The moderating role of individual‐difference variables in compensation research

Abstract

Purpose

To examine the influence of company‐imposed reward systems on the motivation levels of salespeople.

Design/methodology/approach

Data were collected from 214 business‐to‐business salespeople. In order to assure the adequacy of the survey instrument, several salespeople were recruited to “pretest” the questionnaire. To test the potential moderating influence of career stage on pay mix and valence, expectancy, and instrumentality estimates, a split‐group analysis was performed. To test the moderating hypotheses for risk, we used two‐step regression models in which the dependent measures (i.e. valence, expectancy, and instrumentality) were first regressed on the predictor variables as main effects, and then regressed on the multiplicative interaction term along with the main effects.

Findings

Support was found for many of the hypotheses. In particular, individual‐level variables such as career stage and risk preferences moderate the relationship between pay mix and valence for the reward, expectancy perceptions, and instrumentality perceptions.

Practical implications

Managers must acknowledge that certain salespeople respond positively to fixed salary plans while others respond positively to incentive. In the past, managers might have relied on the salesperson to select the appropriate job for them. Salespeople are not “weeding” themselves out during the recruitment process. As a result, greater importance must be placed on human resource and sales managers during the time of recruitment.

Originality/value

There already exists a robust stream of literature on person‐organization fit that suggests that employees prefer to work for companies that are compatible with their personalities. There is an increasing amount of work in multi‐level research that suggests bridging the macro (organizational) and micro (individual) perspectives will enable researchers to make linkages between research streams that are commonly viewed as unconnected.

Citation

Pappas, J.M. and Flaherty, K.E. (2006), "The moderating role of individual‐difference variables in compensation research", Journal of Managerial Psychology, Vol. 21 No. 1, pp. 19-35. https://doi.org/10.1108/02683940610643198