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An empirical examination of a merit bonus plan.

One of the most frequently used methods of rewarding employees involves compensation based upon performance. Recently, a Tower's Perrin survey indicated that of 770 North American organizations, more than two-thirds had variable pay plans (Anonymous, 2000). While many of the variable pay plans reward performance at the organizational level, it appears that for exempt employees the most frequently used method of pay for performance is merit pay (StOnge, 2000; Taylor and Pierce, 1999; Eskew and Heneman, 1996; Gerhart and Milkovich, 1992; Heneman, 1992). Merit pay is pay based on performance, but is distinguished from other forms of incentive pay in four ways: 1) typically it is allocated on the basis of past performance rather than future performance, 2) it is based on the subjective ratings of employee performance rather than objective measures, 3) it is based on individual rather than group performance, and 4) it is based on an assessment of long-term performance in that the increase in pay becomes permanent (Heneman, 1992).

Merit bonus plans are a subset of merit pay plans and share all of the features enumerated by Heneman except the last one; merit bonuses are just that--bonuses--so they are a one-time adjustment to pay and must be earned again during each evaluation period. Merit-based bonus plans have been proposed as one means to deal with some of the problematic issues surrounding merit pay. One of the benefits of using bonuses under a performance-contingent pay plan is that bonuses can better reflect current performance while at the same time managing costs for the organization (Lawler, 1990). It appears that businesses have been attempting to take advantage of these beneficial characteristics, as merit-based bonus plans are increasing and sometimes replacing traditional merit plans (Sturman and Short, 2000). Yet there has been no similar increase in research associated with these plans. Relatively recently, Heneman (1992) noted the lack of evaluative research on merit bonuses and pointed out the need for more inquiry in this area. As evidence, even Heneman and Schwab's Pay Satisfaction Questionnaire did not include a lump-sum bonus satisfaction component and only recently has that dimension been proposed as an addition to that scale (Sturman and Short, 2000). The purpose of this study was to provide some evidence of the effectiveness of merit bonus plans by assessing the implementation of a merit bonus pay program.

Even though merit pay appears to be a fixture in American business, it is not without controversy. There is disagreement as to whether merit pay can and does bring about favorable outcomes (Campbell et al., 1998), and virtually every review of the merit pay literature notes that some question its effectiveness (e. g., Heneman, 1992). But, we should not be surprised. After all, "the implementation of successful performance appraisal and merit pay systems is one of the most challenging aspects of human resource management" (Gabris and Ihrke, 2000: 41). Both detractors and advocates recognize that the manner in which merit pay is implemented is of crucial importance and some have noted that these mixed results may be due to the manner of implementation and administration of the program (Heneman, 1992; Taylor and Pierce, 1999; McGinty and Hanke, 1989).

Heneman (1992) noted that the theoretical foundations for merit pay are found in both the psychological and economic literature and has proposed expectancy theory as the unifying theme for understanding the motivational force associated with merit pay. In expectancy theory, motivation is dependent upon three sets of perceptions that are related as a multiplicative function: expectancy, instrumentality, and valence. Expectancy refers to employees' perception that they can achieve the level of performance expected; valence refers to whether a potential outcome is valued; and instrumentality is whether or not the valued outcome will actually be delivered. Thus, for there to be motivational force, employees must value what is offered as a reward for performance, they must believe that they can achieve that level of performance, anti they must believe once the performance is attained they will receive the reward. Clearly, if any one of these elements is missing or low the motivational force is low.

The purpose of this study was to assess empirically the relative effects of several factors underlying the implementation of a merit bonus pay program on the program's effectiveness in regard to employee satisfaction and performance. The influence of these underlying factors has been addressed to a limited extent by previous research, but the relative effects have not been investigated. The present study investigated the relative influence of four critical factors underlying the implementation of a merit bonus pay plan: reward contingency, feedback, employee participation, and goal quality. All of these increase the motivational force of the merit plan by increasing an employee's expectancy of reward--the first by tying rewards more closely to performance and the latter three by using principles of goal-setting. A limitation of some prior research has been the absence of attempts to determine the relative effects of components of merit plans, such as feedback, involvement, and goal quality (Petty et al., 199 2). A significant contribution of this study is the assessment of the relative effects of several components that are important to the success of merit pay plans.

