This is an outdated version published on 2021-12-17. Read the most recent version.

Personality and Preferences for Characteristics of Pay for Performance Plans: A Path to Job Satisfaction and Customer Satisfaction.

Authors

  • Charles D. Stevens North Dakota State University
  • Ronald A. Ash University of Kansas

Abstract

Person-organization fit has been shown to lead to employee job satisfaction which in turn, has been shown to be related to customer satisfaction. Using a person-organization fit framework, relationships between individual differences in the big five personality dimensions and preferences for characteristics of variable pay were investigated. In an experimental setting the relationship between personality and preferences for pay contingent on individual performance versus team performance was investigated. Additionally, the relationship between personality and preferences for the degree of pay at risk (the portion of pay tied to performance) within variable pay systems was investigated. The results indicate that participants who prefer to have their pay contingent on team performance have higher levels of openness to experience than do individuals who prefer to have their pay contingent on their individual performance. Participants who prefer to have greater levels of their pay at risk have higher levels of extraversion and openness to experience and lower levels of neuroticism than do participants who prefer to have lower levels of their pay at risk. These results suggest that there are systematic differences in preferences for components of pay for performance plans by individuals with differing personalities. To maximize the likelihood of employee job satisfaction and customer satisfaction, organizations should select employees whose personalities align with the organization’s pay for performance plan’s characteristics.

Author Biography

Ronald A. Ash, University of Kansas

Professor Emeritus.  School of Business. University of Kansas

 

References

Armstrong, M. & Brown, D. (2017). “Job evaluation versus market pricing: Competing or combining methods of pay determination?” Compensation & Benefits Review, 49, 153-160. DOI: https://doi.org/10.1177/0886368718765827

Barber, A.E. & Bretz, R.D., Jr. (2000). “Compensation, attraction, and retention,” in Rynes, S.L. & Gerhart, B. (Eds.), Compensation in organizations: Current research and practice, Jossey-Bass, San Francisco, pp. 32-60.

Barrick M.R. & Mount, M.K. (1991). “The big five personality dimen¬sions and job performance: A meta-analysis,” Personnel Psychology, 44, 1-26. DOI: https://doi.org/10.1111/j.1744-6570.1991.tb00688.x

Boxx, W.R., Odom, R.Y., & Dunn, M.G. (1991). “Organizational values and value congruency and their impact on satisfaction, commitment, and cohesion: An empirical examination within the public sector,” Public Personnel Management, 20, 195-205. DOI: https://doi.org/10.1177/009102609102000207

Bretz, R.D. Jr., Ash, R.A., & Dreher, G.F (1989). “Do people make the place? An examination of the attraction-selection-attrition hypothesis,” Personnel Psychology 42, 561-581. DOI: https://doi.org/10.1111/J.1744-6570.1989.TB00669.X

Bretz, R.D. & Judge, T.A. (1994). “Person-organization fit and the Theory of Work Adjustment: Implications for satisfaction, tenure, and career success,” Journal of Vocational Behavior, 44, 32-54. DOI: https://doi.org/10.1006/jvbe.1994.1003

Brief, A.P. (1998). Attitudes in and around organizations, Thousand Oaks, CA: Sage.

Brown, K.A. & Huber, V.L. (1992). “Lowering floors and raising ceilings: A longitudinal assessment of the effects of an earnings-at-risk plan on pay satisfaction,” Personnel Psychology, 45, 279-312. DOI: https://doi.org/10.1111/j.1744-6570.1992.tb00851.x

Brown, S.P. & Lam, S.K. (2008). “A meta-analysis of relationships linking employee satisfaction to customer responses,” Journal of Retailing, 84, 243-255. DOI: https://doi.org/10.1016/j.jretai.2008.06.001

Cable, D.M. & Judge, T.A. (1994). “Pay preferences and job search decisions: A person-organization fit perspective,” Personnel Psychology 47, 317-348. DOI: https://doi.org/10.1111/j.1744-6570.1994.tb01727.x

Cable, D.M. & Judge, T.A. (1996). “Person-organization fit, job choice decisions, and organizational entry,” Organizational Behavior and Human Decision Processes, 67, 294-311. DOI: https://doi.org/10.1006/obhd.1996.0081

Cadsby, C.B., Song, F., & Tapon, F. (2007). “Sorting and incentive effects of pay for performance: An experimental investigation,” Academy of Management Journal, 50, 387-405. DOI: https://doi.org/10.5465/AMJ.2007.24634448

Cascio, W.F. (1998). Managing human resources: Productivity, quality of work life, profits (5th Ed). Irwin-McGraw-Hill, Boston, MA.

