Download pdf - Gainsharing and women's and men's relative pay satisfaction

Gainsharing and women's and men's relativepay satisfaction

MARY E. GRAHAM1* AND THERESA M. WELBOURNE2

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.

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 Major's (1994)model of entitlement, this study examined gender di�erences 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 di�erence was greater among lower-paid employees. Women did not exhibit higher pay satisfaction after gainsharing wasintroduced. The potential association of gainsharing with changes in female±male paysatisfaction is discussed. Copyright # 1999 John Wiley & Sons, Ltd.

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 women's pay satisfaction is higher than that of men, results are not conclusive, inpart because little research directly examines gender di�erences in pay satisfaction. Moreover,researchers documenting this paradox have only been able to speculate about the stability, orpermanence, of gender di�erences in pay satisfaction. Crosby (1982) suggested that because of theintransigence of gender di�erences 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

CCC 0894±3796/99/071027±16$17.50 Received 16 June 1997Copyright # 1999 John Wiley & Sons, Ltd. Accepted 27 May 1998

Journal of Organizational BehaviorJ. Organiz. Behav. 20, 1027±1042 (1999)

* 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: [email protected]

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.

We would like to thank Karl Aquino, Vida Scarpello, and Rick Welsh for comments on an earlier draft of this paper.

the paradox, particularly in today's workplace and society in which women's and men'sexperiences are beginning to converge (Loscocco and Spitze, 1991; Major, 1989, 1994; Sauser andYork, 1978).

This study examines gender di�erences in satisfaction in a more contemporary setting thanprevious studies. In addition, this research represents the ®rst look at the stability of female±malesatisfaction levels in the workplace. Speci®cally, we compare women's and men's pay satisfactionunder a traditional pay system, and later under a gainsharing pay system, to examine whetherthe latter system is associated with a smaller gender di�erence in pay satisfaction. The bene®ts ofsuch a study are threefold. First, results will add to the empirical literature on pay satisfaction bystudying gender di�erences in satisfaction with important variables held constant. Second, thisstudy will augment theory by providing initial evidence of the stability of female±male paysatisfaction. Smaller or no di�erences in women's and men's pay satisfaction levels under gain-sharing as compared to traditional pay systems would indicate that gender di�erences in paysatisfaction may be alterable. Such information will be essential to employers assessing thepotential e�ects of gainsharing programmes. If women's andmen's relative pay satisfaction levels1

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 employeesbecause gainsharing systems have typically been implemented in manufacturing environmentsthat tend to be sta�ed 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 o�er a morecomplete understanding of the gender-related e�ects associated with such interventions.

Literature Review and Hypotheses

The paradox of the contented female worker refers to ®ndings that women's satisfaction is higherthan it should be, given women's objective situations (Crosby, 1982).2 Major (1994) o�ered amodel to explain the existence of women's higher pay satisfaction, the key to which is women'slower feelings of entitlement regarding their pay, as compared to men. According to Major'smodel, gender di�erences in feelings of entitlement are a function of two factors. First the referent

1 By `women's and men's relative pay satisfaction' or `relatively higher female pay satisfaction' we mean comparisons ofwomen's and men's 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 ®ndings in `satisfaction' language.2 Although the paradox focuses on women, in actuality it re¯ects a di�erence between women's and men's paysatisfaction levels. Lacking any objective standard for judging what the proper pay satisfaction level is for workers'particular 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.

Copyright # 1999 John Wiley & Sons, Ltd. J. Organiz. Behav. 20: 1027±1042 (1999)

1028 M. E. GRAHAM AND T. M. WELBOURNE

standards by which individuals judge their pay may di�er by gender due to structural factorsa�ecting 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 women's feelings of entitlement. Forexample, organizational pay structures in which women tend to be paid less than men becomelegitimated over time, which lowers women's feelings of entitlement and raises men's feelings ofentitlement. Lower feelings of entitlement result in higher pay satisfaction. Major's 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; Stou�er et al., 1949).

Major (1994) based her model in part on several studies that directly examined genderdi�erences 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 di�erent organizations. She found that women and men in occupations ofsimilar prestige were equally satis®ed with their jobs, despite the fact that the women were paidsubstantially less than the men. Unfortunately, by design, Crosby's 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 satis®ed than men. However, Sauser and York (1978), in their study of asingle employer, still found that women in lower level jobs were more satis®ed than were the menemployees of this same employer. Consistent with this ®nding, Varca, Sha�er and McCauley(1983) found that women in lower level jobs were more satis®ed 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 wereconducted 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 women's pay satisfaction. Consistentwith Major's model, Loscocco and Spitze (1991), in a study of employees in 52 factories, foundthat women's 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),

Hypothesis 1: Women's pay satisfaction will be higher than men's pay satisfaction.

There is some evidence that women's 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 Major's (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 di�erentials 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 in¯uences have the potential to hinder the access


GAINSHARING AND PAY SATISFACTION 1029

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,

Hypothesis 2: Women's higher pay satisfaction will occur to a greater extent among lower-paid employees.

