Impact of employee participation in pay plan development

Abstract The effects of having employees participate in the design of a base pay plan for a small manufacturing firm were studied. Attitudinal and behavioral data were collected before and after the development and installation of the pay plan from 58 employees. Job satisfaction, pay satisfaction, understanding of the pay plan, and trust in management all increased. A base-free change analysis indicated that these changes, as well as others, could be partially attributed to the effects of participation. It was concluded that under certain conditions, participation in pay plan development can lead to more effective pay plans as well as to a better overall relationship between employees and their organizations.

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