Chatman, J.A. (1991). “Matching people and organizations: Selection and socialization in public accounting firms,” Administrative Science Quarterly, 36, 459-484. DOI: https://doi.org/10.2307/2393204

Cohen, J. (1988). Statistical Power analysis for the behavioral sciences (2nd Ed). Lawrence Erlbaum Associates, Hillsdale, NJ.

Costa, P.T., Jr. & McCrae, R.R. (1988). “Personality in adulthood: A six-year longitudinal study of self-reports and spouse ratings on the NEO Personality Inventory,” Journal of Personality and Social Psychology, 54, 853-863. DOI: https://doi.org/10.1037/0022-3514.54.5.853

Costa, P.T., Jr. & McCrae, R.R. (1992). Revised NEO Personality Inventory (NEO PI-R). Psychological Assess¬ment Resources, Inc., Odessa, FL.

Costa, P.T., Jr., McCrae, R.R & Holland, J.L. (1984). “Personality and vocational interests in an adult sample,” Journal of Applied Psychology, 69, 390-400. DOI: https://doi.org/10.1037/0021-9010.69.3.390

Cranny, C.J., Smith, P.C., & Stone, E. (1992). Job satisfaction: How people feel about their jobs. Lexington: Lexington Books.

Dawis, R.V. & Lofquist, L.H. (1984). A psychological theory of work adjustment, Minneapolis, MN: University of Minnesota Press.

Deckop, J.R., Merriman, K.K., & Blau, G. (2004). “Impact of variable risk preferences on the effectiveness of control by pay,” Journal of Occupational and Organizational Psychology, 77, 63-80. DOI: https://doi.org/10.1348/096317904322915919

Dohmen, T. and Falk, A. (2011). “Performance pay and multidimensional sorting: Productivity, preferences, and gender,” American Economic Review, 101, 556-590. DOI: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.2.556

Dormann, C. & Kaiser, D.M. (2002). “Job conditions and customer satisfaction,” European Journal of Work and Organizational Psychology, 11, 257-283. DOI: https://doi.org/10.1080/13594320244000166

Ekinci, Y. & Dawes, P.L. (2009). “Consumer perceptions of frontline service employee personality traits, interaction quality, and consumer satisfaction,” The Services Industries Journal, 107, 503-521. DOI: https://doi.org/10.1080/02642060802283113

Fang, M. & Gerhart, B. (2012). “Does pay for performance diminish intrinsic interest?” International Journal of Human Resource Management, 23, 1176-1196. DOI: https://doi.org/10.1080/09585192.2011.561227

Flannery, T.P., Hofrichter, D.A., & Platten, P.E. (1996). People, performance, & pay, Free Press, New York, NY.

Fournier, S. & Mick, D. (1999). “Rediscovering satisfaction,” Journal of Marketing, 63, 5-23. DOI: https://doi.org/10.1177/002224299906300403

Fulmer, I.S. & Walker, W.J. (2015). “More bang for the buck?: Personality traits as moderators of responsiveness to pay-for-performance,” Human Performance, 28, 40-65. DOI: https://doi.org/10.1080/08959285.2014.974755

Gerhart, B. & Milkovich, G.T. (1990). “Organizational differences in managerial compensation and financial performance,” Academy of Management Journal, 33, 663-691. DOI: https://doi.org/10.5465/256286

Gerhart, B. & Milkovich, G.T (1992). “Employee compensation: Research and practice,” in Dunnette, M.D. & Hough, L.M. (Eds.), Handbook of industrial and organizational psychology: Vol. 3, (2nd ed.), Consulting Psychologists' Press, Palo Alto, CA, pp. 481-569.

Gerhart, B. & Newman, J. (2020). Compensation (13th Ed.). New York: McGraw Hill

Gomez-Mejia, L.R. & Balkin, D.B (1989). “Effectiveness of individual and aggregate compensation strategies,” Industrial Relations, 28, 431-445. DOI: https://doi.org/10.1111/j.1468-232X.1989.tb00736.x

Gray, J.A. (1973). “Causal theories of personality and how to test them,” in Royce, J.R. (Ed.), Multivariate analysis and psychological theory, Academic Press, New York, NY. pp. 409-464.

