Pay Perceptions and Their Relationships with Cooperation, Commitment, and Intent to Quit

This study examines how perceived in-role (or horizontal) pay differences and understanding of the pay system influence three key performance-related attitudes, namely, organizational commitment, willingness to cooperate, and intent to quit, both directly and indirectly via perceived pay fairness. Toward this end, we apply structural equation modeling to self-report survey-based evidence collected from full-time employees in a major United States supermarket licensing group (n = 159). As expected, perception of wide pay differences was negatively related to pay fairness, while pay understanding was positively related to it. Pay fairness played a pivotal mediating role in strengthening organizational commitment and reducing intent to quit. Cooperation was also influenced directly and negatively by pay differences. Contrary to predictions, however, we found that pay fairness did not mediate the relationship between pay differences and cooperation. Implications for compensation theory and practice are considered.