None of the studies documenting women's higher pay satisfaction examine the stability offemale±male satisfaction. Women's higher pay satisfaction could be a permanent phenomenon,perhaps due to the intransigence of gender di�erences in individuals' work and non-workexperiences, or women's di�culty with acknowledging their personal deprivation (Crosby, 1982).On the other hand, women's higher pay satisfaction may be a more easily altered phenomenon(Major, 1989, 1994; Sauser and York, 1978), that could be in¯uenced with organization-level payinterventions such as gainsharing bonus programmes.

While most organizations still use traditional pay systems, employers have been experimentingwith 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 ®ndingshave implications for situations in which higher women's pay satisfaction levels do in fact exist inan organization. In particular, introductions of pay system innovations could alter women'shigher 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 e�ects to be considered less legitimate within an organization (Major, 1994).

The innovative pay programme examined in this study is gainsharing. Gainsharing programmesare 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 ìmproved 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 women's and men's pay satisfaction to become moresimilar 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). Speci®cally,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 di�erently (Major, 1994). Consistent with this reasoning, Hanlon and Taylor(1991) found that after six months' experience with gainsharing, employee communication withpeers, supervisors, and others signi®cantly improved.

There is evidence that when women's and men's experiences are similar, then their feelings ofentitlement are similar (Bylsma and Major, 1992, 1994; Desmairais and Curtis, 1997; Zanna,



Crosby and Loewenstein, 1987). If women and men have similar feelings of entitlement, thentheir pay satisfaction should be similar (Major, 1994). Again, we expect that gainsharing will helpequalize the pay satisfaction of women and men. Thus, in organizations with traditional paysystems and substantial occupational segregation,

Hypothesis 3: The di�erence in women's and men's pay satisfaction will be greater prior togainsharing's introduction than after gainsharing's introduction.

As stated earlier, the purpose of this study is to examine relative female±male pay satisfactionrates under a traditional pay system and test the extent to which they become similar aftergainsharing bonus programme interventions. We do not distinguish the mechanisms by whichfemale±male satisfaction levels change.

Methods

Research sites, gainsharing programmes,and survey procedures

Our sample was drawn from two companies (company A and company B) that implementedgainsharing programmes in 1991. Both companies are large businesses; each generated over onebillion dollars in annual revenues in 1991. Company A's gainsharing programme was modelledvery closely on the Scanlon Plan (Frost et al., 1974), and Company B's gainsharing programmewas modelled on Improshare (Fein, 1991). The two gainsharing programmes were similar in thatthey were based upon the concept of sharing revenue increases and cost reductions that resultfrom improving production and other work processes with employees. The gainsharing pro-grammes were also similar in that they both relied upon employee involvement in some form togenerate the revenues or cost savings to pay for gainsharing bonuses. The introductions of bothgainsharing programmes were accompanied by training on the workings of the new system. Inaddition to gainsharing, both companies had pay programmes that provided employees withbase salaries plus annual merit raises that were rolled into base salaries.

The two companies di�ered in that they represented two di�erent industries. In addition, thetwo gainsharing bonus formulas had di�erent criteria, thresholds, and payout schedules. Sinceour goal was not to compare gainsharing plans, but rather to compare women's and men's paysatisfaction levels before and after the introduction of gainsharing, we believe that the diversity inthe companies and in their gainsharing programmes strengthen our research conclusions.

We administered surveys to employees of the companies (company A and company B) at twotime periods: one week before gainsharing was introduced (time 1) and three ®nancial quartersafter gainsharing programmes were introduced (time 2). Approximately nine months elapsedbetween the ®rst and second data collection e�orts, both of which occurred in 1991 during on-sitemeetings with employees.

Sample

Data were collected at time 1 from 260 individuals, 171 (66 per cent) of whom were fromcompany A and 89 (34 per cent) of whom were from company B, for an average survey responserate of 83 per cent. Women comprised 96 (37 per cent) of these 260 individuals. At time 1,



employees' pay plans consisted of base wages and annual merit raises; hereafter these individualswill be referred to as the `traditional pay' group.

Data were collected at time 2 from 220 individuals, 150 (68 per cent) of whom were fromcompany A and 70 (32 per cent) of whom were from company B, for an average survey responserate of 70 per cent. Women comprised 79 (36 per cent) of these 220 individuals. At time 2,employees' pay plans consisted of base wages, annual merit raises, and gainsharing bonuses;hereafter these individuals will be referred to as the `gainsharing' group. Since the focus of ourstudy was not to compare the e�ectiveness of the gainsharing plans, and because one company(B) had few women, survey data from both companies were pooled.

It was not possible to match individual responses from the traditional pay and gainsharinggroups. However, using data on the numbers of non-respondents for each time period, weestimate that between 64 and 85 per cent of respondents receiving traditional pay at time 1 werealso gainsharing participants at time 2.3

The compositions of the traditional pay and gainsharing groups by occupation are as follows,with the gainsharing group percentages in parentheses: support services 38 per cent (37 per cent);production, 30 per cent (25 per cent); managerial/professional, 22 per cent (25 per cent); andother, 11 per cent (13 per cent). The average salary level was U.S.$23,838 for the traditional paygroup, and U.S.$25,500 of the gainsharing group. Salaries in both groups ranged fromU.S.$9000to $55,000. Participants received three gainsharing bonuses (one per quarter), averagingU.S.$158 (company A) and U.S.$873 (company B). Merit pay raises were not given in eithercompany during the time period of this study. The median company tenure was 4 years and6 years for the traditional pay and gainsharing groups, respectively. The median education levelwas a `some college/two-year degree' for both the traditional pay and gainsharing groups.Table 1 provides summary information on the sample.