Greene, R.J. (2012). “Variable compensation: Good fit to turbulent environments,” Compensation & Benefits Review, 44, 308-314. DOI: https://doi.org/10.1177/0886368713476932

Guion, R.M. (1965). Personnel testing. New York: McGraw Hill

Guion, R.M. & Gottier, R.F. (1965). “Validity of personality measures in personnel selection,” Personnel Psychology, 18, 135-164. DOI: https://doi.org/10.1111/j.1744-6570.1965.tb00273.x

Heneman, R.L., Fay, C.H., & Wang, Z. (2001). “Compensation systems in the global context,” in Anderson, N., Ones, D.S., Sinangil, H.K., & Viswesvaran, C. (Eds.) Handbook of industrial, work, & organizational psychology Vol. 2, Sage, London, pp. 77-92.

Hogan, R. (1998). “Reinventing personality,” Journal of Social and Clinical Psychology, 17, 1-10. DOI: https://doi.org/10.1521/jscp.1998.17.1.1

Hogan, R.T. & Blake, R.J. (1996). “Vocational interests: Matching self-concept with the work environment,” in K.R. Murphy (Ed.), Individual differences and behavior in organizations, Jossey-Bass, San Francisco, CA, pp. 89-144.

Hogan , R.T . & Hogan, J. (1995). Hogan Personality Inventory manual (2nd ed). Hogan Assessment Systems, Tulsa, OK.

Hogan, R.T., Hogan, J. & Roberts, B.W. (1996). “Personality measurement and employment decisions,” American Psychologist, 51, 469-477. DOI: https://doi.org/10.1037/0003-066X.51.5.469

Holland, J.L. (1973). Making vocational choices: A theory of careers. Prentice-Hall, Englewood Cliffs, NJ.

Homburg, C. & Stock, R.M. (2004). “The link between salespeople’s job satisfaction and customer satisfaction in a business-to-business context: A dyadic analysis,” Journal of the Academy of Marketing Science, 32, 144-158. DOI: https://doi.org/10.1177/0092070303261415

Huefner, J.C. & Hunt, H.K. (2000). “Consumer retaliation as a response to dissatisfaction,” Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, 13, 61-82.

Huselid, M.A. (1995). “The impact of human resource management practices on turnover,

productivity, and corporate financial performance,” Academy of Management Journal,

, 635-673. DOI: https://doi.org/10.5465/256741

Jeon, H. & Choi, B. (2012). “The relationship between employee satisfaction and customer satisfaction,” Journal of Services Marketing, 26, 332-341. DOI: https://doi.org/10.1108/08876041211245236

Judge, T.A. & Cable, D.M. (1997). “Applicant personality, organizational culture, and organization attraction,” Personnel Psychology, 50, 359-394. DOI: https://doi.org/10.1111/j.1744-6570.1997.tb00912.x

Judge, T.A., Higgins, C.A., & Thoresen, C.J. (1999). “The big five personality traits, general mental ability, and career success across the life span,” Personnel Psychology, 52, 621- 652. DOI: https://doi.org/10.1111/j.1744-6570.1999.tb00174.x

Kerr, J. & Slocum, J.W. (1987). “Managing corporate culture through reward systems,” Academy of Management Executive, 1, 99-108. DOI: https://doi.org/10.5465/AME.1987.4275817

Kohli, A.K. & Jaworski, B.J. (1990). “Market orientation: The construct, research propositions, and managerial implications,” Journal of Marketing, 54(2), 1-18. DOI: https://doi.org/10.1177/002224299005400201

Kristof, A.L. (1996). “Person-organization fit: An integrative review of its conceptualizations, measurement, and implications,” Personnel Psychology, 49, 1-50. DOI: https://doi.org/10.1111/j.1744-6570.1996.tb01790.x

Larsen, V. & Wright, N.D. (2020). “Aggregate consumer satisfaction: The telos of marketing,” Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, 33, 63-77.

Lawler, E.E., III (1990). Strategic pay: Aligning organizational strategies and pay systems. Jossey-Bass, San Francisco, CA.

Lawler, E.E., III & Jenkins, G.D., Jr. (1992). “Strategic reward systems,” in Dunnette, M.D. & Hough (Eds.) Handbook of industrial and organizational psychology Vol. 3, (2nd ed.), Consulting Psychologists' Press, Palo Alto, Ca, pp. 1009-1055.

Mischel, W. (1968). Personality and assessment. New York: Wiley.

Mount, M.K. & Barrick, M.R. (1995). “The big five personality dimensions: Implications for research and practice in human resource management,” in Ferris, G.R. (Ed.) Research in personnel and human resource management Vol 13, JAI Press, Inc., Greenwich, CT. pp. 153-200.

