Chapter 22: Ability and Effort Weights in Pay Level and Pay Increase Decisions

It was hypothesized that ability, effort, and the interaction between ability and effort would influence pay level and pay increase decisions. An experiment was conducted with 66 human resource professionals to test this hypothesis. The results indicate that pay level decisions are influenced primarily by ability, and pay increase decisions are influenced primarily by the interaction between ability and effort. The results are discussed in the context of the traditional compensation model which suggests that ability should influence pay level, but not pay increase, and that effort should influence pay increase, but not pay level. It was concluded that the distinction currently being made between person and job based pay plans may not be meaningful.