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Group Incentives and Pay Satisfaction: Understanding the Relationship Through an Identity Theory Perspective

Center for Advanced Human Resource Studies, School of Industrial and Labor Relations, Cornell University, 393 Ives Hall, Ithaca, New York 14851-0952.

Daniel M. Cable

School of Industrial and Labor Relations, Cornell University, 393 Ives Hall, Ithaca, New York 14851-0952.

The goal of this paper is to develop a conceptual model based on identity theory to specify the relationship between group incentives and pay satisfaction. Pay satisfaction, as currently measured, does not include items that directly measure group-based rewards, therefore, any changes in pay satisfaction associated with group incentive implementation would be the result of some spillover effect. Identity theory is employed to model this effect by delineating how group incentives tap salient work-related roles; the theory also has implications for various behavioral consequences. The research described in this paper tests two hypotheses derived from the conceptual model. These hypotheses are tested in two quasi-experimental field studies conducted in a high technology firm and a consumer products company that both implemented gainsharing programs. The findings indicate that gainsharing plans can be viewed as either a benefit or as part of individual pay based on the ability of the incentive plan to activate salient work-related roles.

Key Words: group incentives • gainsharing • identity theory • field study

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