PAY SYSTEM CHARACTERISTICS AND QUIT PATTERNS OF GOOD, AVERAGE, AND POOR PERFORMERS

The relationship between pay dispersion and the quits patterns of good, average, and poor performers was explored among a sample of motor carriers. Results showed that under high pay system communication, pay dispersion was negatively related to good performer quits when performance-based pay increases were emphasized, and positively related when they were not. The results for seniority-based pay increases were different. Under high pay system communication, pay dispersion was negatively related to average performer quits when seniority-based pay increases were emphasized, and the relationship was attenuated when they were not. Contrary to expectation, pay dispersion was not consistently related to quit patterns when pay system communication was low. Predictions regarding quit patterns of poor performers were not supported. Implications of the research are addressed and future research directions identified. There is general agreement in the literature that pay dispersion among key employees (horizontal or within-group pay dispersion) relates to turnover levels in organizations. This assumption goes back at least a half-century (e.g., Livernash, 1957), but theory and empirical findings to date are ambiguous about the specific nature of the relationship. Instead, existing theory and empirical results continue to offer contradictory or competing insights about the effects of pay dispersion on organizational outcomes, leading some to refer to the situation as a theoretical dilemma This study was funded by a grant from the SHRM foundation. The interpretation, conclusions, and recommendations, however, are those of the authors, and do not necessarily represent those of the foundation. An earlier version of this paper was presented at the 2001 annual meetings of the Southern Management Association. We thank Associate Editor Murray Barrick, two anonymous reviewers, Michelle Duffy, Ruolian Fang, Robert Vellella, Jing Zhu, Sven Kepes, Jackie Thompson, and seminar participants at The Ohio State University for helpful comments. Correspondence and requests for reprints should be addressed to Jason D. Shaw, Uni

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