Individual differences in perception of appropriate pay differentials in the U.S.A. and Sweden

The present research investigates the relationships between demographic characteristics and employees' perceptions of appropriate pay-differentials (APD's). In order to investigate this relationship, we examined organizations in two different countries with different social philosophies. The dependent variable (APD's) is defined as what is felt and/or perceived by the individual to be the appropriate pay-differentials among positions with different responsibilities and at different organizational levels. Two different subject groups were used: 137 salaried employees from an automotive engineering company in the U.S.A., and 107 salaried employees from an engineering company in Sweden. Questionnaires constructed in English and Swedish included: (1) questions about individual demographics; (2) job factors; and (3) perception of appropriate pay-differentials using eight organizational charts. Results indicated that the influence of social philosophy, as expressed by organizational socialization processes, was limited in scope. Individual differences associated with employees' perceptions of appropriate pay-differentials should be taken into account when determining pay and compensation policies. These considerations may encourage employee participation in decision making and lead to better organizational outcomes.deceased.