In the remainder of this paper, we discuss issues that can affect the success of the implementation of merit pay plans and develop hypotheses concerning these factors, describe the methods used for our study, present the results of the analysis, and discuss conclusions and implications derived from our research.

IMPLEMENTATIONAL ISSUES

The popularity of merit pay plans has been due in part to their hypothesized impact upon employee performance and satisfaction. In order to have a significant impact, a condition of reward contingency is necessary (Cherrington et al., 1971). In other words, there must be a link between level of performance and the level and/or probability of reward. One of the major problems faced in implementing a performance-pay program concerns employees' doubts that pay is actually linked to performance (McGinty and Hanke, 1989). Doubts among employees concerning the impact they expect their performance to have upon rewards can lead to differences in performance (Kahn and Sherer, 1990). Reward systems that tie rewards more closely to performance are expected to generate higher levels of performance (Kopelman and Reinharth, 1982). If performance is perceived by employees as being instrumental in the attainment of a valued reward, then satisfaction should increase (Lawler, 1971).

Hypothesis la: Employee satisfaction and employee performance in relation to the merit bonus plan will be positively related to the level of reward contingency that employees experience in the plan.

The next three implementation variables that were investigated--participation, feedback, and goal quality--are all components of goal-setting theory and each impacts the motivational force of the plan by enhancing employees' perceptions of the linkage between effort and performance. As Heneman notes, "both efficiency wage theory and goal-setting theory address the issue of expectancy" (Heneman, 1992: 42).

Employee involvement or participation in merit pay plans, like reward contingency, can influence job performance and job satisfaction. By being involved, employees may set better goals and be more committed to reaching those goals, in part, because their level of expectancy is enhanced. Past research has indicated that participation in goal setting may be associated with enhanced performance (e.g., Bullock, 1983; Jenkins and Lawler, 1981; Latham and Yukl, 1975a; Latham and Saari, 1979), but others have questioned the efficacy of participation. It has been argued that allowing subjects to participate in setting their goals should have no direct effects; that is, assigned goals generally lead to the same level of performance as participatively set goals (Locke and Latham, 1990). Meta-analytic reviews of the goal-setting literature have found no effects for employee participation (Tubbs, 1986; Mento et al., 1987). The present study included a measure of employee participation in goal setting; the results should provide additional evidence concerning the effects of involvement on employee performance and satisfaction. While there are competing expectations for the presence of a relationship between participation and the outcome variables, for hypothesis testing purposes we will treat the research question in a positive format.

Hypothesis lb: Employee satisfaction and employee performance in relation to the merit bonus plan will be positively related to the level of involvement that employees experience in the plan.

Feedback, or knowledge of results, is a third implementational variable that may influence the effectiveness of merit pay programs. Goal setting theory proposes that feedback is a very important part of the goal process (Locke et al, 1981; Locke and Latham, 1990) and it too addresses the issue of expectancy, the perceived relationship between effort and performance. High levels of feedback are expected to be associated with higher levels of performance and satisfaction (Kim and Hamner, 1976; Ivancevich and McMahon, 1982; Koch, 1979).

Hypothesis 1c: Employee satisfaction and employee performance in relation to the merit bonus plan will he positively related to the level of feedback that employees experience in the plan.

The final implementational variable hypothesized to influence the effectiveness of merit pay is goal quality. While research has shown that goals should be challenging but achievable, it has also shown that impossible goals may actually cause a decrease in performance (Latham and Yukl, 1975b). If an employee has no control over his/her goals, accomplishment of those goals may not be possible and performance and satisfaction may suffer. Additionally, a major problem with performance evaluation is that some job-relevant behaviors may not be measured (Lawler, 1973). If an employee's goals leave out important job requirements, performance and satisfaction may be impaired. Thus, control over goal accomplishment and completeness of goals (the degree to which goals encompass the important aspects of a job) can have an influence on the effectiveness of merit pay in regard to employee satisfaction and performance.

