Pay-Allocations by Managers: A Policy-Capturing Approach

Abstract

This study used a policy-capturing approach to examine 3120 pay-allocation decisions of 65 managers (31 male, 34 female) who work in organizations that have a pay for performance policy. Subjects were asked to respond to packages that varied in terms of performance of subordinates, specialized skills/expertise of subordinates, difficulty in replacing the subordinates, possibility of potential subordinate turnover, and current salary of subordinates. Results indicated that all five factors were significant and in the direction expected. The interaction between performance and job offer was significant for only two of the 65 managers. The interactions between specialized skills and job offer and difficulty in replacement and job offer were not significant for any of the managers. Most of the variance across the managers was accounted by sampling error and criterion unreliability. Results also indicated that subjects' explicit rankings of the five factors did not correspond highly with the rankings of their regression weights.