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I am a M.A. in industrial/organizational psychology. Most of my experience has been in human resources and change management. My passion lies in employee assessment, organizational development and employee opinions. Website: www.IanMondrow.com LinkedIn Profile: http://linkd.in/drBYoC

Sunday, January 23, 2011

The Relationship between Pay and Job Satisfaction: A Meta-Analysis of the Literature


Summary & Commentary by: Ian B. Mondrow, M.A.

The common phrase "money can't buy you happiness" has been proven to be valid. However, does one's pay influence his/her perception of work? Judge, Piccolo, Podsakoff, Shaw and Rich (2010) set out on a mission to determine if salary has an impact on one's job satisfaction.

The researchers used a series of terms on the PsycINFO database to collect 1156 abstracts. Out of this collection of abstracts, it was determined that 86 studies were to be utilized in the analysis. A meta-analysis was conducted to provide estimated correlations between satisfaction and pay level.

Results revealed that pay-level was positively correlated with both job satisfaction ( r = .15, p < .05) and pay satisfaction (r = .24, p < .05). Since zero was not included in the confidence intervals, it can be assumed the mean correlations of job satisfaction and pay satisfaction were not zero. A population correlation showed a stronger relationship between pay level and satisfaction than the correlations with pay level and job satisfaction (Z = -4.01, p < .05). This suggests that pay level has a stronger relationship pay-satisfaction than job-satisfaction. Therefore, it is possible for an individual to be satisfied with his/her pay but not satisfied with his her job.

When analyzing moderators, the country being examined had no effect. The United States showed no difference in pay level and job satisfaction than Great Britain, India Australia and Thailand. In addition, Pay satisfaction did not differ based on the country.

IMPLICATIONS FOR HR PROFESSIONALS
While pay may help to determine if an applicant accepts a job offer, salary has little effect on one's job satisfaction. An individual can be satisfied with the amount of pay he/she is receiving but intrinsic rewards and culture-fit have been found to be better predictors of job satisfaction. Pay will not motivate employees and HR Managers need to ensure that managers comprehend this.

When considering job satisfaction, focus on the company culture and reward system. Take Google as an example. Previously, Google has offered employees lower wages but provided a vast amount of benefits. In addition, the culture within google was positively perceived and therefore individuals were more likely to accept the pay cut due to their high levels of job satisfaction (fostered by the culture). Employees should feel as though they are making an impact and their work is appreciated. An intrinsic reward provides one with greater satisfaction because it instills a sense of pride. An extrinsic rewards can be meaningless because it quickly loses its value once the novelty has wore off.

This does not mean that an organization can offer lower wages compared to their competitors. Wages have an impact on the war for talent and therefore, to be competitive, an organization must be able to match wages. It does ensure that an organization does not have to be a pay leader in order for their employees to be happy.




source: Judge, T.A., Piccolo, R.F., Podsakoff, J.C., Rich, B.L. (2010). The relationship between pay satisfaction and job satisfaction. Journal of Vocational Behavior, 77, 157-167.

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