Data from company A and company B were particularly appropriate for this study for tworeasons. First, the average salaries of workers in our sample approximate national pay averages inthe software manufacturing (company A) and food product manufacturing (company B)industries (U.S. Bureau of the Census, 1992). Second, occupational segregation is one factoridenti®ed by theorists as a source of women's and men's di�erential pay satisfaction (e.g., Major,1994), and substantial occupational segregation existed in the two companies in this study.Speci®cally, occupational segregation indexes indicated that approximately 50 per cent of womenwould have to change occupations in order to fully integrate the occupations in this study(Duncan and Duncan, 1955). This amount of occupational segregation is substantially higherthan in the workforce as a whole (Blau and Ferber, 1992). Thus, if the paradox of the contentedfemale worker exists, we might expect to ®nd it in these two companies.

Measures

The dependent variables used in the analyses are two pay satisfaction indices comprised of itemson pay level and pay structure/administration from the Pay Satisfaction Questionnaire (PSQ)(Heneman and Schwab, 1985). The traditional 18-item PSQ was used in this study, and in anearlier study using this same sample, support was found for the conventional four discrete paysatisfaction dimensions in both the traditional pay and gainsharing groups: pay level, paystructure/administration, pay raises, and bene®ts (Judge and Welbourne, 1994). Because gain-sharing bonuses most directly a�ect pay level and pay structure/administration, these two indices

3 Calculations of these estimates are available from the authors.



Table 1. Descriptive statistics on the sample

Traditional pay group(n � 260)

Gainsharing group(n � 220)

Means (s.d.):Annual SalaryOverall 23,838 25,500

(11,285) (11,783)Women 18,381 19,350

(8243) (9439)Men 27,086 29,014

(11,614) (11,571)

Company tenure (years)Overall 5.16 6.97

(4.01) (6.06)Women 5.43 7.62

(4.13) (6.91)Men 5.01 6.60

(3.94) (5.51)

Education (3-point scale)Overall 1.78 1.76

(0.72) (0.78)Women 1.61 1.66

(0.69) (0.75)Men 1.89 1.82

(0.72) (0.79)

OccupationsÐoverall (yes � 1)Support services 0.37 0.37

(0.49) (0.48)Production 0.30 0.25

(0.46) (0.43)Managerial/professional 0.22 0.25

(0.41) (0.44)Other 0.11 0.13

(0.32) (0.34)

OccupationsÐwomen (yes � 1)Support services 0.70 0.68

(0.47) (0.47)Production 0.10 0.06


(0.35) (0.41)Other 0.06 0.05

(0.24) (0.22)

OccupationsÐmen (yes � 1)Support services 0.19 0.19

(0.40) (0.39)Production 0.41 0.35


(0.44) (0.45)Other 0.14 0.18

(0.24) (0.38)



are the foci of our analyses.4 Reliabilities (coe�cient alpha) of the pay level index were 0.95 forboth the traditional pay and gainsharing groups. Reliabilities (coe�cient alpha) for the paystructure/administration index were 0.84 for the traditional pay group and 0.85 for thegainsharing group.

The key independent variable used in our ordinary least squares (OLS) regression analyseswas gender (1 � women; 0 � men). Other independent variables used in the analyses includeimportant structural determinants of pay satisfaction (Heneman, 1985), including salary levels(Dreher, 1981), companies (Scarpello, Huber and Vandenberg, 1988), company tenure (Dreher,1981), educational levels (Ronan and Argant, 1973), and occupations (Scarpello et al., 1988).Speci®cally, salary level is measured as the natural logarithm of a continuous salary variableconstructed from the midpoints of self-reported pay level categories, in both companies.Company tenure is a continuous variable measured as self-reported years with the company.Self-reported education level was measured on a continuous scale ranging from 1 (highschool education or less) to 3 (four-year degree or more), created by two coders who collapsed 6educational categories. Inter-rater reliability for this collapsing procedure was 100 per cent. Sinceself-reported occupations were not identical across companies, and some occupations held fewobservations, we created dummy variables for four common occupational categories: supportservices, production, managerial/professional, and other.5 The collapsing of seven self-reportedoccupations into four categories was performed by one of the authors who had workedextensively with the two companies.

In addition to these independent variables, several control variables were used in the analyses.We included a dichotomous variable for employer (company B employee � 1; company Aemployee � 0) to hold constant employer-speci®c characteristics. For analyses of the gainsharinggroup, we used a gainsharing satisfaction variable. Gainsharing satisfaction was measured asstandardized indices of responses to seven statements. An example is, Ì am satis®ed with thegainsharing plan.' The reliability (coe�cient alpha) for this measure was 0.84, and the Appendixpresents the items in this index. In addition, for gainsharing group analyses, participation ingainsharing was measured by a dichotomous variable for whether or not an individual o�ered asuggestion under the gainsharing programme (1 � yes; 0 � no).