Hypothesis id: Employee satisfaction and employee performance in relation to the merit bonus plan will be positively related to the level of goal quality that employees experience in the plan.

METHOD

The site for this study was a large service corporation consisting of seven separate operating companies located in the Southeastern United States. Under a new pay system implemented by the Corporation, all exempt employees were to be compensated by a two-component plan. The first component consisted of base salary and the second component consisted of a merit pay bonus, which would be allocated to employees based upon their rated performance in relation to preset goals.

The merit bonus was designed to make a portion of employees' pay variable; this portion was to be contingent upon job performance. Therefore, total compensation theoretically could vary significantly with current performance. As a part of the pay plan, individual goals were established, with employees and their supervisors agreeing on the range and scope of the tasks to be performed by the employees during the annual rating period. Employees' bonuses were then determined by supervisory ratings of the degree to which preset goals were met. The maximum possible bonus available to an employee who achieved the highest performance rating was 20 percent.

The subjects of this study included all exempt employees of the corporation. Three different job levels were involved: managerial, supervisory, and non-supervisory exempt. The employees held a wide variety of jobs in three different types of organizations (or departments): staff, plant, and customer service. There were seven separate operating companies involved: one corporate services company, one specialized operations company, and five other companies with operations in diverse geographic locations throughout the Southeast. The sample for the study consisted of approximately 1,500 employees who completed and returned questionnaires concerning the merit pay plan.

The implementational factors and employee satisfaction and performance were measured with Likert-type items on a six-point scale anchored by "strongly agree" and "strongly disagree" on a survey instrument designed to assess the outcomes of the merit pay plan. Employees indicated "strong agreement," "agreement," etc. on items on the survey which measured employees' perceptions of: (1) the degree to which the merit bonus they received was based upon their performance, which measured reward contingency (one item), (2) their level of involvement in setting goals (one item), (3) the level of feedback that they received (one item), (4) the quality of their goals in terms of completeness and control over accomplishment (two items with a reliability of .82); (5) their job performance (three items concerning work habits, work quality, and productivity, with a reliability of .93), (6) satisfaction with their job (one item), and (7) satisfaction with their pay (three items concerning base salary, bonus payment, and fair ness of pay compared to others, with a reliability of .80). The survey was administered one month after employees received bonus payments.

The performance measures in this study were not the actual performance ratings from the merit plan (these were not available from the corporation due to privacy concerns), but were, instead, employees' self-evaluations of performance provided through the survey instrument. Although this represents a potential limitation in this study, research has shown that when it is clear that ratings will be used for research purposes only, self-ratings of performance can actually be more accurate than supervisory ratings (Heneman, 1974). The respondents were aware that the questions about performance were to be used solely for research purposes, to aid in assessment of the merit plan.

The use of single-item measures might also be viewed as a limitation, but the use of these measures is acceptable when the construct being measured is narrow or unambiguous to the respondent (Sackett and Larson, 1990). Wanous et al. (1997) point out that while more complex constructs, such as personality, should be measured with multiple-item scales, there is a middle ground between the extremes of simple constructs, such as expectancy, and complex constructs where single-item measures may also be acceptable. Job satisfaction is given as an example of one of these "middle-ground" constructs. Three of the single-item measures used in this study (reward contingency, involvement in goal setting, and feedback) would be viewed as falling on the simpler side of the simple/complex continuum and are constructs that should be unambiguous to the respondent. The fourth single-item construct, job satisfaction, is a "middle-ground" construct noted by Wanous et al. (1997) as acceptably measured by a single item.

The data were analyzed through analysis of covariance. The objective of analysis of covariance is to compare mean responses on the dependent variable across levels of the class variables after adjusting for differences due to the covariates (Ott, 1988). Job performance (PERF), job satisfaction (SAT), and satisfaction with pay (PAY) were treated as dependent variables, while reward contingency (RC), involvement (INV), feedback (FDB), and goal quality (GQ) were treated as independent variables and covariates.