Mount, M.R., Ilies, R., & Johnson, E. (2006). “Relationship of personality traits and counterproductive work behaviors: The mediating effects of job satisfaction,” Personnel Psychology, 59, 591-622. DOI: https://doi.org/10.1111/j.1744-6570.2006.00048.x

Narver, J.C. & Slater, S.F. (1990). “The effect of a market orientation on business profitability,” Journal of Marketing, 54(4), 20-35. DOI: https://doi.org/10.2307/1251757

Netemeyer, R.G., Maxham, J.G. III, & Lichtenstein, D.R. (2010). “Store manager performance and satisfaction: Effects on store employee performance and satisfaction, store customer satisfaction, and store customer spending growth,” Journal of Applied Psychology, 95, 530-545. DOI: https://doi.org/10.1037/a0017630

Newman. J.M., Gerhart, B., & Milkovich, G.T. (2017). Compensation (12th Ed.). New York: McGraw Hill

O’Reilly, C.A., Chatman, J., & Caldwell, D.F. (1991). “People and organizational culture: A profile comparison approach to assessing person-organization fit,” Academy of Management Journal, 34, 487-516. DOI: https://doi.org/10.5465/256404

Oswald, F.L. & Hough, L.M. (2011). “Personality and its assessment in organizations: Theoretical and empirical developments,” in Zedeck, S. (Ed), APA handbook of industrial and organizational psychology: Vol. 2, American Psychological Association: Washington, D.C., pp. 153-184. DOI: https://psycnet.apa.org/doi/10.1037/12170-005

Pappas, J.M. & Flaherty, K.E. (2006). “The moderating role of individual-difference variables in compensation research,” Journal of Managerial Psychology, 21, 19-35. DOI: https://doi.org/10.1108/02683940610643198

Pfeffer, J. (1998). The human equation: Building profits by putting people first, Harvard Business School Press, Boston, MA.

Renn, R.W., Barksdale, W.K., & Van Scotter, J.R. (2001). “Earnings-at-risk incentive plans: A performance, satisfaction and turnover dilemma,” Compensation & Benefits Review, 33(4), 68-73. DOI: https://doi.org/10.1177/08863680122098441

Rynes, S.L. (1987). “Compensation strategies for recruiting,” Topics in Total Compensation, Vol. 2, pp. 185-196.

Schein, E.H. (1992). Organizational culture and leadership (2nd ed.). Jossey-Bass, San Francisco, CA.

Schuster, J.R. & Zingheim, P.K (1992). The new pay: Linking employee and organizational performance. Lexington, New York, NY.

Spector, P.E. (1997). Job satisfaction: Application, assessment, causes, and consequences. Thousand Oaks, CA: Sage

Stevens, C.D, & Ash, R.A. (2001). “Selecting employees for fit: personality and preferred managerial style,” Journal of Managerial Issues, 13, 500-517.

Stevens, C.D., Guthrie, J.P., Ash, R.A., & Coate, C.J. (2002). “Does personality predict preferred managerial style? Evidence from New Zealand and the United States.” Asia Pacific Journal of Human Resources, 40, 322-344. DOI: https://doi.org/10.1177/1038411102040003256

Stewart, G.L. (1996). “Reward structure as a moderator of the relationship between extraversion and sales performance,” Journal of Applied Psychology, 81, 619-627. DOI: https://doi.org/10.1037/0021-9010.81.6.619

Trank, C.Q., Rynes, S.L., & Bretz, R.D., Jr. (2001). “Attracting applicants in the war for talent: Differences in work preferences among high achievers,” Journal of Business and Psychology, 16, 331-345. DOI: https://doi.org/10.1023/A:1012887605708

Tse, D., Nicosia, F., & Wilton, P. (1990). “Consumer satisfaction as a process,” Psychology & Marketing, 7, 177-193. DOI: https://doi.org/10.1002/mar.4220070304

Verquer, M.L., Beehr, T.A., & Wagner, S.H. (2003). “A meta-analysis of relations between person-organization fit and work attitudes,” Journal of Vocational Behavior, 63, 473-489. DOI: https://doi.org/10.1016/S0001-8791(02)00036-2

Wangenheim, F.v., Evanschitzky, H., & Wunderlich, M. (2007). “Does the employee-customer satisfaction link hold for all employee groups?” Journal of Business Research, 60, 690-697. DOI: https://doi.org/10.1016/j.jbusres.2007.02.019

Webster, F.E. Jr. (1994). “Defining the new marketing concept,” Marketing Management, 2(4), 23-31.

Wright, N.D., Pearce, J.W., & Busbin, J.W. (1997). “Linking customer service orientation to competitive performance: Does the marketing concept really work?” Journal of Marketing Theory and Practice, 5(4), 23-34. DOI: https://doi.org/10.1080/10696679.1997.11501777

Downloads

Published

2021-12-17

Versions