Analyses and results

As stated earlier, our hypotheses were examined with a sample that pools employee survey datafrom two companies. Table 2 presents correlations, means, and standard deviations of thevariables used in the analyses. Table 3 presents statistics on the two dependent variables. Formaltests of di�erences in the makeup of the traditional pay and gainsharing groups follow. Pearsonchi-square tests indicated that the company compositions, gender compositions, and occupa-tional compositions of the traditional pay and gainsharing groups did not di�er signi®cantly.T-test results indicated no signi®cant mean di�erences between the traditional pay and gain-sharing groups in education level and/or in years of company tenure, but those in the gainsharing

4 The results of the pay raise and bene®ts indices are similar but weaker than the results for the pay level and paystructure/administration indices. These results are available from the authors.5 Possible occupations represented in the òther' occupational category include sta� members not considered to besupport services, individuals in functions related to production, and others who would not classify themselves in theavailable categories.



Table 2. Pearson correlation coe�cients and variable means (top half � traditional pay group correlations; bottom half � gainsharing groupcorrelations)

1 2 3 4 5 6 7 8 9 10 11 Means(s.d.)

traditional(n � 260)

Means(s.d.)

gainsharing(n � 220)

1. Pay level satisfactiona 0.64{ 0.17{ ÿ0.17{ 0.02 0.09 0.07 ÿ0.25{ 0.02 0.26{ ÿ0.01 2.82 2.95(1.09) (1.09)

2. Pay structure satisfactiona 0.65{ 0.28{ ÿ0.23{ ÿ0.13* ÿ0.05 ÿ0.03 ÿ0.31{ 0.21{ 0.11 ÿ0.03 2.79 3.01(0.76) (0.69)

3. Gender(1 � women; 0 � men)

ÿ0.17* ÿ0.13* ÿ0.34{ ÿ0.38{ 0.05 ÿ0.19{ ÿ0.33{ 0.49{ ÿ0.14* ÿ0.12 0.37(0.48)

0.36(0.48)

4. Company B(1 � yes; 0 � no)

0.15* 0.04 ÿ0.33{ 0.36{ ÿ0.24{ 0.02 0.44{ ÿ0.47{ 0.03 0.03 0.34(0.48)

0.32(0.47)

5. Salary level(log of annual salary)

0.20{ 0.05 ÿ0.43{ 0.30{ 0.30{ 0.37{ 0.15* ÿ0.57{ 0.56{ ÿ0.08 9.97(0.47)

10.04(0.46)

6. Company tenure(years)

0.04 0.02 0.08 ÿ0.24{ 0.18{ ÿ0.01 ÿ0.07 ÿ0.11 0.18{ 0.06 5.16(4.01)

6.97(6.06)

7. Education level(1 � low to 3 � high scale)

ÿ0.02 ÿ0.11 ÿ0.10 0.02 0.31{ 0.10 ÿ0.20{ ÿ0.25{ 0.50{ 0.02 1.78(0.72)

1.76(0.78)

8. Production occupation(1 � yes; 0 � no)

0.09 0.09 ÿ0.33{ 0.33{ 0.19{ ÿ0.06 ÿ0.23{ ÿ0.47{ ÿ0.34{ ÿ0.23{ 0.30(0.46)

0.25(0.43)

9. Support svcs. occupation(1 � yes; 0 � no)

ÿ0.14* 0.01 0.49{ ÿ0.42{ ÿ0.65{ ÿ0.07 ÿ0.20{ ÿ0.44{ ÿ0.42{ ÿ0.28{ 0.37(0.49)

0.37(0.48)

10. Professional occupation(1 � yes; 0 � no)

0.05 ÿ0.06 ÿ0.07 0.00 0.55{ 0.18{ 0.52{ ÿ0.34{ ÿ0.44{ ÿ0.19{ 0.22(0.41)

0.25(0.44)

11. Other occupation(1 � yes; 0 � no)

0.03 ÿ0.06 ÿ0.18{ 0.17* ÿ0.03 ÿ0.07 ÿ0.09 ÿ0.23{ ÿ0.29{ ÿ0.23{ 0.11(0.32)

0.13(0.34)

12.Gainsharing satisfactiona 0.20{ 0.39{ 0.18{ ÿ0.42{ 0.31{ 0.08 0.17* ÿ0.07 0.30{ ÿ0.25{ ÿ0.04 N/A 3.21(0.81)

13. Gainsharingparticipationa (1 � yes; 0 � no)

0.00 ÿ0.01 ÿ0.12 ÿ0.02 0.04 0.07 0.02 0.09 ÿ0.07 ÿ0.04 ÿ0.06 N/A 0.52(0.50)

Signi®cant levels: * p5 0.05; { p5 0.01.a 5-point scale, with 1 � very dissatis®ed and 5 � very satis®ed.

Copyrig

ht#

1999JohnWiley

&Sons,Ltd.

J.Organiz.

Behav.

20:1027±1042(1999)

GAIN

SHARIN

GAND

PAY

SATISFACTIO

N1035

group averaged 1.8 more years of employment with their companies (p5 0.01). Detailedinformation on non-respondents was not available for either company, but management in bothcompanies indicated that the data appeared representative of the groups covered by gainsharing.

We performed ordinary least squares (OLS) regression analyses on the dependent variablesof pay level satisfaction and pay structure/administration satisfaction. Table 4 presents theregression results.6 Hypothesis 1 was supported. Women reported higher levels of both pay leveland pay structure/administration satisfaction than men, in the traditional pay sample (b � 0.15and 0.19, respectively; p5 0.05).