We also included as control variables the situational factors of operating company (COM), job level (JOB), and organization types (ORG) of the employees. We expected that these situational factors would have no significant effects, but rather that any variance in the effects of the plan would be due to the implementational factors.

The situational factors--JOB, ORG and COM--had three, three, and seven levels, respectively; that is, the subjects were employed at three different job levels, within three different organization types, and within seven separate operating companies. The implementational variables had two levels. Employees who indicated either "agreement" or "strong agreement" about the presence of reward contingency were placed in the "high RC" category, while employees who indicated "disagreement" or "strong disagreement" were placed in the "low RC" category. The same procedure was used for the involvement, feedback, and goal quality variables.

In addition, the relative influence of the implementational variables was assessed. The beta coefficients were estimated through regression analysis and a procedure described by Cohen and Cohen (1983) was used to test for significant differences between the standardized betas.

RESULTS

The results of the analysis of covariance, including the implementational variables along with the situational factors, are contained in Table 1. The results conformed to expectations, with two exceptions. There were significant differences (p<.001) across three of the four implementational variables for each of the outcome variables (with involvement as the non-significant covariate) and the relationship was positive, as expected, with higher levels of reward contingency, feedback and goal quality associated with higher levels of performance and satisfaction. However, there were also significant differences across two of the situational factors. There were significant differences between companies (p<.01) on both job satisfaction and job performance, and there were significant differences between job levels (p<.001) for pay satisfaction. The [R.sup.2] values for the three models were: .48 for the job performance model, .50 for the job satisfaction model, and .46 for satisfaction with pay.

The results of the regression analysis and test for significant differences between betas are contained in Table 2. The results indicate that for the dependent variable of perceived job performance, there was no significant difference between the standardized beta coefficients for RG and GQ. Both of these coefficients were higher (p<.001) than that of FDB, however. For the dependent variable of job satisfaction, the results were the same; RC and GQ were not significantly different, but both were higher (p<.001) than FDB. When satisfaction with pay was the dependent variable, the test indicated that the standardized beta for RC was significantly higher that than GQ (p<.001), that RC was higher than FDB (p<.001), and that GQ was higher than FDB (p<.01).

DISCUSSION

This study sought to explore the effects of certain factors underlying the implementation of a merit bonus plan. We hypothesized that the factors underlying the implementation of the merit bonus program--specifically reward contingency, feedback, goal quality, and involvement in goal setting--would be positively associated with employee satisfaction and performance.

Reward contingency, feedback, and goal quality were positively related to each of the outcome variables. Employees who reported high levels of these constructs also reported higher levels of satisfaction and responded that the plan had improved their job performance. However, no indication of a relationship between participation and any of the three outcome variables was evidenced. Employees who perceived that they had high levels of involvement in setting their goals did not report that satisfaction or performance had been enhanced. The evidence supports the view that involvement in goal setting does not necessary lead to elevated performance or satisfaction.

Our investigation of the situational variables showed that there were still significant differences in mean job performance and job satisfaction across operating companies, and in mean satisfaction with pay across job levels. The results concerning satisfaction with pay may be due to the generally positive relationship between level of merit pay and job level (Heneman, 1990). Employees in higher job levels typically receive higher levels of pay. Since lower-level employees generally receive less pay, these employees might be less satisfied, as people usually prefer to receive more rather than less money. Thus, job level could still exert a significant influence upon pay satisfaction in the presence of the implementational variables.

The continued effect of operating company on perceived job performance and job satisfaction may have been due to difference between one company and the other. An examination of the mean scores for job performance and job satisfaction across operating companies in Table 1 reveals that in both cases the mean score for Company 5 was well above then mean scores for the other companies. Company 5 had fewer employees than the rest of the operating companies and was a relatively recent addition to the corporation, while the other companies had been part of the corporation for a more extended period of time. The analyses of covariance were performed a second time, with Company 5 removed, and no significant differences in mean job performance or mean job satisfaction across companies were found.

