Compensation satisfaction: Its measurement and dimensionality.

Abstract

This research examined the influence of contextual variables on the factor structure of Heneman and Schwab's (1985) Pay Satisfaction Questionnaire (PSQ) and further explored the dimensionality of the compensation satisfaction construct. The PSQ is intended to measure four aspects of compensation: pay level, pay raises, pay structure-administration, and benefits. Previous research showed support for the pay level and benefit subscales, with equivocal results for the raises and structureadministration subscales. In this study, using data obtained from 1,007 employees of a manufacturing firm and 95 nursing home employees, we found that PSQ factor structure varied by employee job classification (salaried-exempt, salaried nonexempt, and hourly) and may also vary by other contextual factors such as company labor-relations compensation policy. The question of the underlying dimensionality of the compensation satisfaction construct cannot be adequately addressed by use of the current version of the PSQ. Implications for research and practice are discussed.Over the past two decades a great deal of research has been conducted that relates to pay satisfaction (for reviews, see Heneman, 1985;Lawler, 1971;Nash & Carroll, 1975;Schwab & Wallace, 1974). Nevertheless, confusion regarding the antecedents and consequences of pay satisfaction persists (Milkovich & Newman, 1987). In the most recent review of the literature, Heneman (1985) suggested that much of this confusion stems from the belief that people have only some overall general affect about their pay. Drawing on earlier work on the dimensionality of pay (Heneman & Schwab, 1979), Heneman (1985 argued that employees not only have a general affect about their pay, but also develop specific attitudes toward distinct aspects of financial compensation. Furthermore, Heneman and Schwab (1985) offered a five-dimensional construct of satisfaction with compensation that consists of satisfaction with (a) pay level (i.e., current wage or salary), (b) raises (i.e., changes in pay level), (c) structure (i.e., how pay is allocated among hierarchically arranged jobs), (d) administration (i.e., how pay is distributed to employees), and (e) benefits (e.g., vacations, sick leave, insurance, pensions, income accumulation plans, and miscellaneous services).In order to explore the dimensionality of the compensation satisfaction construct, Heneman and Schwab (1985) devised a 20-item instrument, the Pay Satisfaction Questionnaire (PSQ), and administered it to three groups of employees: professional,We sincerely thank and acknowledge Sara Rynes, Charles Lance, and two anonymous reviewers for helpful comments on earlier drafts of this article.

Measurement Invariance of the Pay Satisfaction Questionnaire Across Three Countries

“…L. Heneman et al, 1988;Judge, 1993;Judge & Welbourne, 1994;Lam, 1998;Mulvey, Miceli, & Near, 1992;Orpen & Bonnici, 1987;Scarpello et al, 1988). As summarized by H. G. Heneman and Judge (2000), these factor analytic studies have supported the notion of pay satisfaction as a multidimensional construct.…”

“…One explanation for some of the inconsistent results obtained is that the factor structure, or number of factors, of the PSQ might depend on contextual characteristics. For instance, Scarpello et al (1988) found that the PSQ factor structure varied by job classification (exempt, nonexempt, and hourly) and by other organizational factors such as company labor-relations policy.…”

The effects of pay satisfaction and affective commitment on turnover intention

“…Finally, scientists have agreed that pay satisfaction is multidimensional (Heneman & Schwab, 1985;Scarpello, Huber, & Vandenberg, 1988). They proposed that pay satisfaction comprised four dimensions.…”

Pay Satisfaction, Job Satisfaction and Turnover Intent

“…Third, there is considerable evidence that compensation satisfaction is a multidimensional construct although there is no universal agreement whether there are three (Carraher, 1991;Scarpello, Huber and Vandenberg, 1988), four (Heneman, Greenberg and Strasser, 1988;Heneman and Schwab, 1985;Judge, 1993;Scarpello, Huber and Vandenberg, 1988), or five (Garcia and Posthuma, 2009;Mulvey, Miceli and Near, 1992) dimensions. Yet, as Lum et al (1998) note, many pay satisfactionturnover studies have used unidimensional constructs to measure pay satisfaction (see for example, Keaveny and Inderrieden, 2000), or focused on only one aspect of pay satisfaction, usually pay level (see Williams, McDaniel and Nguyen, 2006, for a meta-analysis of pay level satisfaction).…”