Hypothesis 2, which posited that women's higher pay satisfaction would occur to a greaterextent among lower-paid employees, was partially supported. For the traditional pay group,there was a signi®cant coe�cient on the gender by salary interaction (p5 0.05) for pay levelsatisfaction, with the addition of the gender by salary interaction resulting in a change inR-squared of 0.02 (F � 4.55, p5 0.05). A plot of this signi®cant interaction (Cohen and Cohen,1983) indicated that women's greater pay satisfaction tended to occur at lower salary levels(plot not presented). The coe�cient on this same interaction was not signi®cant for pay structure/administration satisfaction, and it resulted in a non-signi®cant increase in R-squared of 0.01(F � 2.48, p5 n.s.). For the gainsharing group, gender by salary interactions were not signi®cantfor either dependent variable.

The third hypothesis stated that the di�erence in women's and men's pay satisfaction would begreater prior to gainsharing's introduction than afterwards. Findings indicated that women in thegainsharing group do not have higher pay level satisfaction than men, no do they have highersatisfaction with the pay structure and administration. In fact, the data indicated that men hadhigher levels of pay structure/administration satisfaction than women (b � ÿ0.17, p5 0.05) inthe gainsharing group.7 In support of hypothesis 3, t-tests indicated that the gender coe�cientsfor the traditional pay and gainsharing groups' regressions were signi®cantly di�erent for paylevel satisfaction (p5 0.05) and pay structure/administration satisfaction (p5 0.01) (Hardy,

Table 3. Pay satisfaction descriptive statistics

Overall Overall women Overall men

Traditional pay groupMeans (s.d.):Pay level satisfaction 2.82 3.05 2.67

(1.09) (1.03) (1.11)Pay structure/admin. satisfaction 2.79 3.07 2.63

(0.76) (0.73) (0.73)Sample size 260 97 163

Gainsharing GroupMeans (s.d.):Pay level satisfaction 2.95 2.71 3.09

(1.09) (1.09) (1.07)Pay structure/admin. satisfaction 3.01 2.89 3.08

(0.69) (0.72) (0.67)Sample size 220 80 140

6 The results for each company are similar to results for the pooled sample. These results are available from the authors.7 Regression results did not di�er substantially when the gainsharing satisfaction and gainsharing participation variableswere excluded from the regressions.



1993). McNemar change tests, which we adapted to consider that observations at time 1 andtime 2 were not matched, con®rmed that women's and men's satisfaction converged in the case ofpay level (p5 0.01) and pay structure/administration (p5 0.01) (Siegel and Castellan, 1988;pp. 75±76). That is, changes in women's and men's pay satisfaction between time 1 and time 2di�ered from what might have been expected with no gainsharing interventions.

Discussion

Two main ®ndings emerge from our examination of women's and men's relative pay satisfactionbefore and after gainsharing interventions in two companies. First, women's greater pay satis-faction appeared to exist among employees who were paid under traditional pay systems, who

Table 4. Regression results for pay level satisfaction and pay structure/administration satisfaction

Variables Pay levelTraditional Pay

coe�cienta

(standard error)

Pay levelGainsharingcoe�cienta

(standard error)

Pay structureTraditional pay

coe�cienta

(standard error)

Pay structureGainsharingcoe�cienta

(standard error)

Independent variables:Gender (women � 1) 0.15* ÿ0.09 0.19{ ÿ0.17*

(0.07) (0.08) (0.04) (0.07)Salary level ÿ0.06 0.23* 0.01 0.14

(0.09) (0.10) (0.09) (0.09)Company tenure 0.01 0.03 ÿ0.14* 0.02

(0.07) (0.07) (0.07) (0.06)Education Level ÿ0.05 ÿ0.05 ÿ0.11 ÿ0.10

(0.07) (0.07) (0.07) (0.07)

Occupation (yes � 1): (omitted occupation is support services)Production ÿ0.03 ÿ0.04 ÿ0.17* ÿ0.09

(0.09) (0.09) (0.03) (0.09)Managerial/professional 0.34{ 0.01 0.15 ÿ0.03

(0.09) (0.11) (0.04) (0.10)Other 0.07 ÿ0.02 0.00 ÿ0.14

(0.07) (0.08) (0.04) (0.07)

Control variables:Company B (yes � 1) ÿ0.10 0.24{ ÿ0.13{ 0.21{

(0.08) (0.08) (0.08) (0.08)Gainsharing satisfaction Ð 0.38{ Ð 0.51{

(0.07) (0.07)Gainsharing participation(yes � 1)

Ð ÿ0.04 Ð ÿ0.05(0.06) (0.06)

N 260 220 260 220R2 0.13 0.17 0.16 0.26F for model 4.74{ 4.39{ 6.19{ 7.17{

aStandardized regression coe�cients and standard errors are presented in the table.Signi®cance levels: * p5 0.05; { p5 0.01



were not yet the recipients of gainsharing interventions. Thus, we con®rmed Crosby's paradox ofthe contented female worker in our traditional pay sample. We also found evidence that thisparadox was driven by the greater pay satisfaction of lower-paid women in the case of pay levelsatisfaction. Con®rmation of the paradox and its location among lower-paid women is consistentwith previous empirical ®ndings (Sauser and York, 1978; Varca et al., 1983).