The effects of the merit bonus plan on employee satisfaction and job performance were found to be due primarily to the perceived levels of reward contingency, feedback, and goal quality. A significant outcome of this study concerns the relative influence of these constructs. Some prior research has investigated the combined effects, but not the relative effects, of the variables (Petty et al., 1992), and meta-analyses have addressed the variables separately instead of in combination (Hunter and Hirsh, 1987). The design of the present study allowed the relative influence of the variables to be assessed.

The results indicate that reward contingency and goal quality had the greatest relative effects on the outcomes of the plan. Goal quality and reward contingency appeared to be the most important variables in regard to job performance and job satisfaction, while reward contingency was most important regarding satisfaction with pay.

A potential limitation of this study is the possibility of common method variance in the observed relationships. In order to assess this possibility, we performed analysis of covariance including only the situational factors as independent variables and covariates. The results are contained in Table 3. As can be seen, the situational variables were significantly related to satisfaction and performance when tested in the absence of the implementational variables, but were no longer significant when included with the implementational variables (in the original ANGOVA). These results provide evidence that the implementational variables have a robust relationship to the outcome variables, since they accounted for the variance that had initially appeared to be due to the situational variables. If the relationships were due solely to common method variance, it is likely that the situational factors would still have significant effects in the presence of the implementational variables. Also, if the observed relatio nships were due solely to common method variance, we would expect involvement (INV) to be statistically significant along with the other implementational variables.

Another potential limitation concerns the causal ordering of the model. While our model suggests that the characteristics of the plan impact its efficacy, the causal arrow could possibly point in the opposite direction. The larger bonuses received by some employees could have enhanced their perceptions of reward contingency, feedback, and goal quality, thus leading to apparent significant effects for these factors. Other potential limitations of this study have been addressed earlier. Single-item measures and self-reported performance information also represent possible shortcomings in our research. It is wise to bear them in mind when considering the implications of this research; however, for the reasons discussed earlier, these potential limitations may not have been realized.

MANAGERIAL IMPLICATIONS AND FUTURE RESEARCH

The allure of merit bonus plans is the tying of pay to current performance. While merit bonus plans are very similar to conventional merit pay plans in most aspects, the key difference is that the bonus does not become an annuity, to be paid in future years even if performance declines, as is the case with conventional merit pay. The merit bonus is earned only if performance is maintained at acceptable levels. Thus, the successful implementation of a merit bonus plan could prove to be a financially sound pay strategy for many companies. In order for the implementation to be successful, the present research indicates that careful attention must be paid to important implementational issues. In this case, the success of the merit bonus plan in regard to enhancing job performance, job satisfaction, and pay satisfaction hinged primarily on the degree to which employees perceived that their rewards were contingent on their performance, on whether or not they received effective feedback, and on the quality of their goals. Of these variables, reward contingency and goal quality had the most relative influence. Additionally, we found that employee participation in goal setting had no significant influence on the effects of the program.

The current study sheds some light on the question of whether merit bonus plans (and merit pay plans in general, since the fundamental underlying theory is the same for both) can be effective in augmenting employee satisfaction and performance. First, if a merit pay plan is to be implemented successfully, the employees covered under the program must perceive that their pay is truly based upon their performance. It is crucial that managers be aware that they must create an environment which enhances an employee's perception of the linkage between effort and performance. If employees do not perceive a link between pay and performance, they will have no motivation to increase their performance, and performance and satisfaction may even suffer. Second, if goals are incorporated as a means to achieving that link, careful attention must be given to the establishment of the goals. Employees must have control over the accomplishment of their goals and the goals should not leave out any important aspects of job perfo rmance. Third, a system for providing effective feedback can and should be a part of any merit pay program that attempts to create this link. Employees should be the beneficiaries of some type of mechanism which informs them of their progress in relation to goal accomplishment, so that they will be cognizant of situations which require increased effort to reach a goal. Finally, subordinate participation in goal setting did not appear to be necessary. Although it has been argued that employee participation in goal setting will lead to a more effective program, the results of this study add support to the contention that participation is not necessary for improved performance or satisfaction. The quality of the goals, a condition of reward contingency, and effective feedback were more important in ensuring that the performance-effort link is made in the minds of the employees and hence in the success of the performance-pay program.

