards by which individuals judge their pay may dier by gender due to structural factorsaecting the workforce. For example, gender-related occupational segregation may facilitate theuse of intragroup referent standards, typically co-workers of the same gender. Second, thelegitimation of gender-based social inequality decreases womens feelings of entitlement. Forexample, organizational pay structures in which women tend to be paid less than men becomelegitimated over time, which lowers womens feelings of entitlement and raises mens feelings ofentitlement. Lower feelings of entitlement result in higher pay satisfaction. Majors model isconsistent with pay satisfaction models (Heneman, 1985; Lawler, 1971; Miceli and Lane, 1991),and theories of equity (Adams, 1965); distributive justice (Folger, 1986, 1987; Greenberg, 1990);and relative deprivation (Crosby 1982; Martin, 1981; Stouer et al., 1949).Major (1994) based her model in part on several studies that directly examined gender</p><p>dierences in pay satisfaction, and that documented existence of the paradox. First, a path-breaking study by Crosby (1982) examined the satisfaction of a sample of women and menworking in many dierent organizations. She found that women and men in occupations ofsimilar prestige were equally satisfied with their jobs, despite the fact that the women were paidsubstantially less than the men. Unfortunately, by design, Crosbys study was unable to controlfor the important variable of employer, which could potentially explain why women in hersample were paid less than men (e.g. women worked for smaller employers) and, by extension,why they were not less satisfied than men. However, Sauser and York (1978), in their study of asingle employer, still found that women in lower level jobs were more satisfied than were the menemployees of this same employer. Consistent with this finding, Varca, Shaer and McCauley(1983) found that women in lower level jobs were more satisfied with their pay than men,although they found the reverse among higher paid employees. Finally, Steel and Lovrich (1987)found that women reported higher pay satisfaction than men in the federal government, despitethe fact that women and men reported that pay was equally motivating to them relative to otherrewards in the workplace.Unfortunately, few studies have augmented the studies described above, all of which were</p><p>conducted at least ten years ago, when traditional pay systems were the norm (Heneman, 1985),and when gender-related occupational segregation was more severe (Blau and Ferber, 1992). Wewould expect occupational segregation to result in higher womens pay satisfaction. Consistentwith Majors model, Loscocco and Spitze (1991), in a study of employees in 52 factories, foundthat womens higher pay satisfaction levels were in part due to occupational segregation. Wewould not expect traditional pay systems, which reward individual contributions, to counter thisoccupational segregation in any way (e.g. by promoting employee interactions across occupa-tions). Thus, in organizations that use traditional pay systems and have substantial occupationalsegregation (as is the case in this study),</p><p>Hypothesis 1: Womens pay satisfaction will be higher than mens pay satisfaction.</p><p>There is some evidence that womens higher satisfaction levels occur to a greater extent amonglower-paid rather than higher-paid employees (Sauser and York, 1978; Varca et al., 1983).According to Majors (1994) model, this could occur because lower-paid employees might bemore likely to use same-sex referents than would more highly paid employees, or because womenat lower pay levels are more accepting of gender-related pay dierentials than are higher-paid women. Work on internal labour markets and gender provides evidence of substantial,permanent occupational segregation and early career plateauing of lower-paid women (e.g.Kanter, 1997; Ospina, 1996; Ryan, 1983). These influences have the potential to hinder the access</p><p>Copyright # 1999 John Wiley &amp; Sons, Ltd. J. Organiz. Behav. 20: 10271042 (1999)</p><p>GAINSHARING AND PAY SATISFACTION 1029</p></li><li><p>of lower-paid women to pay and other organizational information, relative to their male peers,more so than in the case of higher-paid employees. Thus,</p><p>Hypothesis 2: Womens higher pay satisfaction will occur to a greater extent among lower-paid employees.</p><p>None of the studies documenting womens higher pay satisfaction examine the stability offemalemale satisfaction. Womens higher pay satisfaction could be a permanent phenomenon,perhaps due to the intransigence of gender dierences in individuals work and non-workexperiences, or womens diculty with acknowledging their personal deprivation (Crosby, 1982).On the other hand, womens higher pay satisfaction may be a more easily altered phenomenon(Major, 1989, 1994; Sauser and York, 1978), that could be influenced with organization-level payinterventions such as gainsharing bonus programmes.While most organizations still use traditional pay systems, employers have been experimenting</p><p>with the ways in which employees are compensated. In particular, the use of innovative bonusprogrammes such as gainsharing has increased (Lissy and Morgenstern, 1995), and there isevidence that the introduction of these pay system innovations can change employee paysatisfaction (Brown and Huber, 1992; Lee and Martin, 1996; Miceli et al., 1991). These findingshave implications for situations in which higher womens pay satisfaction levels do in fact exist inan organization. In particular, introductions of pay system innovations could alter womenshigher pay satisfaction levels, to the extent that they cause women and men to begin to use moresimilar referent standards, and to the extent that they cause pay patterns and practices withgender eects to be considered less legitimate within an organization (Major, 1994).The innovative pay programme examined in this study is gainsharing. Gainsharing programmes</p><p>are group-based pay programmes that distribute bonuses to employees when cost-saving, quality,and productivity goals are met (Graham-Moore and Ross, 1995). Two primary types ofgainsharing programmes are the Scanlon Plan and Impropshare. The Scanlon Plan, which wasdeveloped by union member Joseph Scanlon in the 1930s, stresses employee participation in thedevelopment and implementation phases of the programme, and involves committees ofemployees who screen and pursue implementation of employee suggestions (Frost, Wakely andRuh, 1974; Welbourne and Gomez-Mejia, 1995). Improshare, or improved productivity throughsharing, focuses less on employee involvement than the Scanlon Plan, although suggestionsystems occur under Improshare as well (Fein, 1991; Graham-Moore and Ross, 1995).We believe that gainsharing will cause womens and mens pay satisfaction to become more</p><p>similar by requiring training, the formation of employee work groups, and high employeeparticipation levels, across varied employee occupations, levels, and departments (Graham-Moore and Ross, 1983, 1995; Hammer, 1988; Bergmann, Scarpello and Hills, 1998). Specifically,the employee training and participation typical of gainsharing may make the overall pay systemparticularly salient to employees, which may be a precursor to any changes in pay satisfactionlevels. Further, the cross-functional work groups that underlie gainsharing programmes canovercome the barriers presented by gender-related occupational segregation. As a result of thisprocess, employees may begin to include information about those of the opposite sex in theirjudgements about their pay. Relatedly, the coverage of diverse employee groups under gain-sharing may cause employees to learn more about or question legitimate pay practices that treatemployee groups dierently (Major, 1994). Consistent with this reasoning, Hanlon and Taylor(1991) found that after six months experience w...</p></li></ul>