Participation and Pay

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Abstract
The participation literature generally avoids the risky area of pay decisions. This research investigated the impact on individual attitudes of participation in important pay decisions. A merit pay plan was participatively designed, installed, and maintained in a professional engineering organization (N = 380). The plan involved nomination by peers and supervisors of outstanding per formers for a cash bonus of approximately $2000. Using objective and subjective measures, participation predicted increases in understanding and commit ment to the new pay plan, organizational involvement, job involvement, and job satisfaction. Participation also predicted improvements in the perceived performance-pay contingency and pay equity, but it did not improve pay satis faction. A follow-up analysis of the award recipients showed that merit award status predicted increased job satisfaction, performance-pay contingency per ceptions, and commitment. Several aspects of participative pay decisions are discussed.