Clearly, these results can help managers make more efficient use of resources. The finding that there are different relative effects of the components of the plan means that managers should evaluate their allocation of resources accordingly. For example, the relative unimportance of participation in setting goals may mean that managers should spend less time in getting employees to participate in setting goals and more time in insuring that quality goals are given along with clear feedback. In other words, resources ought to be devoted proportionally to the performance returns expected.

Future research needs to be done on the relative effects of these implementational variables with regard to standard merit pay plans. Given that the fundamental theory for merit pay and merit bonus plans are the same, the implications of this study should be generalizable to merit pay plans. Perhaps, much of the variation in the results that have been observed in the literature on merit pay are due primarily to variation in the manner in which the plans were implemented. Additionally, there is need for research on merit bonus plans themselves. Although Heneman (1992) indicated that there was a need for evaluative research in this area, our search of the literature revealed no empirical research on the impact of merit bonus plans on performance outcomes since 1992. This study represents one attempt to begin to fill this gap, but more research is needed.

This investigation has shown that merit pay can have beneficial organizational consequences. However, such a program should not be implemented haphazardly. Certain conditions must be present in order for the program to operate effectively. If these conditions are met, organizations are likely to find the consequences of implementing a pay-for-performance program to be quite rewarding.
TABLE 1

Analysis of Covariance Results for Implementational Variables and
Situational Factors

Dependent Independent Adjusted
Variable [R.sub.2] Variable F Level N Mean

PERF .48 RC 85.88 (***) 1 521 2.95
 2 822 3.79

 INV 0.23 1 460 3.39
 2 883 3.35

 FDB 19.46 (***) 1 423 3.18
 2 920 3.56

 GQ 122.65 (***) 1 610 2.84
 2 733 3.90

 JOB 2.35 1 668 3.28
 2 404 3.41
 3 271 3.42

 ORG 1.41 1 808 3.34
 2 283 3.46
 3 252 3.31

 COM 3.70 (***) 1 358 3.29
 2 416 3.20
 3 48 3.31
 4 115 3.05
 5 20 4.21
 6 212 3.32
 7 174 3.21
SAT .50 RC 104.62 (***) 1 501 2.59
 2 799 3.60

 INV 0.15 1 443 3.07
 2 857 3.11

 FDB 32.17 (***) 1 406 2.83
 2 894 3.35
 GQ 87.24 (***) 1 586 2.61
 2 714 3.58

 JOB 0.27 1 639 3.06
 2 395 3.10
 3 266 3.12

 ORG 0.67 1 782 3.11
 2 276 3.15
 3 242 3.02

 COM 3.19 (**) 1 348 3.02
 2 402 2.94
 3 46 3.13
 4 113 2.81
 5 18 3.97
 6 207 2.89
 7 166 2.89

PAY .46 RC 54.52 (***) 1 521 2.93
 2 817 4.11

 INV 0.13 1 461 3.50
 2 877 3.53
 FDB 15.32 (***) 1 423 3.34
 2 915 3.70

 GQ 34.81 (***) 1 609 3.22
 2 729 3.81

 JOB 12.00 (***) 1 665 3.39
 2 403 3.38
 3 270 3.78

 ORG 1.32 1 805 3.60
 2 283 3.50
 3 250 3.46

 COM 2.53 1 358 3.57
 2 416 3.39
 3 48 3.81
 4 113 3.41
 5 19 3.57
 6 211 3.30
 7 173 3.58

Dependent Std.
Variable Error

PERF 0.07
 0.07

 0.08
 0.07

 0.08
 0.06

 0.07
 0.08

 0.07
 0.07
 0.08

 0.06
 0.08
 0.09

 0.06
 0.06
 0.16
 0.11
 0.09
 0.09
 0.09
SAT 0.08
 0.07

 0.08
 0.07

 0.08
 0.07
 0.07
 0.08

 0.07
 0.07
 0.09

 0.07
 0.09
 0.09

 0.07
 0.06
 0.17
 0.11
 0.27
 0.09
 0.09

PAY 0.08
 0.07

 0.08
 0.07
 0.08
 0.07

 0.07
 0.08

 0.07
 0.07
 0.09

 0.07
 0.08
 0.09

 0.07
 0.06
 0.17
 0.11
 0.26
 0.09
 0.10

(**)p<.01,

(**)p<.001

For the implementational variables the levels are: 1 = low; 2 = high.
For JOB the levels are: 1 = non-supervisory exempt; 2 = supervisory; 3
managerial. For ORG the levels are: 1 = staff; 2 = customer service;
3 = plant.
TABLE 2