Second, the paradox did not exist among women and men after gainsharing was introduced.This provides initial evidence that female±male pay satisfaction levels are not stable and thatit may be possible to alter them by way of organizational level interventions. This ®nding isconsistent with the speculation of some researchers that women's higher pay satisfaction levelscan be changed (Major, 1989, 1994; Sauser and York, 1978). This ®nding is contrary to Crosby's(1982) speculation that women's higher pay satisfaction is a stable phenomenon, although itshould be noted that when her study was done, few organizations were implementing gainsharingand other innovative pay programmes with the potential to promote interactions of employeesacross occupational groups.

We believe that the training and employee interaction involved with gainsharing interventionsmay serve as catalysts for changes in female±male pay satisfaction levels through two routes:(1) women and men paid under gainsharing may use more similar referents than women andmen under traditional pay systems, and (2) women may be more likely to question the equity oftheir pay systems under gainsharing than under traditional pay (Major, 1994). We note that theformer explanation is consistent with women experiencing a decrease in pay satisfaction andmen experiencing an increase in pay satisfaction. The second explanation may explain whywomen in our sample actually had lower satisfaction with the pay structure and administrationthan men after gainsharing, in that new or suddenly salient knowledge about pay inequitiesmay have been associated with a large drop in women's pay satisfaction, relative to men, as theynotice inequity in the system. Both of these explanations (1 and 2 above) are consistent with paysatisfaction models (Heneman, 1985; Lawler, 1971; Miceli and Lane, 1991), equity theory(Adams, 1965), distributive justice theory (Folger, 1986, 1987; Greenberg, 1990), and relativedeprivation theory (Crosby, 1982; Martin, 1981; Stou�er et al., 1949), all of which provide anumber of ways that pay satisfaction, and by extension, the relative pay satisfaction of womenand men, can change.

We note that the lack of the expected positive relationship between salary level and paysatisfaction in the traditional pay group (see Table 4) could be due to the relatively high paysatisfaction of women in low-paying jobs. That we ®nd a positive relationship between salary andpay level satisfaction in the gainsharing group (Table 4) is consistent with our theorizingregarding gainsharing's association with women's and men's pay satisfaction convergence. Inother words, gainsharing may result in individuals' pay satisfaction mirroring their materialstates (i.e. pay level) more closely.

Alterable female±male pay satisfaction levels may be somewhat troubling for employersimplementing supplemental, performance-based pay programmes. If women become moredissatis®ed (relative to men) following gainsharing introductions, it would most likely be anunintended consequence of the intervention. There is no evidence that secondary, gender-relatede�ects associated with gainsharing interventions outweigh overall satisfaction increases orpotential performance gains, yet the ®ndings may challenge employers who are unaware of thispotential gender-related phenomenon.

Results of this study raise the possibility of additional gender-related outcomes associated withgainsharing and other innovative pay programmes. Perhaps programmes such as gainsharing,which pay employees based upon group outcomes, would equalize the pay of women and men.On the other hand, such pay programmes may widen pay disparities between women and men to



the extent that payouts are based upon percentages of employees' base salaries, or to the extentthat more men are eligible to participate in the programmes than are women. Concerns aboutthese outcomes may extend beyond the employers considering their use. Public policy makersevaluating proposals to provide tax incentives for the adopting of performance-based payprogrammes such as gainsharing might be interested in both the bene®cial and any potentiallyharmful results associated with the programmes. Unfortunately, little attention has been paid tothese important gender-related outcomes.

Study limitations and future research

Future research may want to address a primary limitation of our studyÐthe fact that the dataprecluded direct testing of some of the explanations for the di�erences found between ourtraditional pay and gainsharing groups. Such information is essential for theory development,and it has practical implications for organizations implementing pay programme changesdesigned to enhance organizational e�ectiveness. Second, we acknowledge that our designprecluded strong causal inferences regarding the e�ects of gainsharing on women's and men'srelative pay satisfaction. Future researchers may want to build upon our initial ®ndings todetermine if in fact gainsharing interventions cause the pay satisfaction of women and men toconverge. Third, we were unable to measure in a detailed way the extent to which women in oursample were `worse o�' than the men (as is stated in the de®nition of the paradox); however, ourdata do indicate that the women in our sample were paid less than the men. We also rely uponliterature that documents the fact that women still receive lower rewards in the workplace thanmen, a ®nding that is not explained away by measurable job-related or human capital factors(Blau and Kahn, 1992; Cain, 1986; Ospina, 1996; Orazem and Mattila, 1989). Nevertheless,future work that could address this issue directly would help strengthen conclusions aboutrelative female±male pay satisfaction. Finally, future research may want to build on this study toexamine women's and men's pay satisfaction levels in multiple settings, with varying degrees ofoccupational segregation, in order to permit wider generalization of conclusions and to helpre®ne the theories explaining di�erences in gender di�erences in pay satisfaction.

References

Adams, J. S. (1965). Ìnequity in social exchange', In: Berkowitz, L. (Ed.), Advances in Experimental SocialPsychology, Vol. 2, pp. 267±299. Academic Press, New York.

Bergmann, T. J., Scarpello, V. G. and Hills, F. H. (1998). Compensation Decision Making (3rd ed.),The Dryden Press, Fort Worth, TX.

