Compensation Management; Paid Job and Organizational Satisfaction

Compensation Management; Paid Job and Organizational Satisfaction

The relationship between pay satisfaction, job satisfaction and organizational satisfaction are interconnected. In human resource management (HRM) literature, there is a great deal of attention paid to job satisfaction. Employees that are satisfied are likely to demonstrate a number of positive behavioral characteristics, compared to employees with a lower level of satisfaction, including a high level of productivity and great commitment to their employer. There are many influences on job satisfaction, and models such as Maslow's hierarchy of needs and Hetzberg's hygiene factors, indicate that pay satisfaction is a key component, and while money alone may not always be a motivator, it has the potential to undermine the employment relationship if an employee does not see the amount they are paid as being fair (Buchanan and Huczynski, 2010). Where employees feel they are being paid fairly, other factors may be used to motivate improve performance and job satisfaction, but if an employee feels they are not being treated fairly, the potential to create job satisfaction in other ways is severely limited.

When employees assess the pay their receiving a key aspect will be that of fairness (Henderson, 2006). If employees believe they are being paid a fair wage they are likely to be satisfied. However, if they believe that the wages are unfair, for job satisfaction will be lower (Henderson, 2006). According to Adams (1965) equity theory the way employees determine whether or not their wages are fair is primarily through comparison with other employees. If a worker is being paid less than others who are doing the same work, it may be seen as unfair. The equity assessment process is complex, it is not only the work itself that is considered, other influencing factors are also considered, where aspects such as seniority, qualifications, experience and competency are also included in the internal equity assessment (Adams, 1965). When employees compare themselves against others, it is not only those with in the same organization, but the organization's pay compared to other firms in the same in some industries. For example, if one firm is known for pain particularly low wages, it is highly likely that any employees who obtain jobs at that employer will suffer a degree of satisfaction, which may manifest in a higher attrition level, as well as other negative behavioral traits through which the employee seeks to redress the unfairness (Adams, 1965). It may also be noted that the potential concept of fairness will not be limited to direct comparisons, if employees see senior management gaining significant bonuses and pay rises, while they themselves are suffering from pay decreases, there is also likely to be a feeling of unfairness or in equity (Henderson, 2006).

Where an employer pays a fair wage, this will impact on employment relationship, and the employees will perceive the employer is being fair. This will be further enhanced where there are other strategies in place which demonstrate the employer considering the needs of the employees (Buchanan and Huczynski, 2010). It is also worth noting that there are some jobs in which there is unlikely to be real long-term job satisfaction, such as highly boring repetitive jobs. However, an interesting study undertaken by Goldthorpe in a Vauxhall car manufacturing facility in the 1970s, found that even employees in jobs where there was traditionally a low level of satisfaction could gain satisfaction where they had a high remuneration (Buchanan and Huczynski, 2010). It was theorized that the job satisfaction was gained from instrumental rather than intrinsic sources, with the high wages used to compensate. Therefore, there is a direct relationship between satisfaction with wages and job satisfaction, while wage satisfaction may not be the only potential influence in job satisfaction, if there is an absence of wage satisfaction and there is unlikely to be job satisfaction.