Relative Effects of the Implementational Variables

Results of Regression Analysis

Dependent Independent Standard Standardized
Variable Variable Beta Error Beta t

PERF RC 0.907 0.088 0.301 10.33 (***)
 INV -0.088 0.088 -0.029 -1.00
 FDB 0.444 0.083 0.141 5.35 (***)
 GQ 1.011 0.092 0.343 11.05 (***)

SAT RC 1.058 0.095 0.325 11.11 (***)
 INV 0.006 0.095 0.002 0.06
 FDB 0.546 0.090 0.160 6.10 (***)
 GQ 0.973 0.099 0.305 9.86 (***)

PAY RC 1.259 0.091 0.407 13.76 (***)
 INV 0.115 0.092 0.036 1.25
 FDB 0.317 0.087 0.098 3.66 (***)
 GQ 0.624 0.095 0.206 6.58 (***)
Test for Significant Differences Between Betas

Dependent Variable Betas tested t

PER RC - FDB 3.50 (***)
 RC - GQ -0.85
 FDB - GQ -4.70 (***)

SAT RC - FDB 3.71 (***)
 RC - GQ 0.40
 FDB - GQ -3.48 (***)

PAY RC - FDB 6.66 (***)
 RC - GQ 4.00 (***)
 FDB - GQ -2.48 (**)

(**)p<.01,

(***)p<.001
TABLE 3

Analysis of Covariance Results for Situational Factors

Dependent Independent Adjusted Standard
Variable Variable F-value Level N Mean Error

PERF JOB 45.13 (***) 1 668 3.17 0.08
 2 404 3.59 0.08
 3 271 4.12 0.10

 ORG 19.19 (***) 1 808 3.95 0.07
 2 283 3.74 0.10
 3 271 3.19 0.11

 COM 7.17 (***) 1 358 3.64 0.07
 2 416 3.17 0.07
 3 48 3.71 0.20
 4 115 3.48 0.13
 5 20 4.62 0.31
 6 212 3.51 0.11
 7 174 3.27 0.12

SAT JOB 37.08 (***) 1 639 3.02 0.09
 2 395 3.35 0.09
 3 266 3.96 0.11

 ORG 23.84 (***) 1 782 3.85 0.08
 2 276 3.55 0.11
 3 242 2.94 0.12

 COM 7.97 (***) 1 348 3.44 0.08
 2 402 2.92 0.08
 3 46 3.70 0.22
 4 113 3.36 0.14
 5 18 4.61 0.35
 6 207 3.13 0.12
 7 166 2.96 0.13

PAY JOB 63.66 (***) 1 665 3.35 0.08
 2 403 3.60 0.08
 3 270 4.49 0.10

 ORG 23.94 (***) 1 805 4.21 0.07
 2 283 3.84 0.10
 3 250 3.38 0.12

 COM 7.15 (***) 1 358 3.93 0.08
 2 416 3.39 0.07
 3 48 4.30 0.20
 4 113 3.83 0.14
 5 19 4.03 0.32
 6 211 3.53 0.11
 7 173 3.67 0.12

(***)p<.001

For variable JOB the levels are: 1 = non-supervisory exempt; 2 =
supervisory; 3 = managerial. For ORG the levels are: 1 = staff; 2 =
division; 3 = plant.


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Author:Lowery, Christopher M.; Beadles, N.A. II; Petty, M.M.; Amsler, Gordon M.; Thompson, James W.
Publication:Journal of Managerial Issues
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Geographic Code:1USA
Date:Mar 22, 2002
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