Blau, F. D. and Ferber, M. A. (1992). The Economics of Women, Men, and Work (2nd ed.), Prentice-Hall,Inc., Englewood Cli�s, NJ.

Blau, F. D. and Kahn, L. (1992). `The gender earnings gap: learning from international comparisons',American Economic Review, 82, 533±538.

Bowie-McCoy, S. W., Wendt, A. C. and Chope, R. (1993). `Gainsharing in public accounting: workingsmarter and harder', Industrial Relations, 32, 432±445.



Brown, K. A. and Huber, V. (1992). `Lowering ¯oors and raising ceilings: a longitudinal assessment of thee�ects of an earnings-at-risk plan on pay satisfaction', Personnel Psychology, 45, 279±311.

Bullock, R. J. and Bullock, P. F. (1982). `Gainsharing and Rubik's cube: solving system problems',National Productivity Review, 1(4), 396±407.

Bullock, R. J. and Lawler, E. E. III. (1984). `Gainsharing: a few questions and fewer answers', HumanResource Management, 23(1), 23±40.

Bylsma, W. and Major, B. (1992). `Two routes to eliminating gender di�erences in personal entitlement:social comparisons and performance evaluations', Psychology of Women Quarterly, 16, 193±200.

Bylsma, W. and Major, B. (1994). `Social comparisons and contentment: exploring the psychological costsof the gender wage gap', Psychology of Women Quarterly, 18, 241±249.

Cain, G. G. (1986). `The economic analysis of labor market discrimination: a survey', In: Ashenfelter O.and Layard, R. (Eds.), Handbook of Labor Economics, North-Holland, Amsterdam.

Cohen, J. and Cohen, P. (1983). Applied Multiple Regression/Correlation Analysis for the BehavioralSciences, Lawrence Erlbaum Associates, Hillsdale, NJ.

Crosby, F. (1982). Relative Deprivation and Working Women, Oxford University Press, New York.Desmairais, S. and Curtis, J. (1997). `Gender and perceived pay entitlement: testing for e�ects of experiencewith income', Journal of Personality and Social Psychology, 72, 141±150.

Dreher, G. F. (1981). `Predicting the salary satisfaction of exempt employees', Personnel Psychology, 34,579±589.

Duncan, O. D. and Duncan, B. (1955). À methodological analysis of segregation indexes', AmericanSociological Review, 20, 210±217.

Fein, M. (1991). Ìmproshare: a technique for sharing productivity gains with employees', In: Rock, M. L.and Berger, L. A. (Eds.), The Compensation Handbook (3rd edition), pp. 158±175, McGraw-Hill, Inc.,New York.

Folger, R. (1986). À referent cognitions theory of relative deprivation', In: Olson J. M., Herman C. P. andZanna M. P. (Eds.), Relative Deprivation and Social Comparison: The Ontario Symposium, Vol. 4,Lawrence Erlbaum Associates, Hillsdale, NJ.

Folger, R. (1987). `Reformulating the preconditions of resentment: A referent cognitions model',In: Masters, J. C. and Smith, W. P. Social Comparison, Social Justice, and Relative Deprivation, pp. 183±215. Lawrence Erlbaum Associates, Hillsdale, NJ.

Frost, C., Wakeley, J. and Ruh, R. (1974). The Scanlon Plan for Organization Development: Identity,Participation, and Equity, Michigan State University Press, East Lansing, MI.

Gerhart, B., Trevor, C. O. and Graham, M. E. (1996). `New directions in compensation research: Synergies,risk, and survival', In: Ferris, G. (Ed.), Research in Personnel and Human Resources Management, 14,143±203.

Graham-Moore, B. E. and Ross, T. L. (1983). Productivity Gainsharing: How Employee Incentive ProgramsCan Improve Business Performance, Prentice-Hall, Inc., Englewood Cli�s, NJ.

Graham-Moore, B. E. and Ross, T. L. (1995). Gainsharing and Employee Involvement, Bureau of NationalA�airs, Washington, D.C.

Greenberg, J. (1990). Òrganizational justice: yesterday, today, and tomorrow', Journal of Management, 16,399±432.

Hammer, T. (1988). `New developments in pro®t sharing', In: Campbell, J., Campbell, R. and Associates(Eds.), Productivity in Organizations, pp. 328±366, Jossey-Bass, San Francisco.

Hanlon, S. C. and Taylor, R. R. (1991). Àn examination of changes in work group communicationbehaviors following installation of a gainsharing plan', Group and Organization Studies, 16, 238±267.

Hardy, M. A. (1993). Regression with Dummy Variables, Sage Publications, Inc., Newbury Park, CA.Heneman, H. G. (1985). `Pay satisfaction', In: Rowland, K. M. and Ferris, G. R. (Eds.), Research inPersonnel and Human Resources Management, Vol. 3, pp. 115±139, JAI Press, Greenwich, CT.

Heneman, H. G. III and Schwab, D. P. (1985). `Pay satisfaction: its multidimensional nature andmeasurement', International Journal of Psychology, 20, 129±141.

Judge, T. A. and Welbourne, T. M. (1994). À con®rmatory investigation of the dimensionality of the paysatisfaction questionnaire', Journal of Applied Psychology, 79, 461±466.

Kanter, R. M. (1977). Men and Women of the Corporation, Basic Books, New York.Lawler, E. E. III. (1971). Pay and Organizational E�ectiveness: A Psychological View, McGraw-Hill, NewYork.

Lee, R. T. and Martin, J. E. (1996). `When a gain comes at a price: pay attitudes after changing tier status',Industrial Relations, 35, 218±226.



Lissy, W. E. and Morgenstern, M. L. (1995). `Salary and wage', Compensation and Bene®ts Review, 27(5),10±12.

Loscocco, K. A. and Spitze, G. (1991). `The organizational context of women's and men's pay satisfaction',Social Science Quarterly, 72, 3±19.

Major, B. (1989). `Gender di�erences in comparisons and entitlement: implications for comparable worth',Journal of Social Issues, 45, 99±116.

Major, B. (1994). `From social inequality to personal entitlement: the role of social comparisons, legitimacyappraisals, and group membership', Advances in Experimental Social Psychology, 26, 293±355.

Major, B. and Konar, E. (1984). Àn investigation of sex di�erences in pay expectations and their possiblecauses', Academy of Management Journal, 27, 777±792.

Martin, J. (1981), `Relative deprivation: a theory of distributive justice for an era of shrinking resources',In: Cummings, L. L. and Staw, B. M. (Eds.), Research in Organizational Behavior, Vol. 3, pp. 53±107,JAI Press, Greenwich, CT.

Miceli, M. P., Jung, I., Near, J. P. and Greenberger, D. B. (1991). `Predictors and outcomes of reactions topay-for-performance plans', Journal of Applied Psychology, 76, 508±521.

Miceli, M. P. and Lane, M. C. (1991). Àntecedents of pay satisfaction: a review and extension',In: Rowland, K. and Ferris, G. (Eds.), Research in Personnel and Human Resources Management, Vol. 9,pp. 235±309, JAI Press, Greenwich, CT.

Milkovich, G. and Milkovich, C. (1992). `Strengthening the pay-performance relationship: the research',Compensation and Bene®ts Review, 24(6), 53±62.

Orazem, P. F. and Mattila, P. J. (1989). `Comparable worth and the structure of earnings: the Iowa case',In: Michael, R. T., Hartmann, H. I. and O'Farrell, B. (Eds.), Pay Equity Empirical Inquiries, NationalAcademy Press, Washington, DC.

Ospina, S. (1996). Illusions of Opportunity, Employee Expectations and Workplace Inequality. ILR Press(an imprint of Cornell University Press), Ithaca, NY.

Ronan, W. W. and Argant, G. J. (1973). `Determinants of pay and pay satisfaction', Personnel Psychology,26, 503±520.

Ryan, M. P. (1983). Womanhood in America: From Colonial Times to the Present, Franklin-Watts,New York, NY.

Santora, J. E. (1991). `DuPont returns to the drawing board', Personnel Journal, 70(2), 34±36.Sauser, W. and York, M. (1978). `Sex di�erences in job satisfaction: a reexamination', Personnel Psych-ology, 31, 537±547.

Scarpello, V., Huber, V. L. and Vandenbeg, R. (1988). `Pay satisfaction: its measurement and dimen-sionality', Journal of Applied Psychology, 73, 163±171.

Siegel, S. and Castellan, N. J. (1988). Nonparametric Statistics for the Behavioral Sciences (2nd ed.),McGraw-Hill, Inc., New York.

Steel, B. S. and Lovrich, N. P., Jr. (1987). `Comparable worth: the problematic politicization of a publicpersonnel issue', Public Personnel Management, 16, 23±36.

Stou�er, S. A., Suchman, E. A., DeVinney, L. C., Starr, S. A. and Williams, R. M. (1949). The AmericanSoldier: Adjustment During Army Life, (Vol. 1), Princeton University Press, Princeton, NJ.

U.S. Bureau of the Census. (1992). Statistical Abstract of the United States: 1992 (112th edition),Washington, DC.

Varca, P. E., Sha�er, G. S. and McCauley, C. D. (1983). `Sex di�erences in job satisfaction revisited',Academy of Management Journal, 26, 348±353.

Welbourne, T. M. and Gomez-Mejia, L. R. (1995). `Gainsharing: a critical review and a future researchagenda', Journal of Management, 21, 559±609.

Welbourne, T. M., Balkin, D. B. and Gomez-Mejia, L. R. (1995). `Gainsharing and mutual monitoring:a combined agency-organizational justice interpretation', Academy of Management Journal, 38,881±899.

Zanna, M. P., Crosby, F. and Loewenstein, G. (1987). `Male reference groups and discontent among femaleprofessionals', In: Gutek, B. and Larwood, L. (Eds.), Women's Career Development, pp. 28±41, Sage,Newbury Park, CA.



Appendix

The items comprising the gainsharing satisfaction indexes for companies A and B, which are on a5-point `strongly disagree' to `strongly agree' scale, are as follows:

I am satis®ed with the gainsharing plan.

I am satis®ed with the bonus formula.

I am satis®ed with the suggestion committees.

My company should continue the gainsharing programme.

The gainsharing plan is good for managers.

The gainsharing plan is good for non-managers.

The gainsharing plan is good for all employees.

