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The impact of pay-for-performance perception and pay level satisfaction on

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 Journal of Chinese Human Resource Management
The impact of pay-for-performance perception and pay level satisfaction on
employee work attitudes and extra-role behaviors: An investigation of moderating
effects
Ting Ren, Ruolian Fang, Zhen Yang,
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effects", Journal of Chinese Human Resource Management, Vol. 8 Issue: 2, pp.94-113, https://
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JCHRM
8,2
94
Received 16 June 2015
Revised 17 July 2017
Accepted 21 July 2017
Downloaded by Professor Ting Ren At 17:33 24 November 2017 (PT)
Journal of Chinese Human
Resource Management
Vol. 8 No. 2, 2017
pp. 94-113
© Emerald Publishing Limited
2040-8005
DOI 10.1108/JCHRM-06-2015-0012
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2040-8005.htm
The impact of pay-for-performance
perception and pay level
satisfaction on employee work
attitudes and extra-role behaviors
An investigation of moderating effects
Ting Ren
HSBC Business School, Peking University, Shenzhen, China
Ruolian Fang
NUS Business School, National University of Singapore, Singapore, and
Zhen Yang
E Fund Management Co. Ltd, Beijing, China
Abstract
Purpose – This paper aims to investigate the impact of pay-for-performance (PFP) perception and pay level
satisfaction on work attitudes (job satisfaction, turnover intention and affective commitment) and extra-role
behaviors (discretionary effort and interpersonal helping), and further, how three aspects of conditional
factors – intrinsic motivation, leader–member exchange (LMX) and perceived organizational support (POS) –
moderate the main-effect relationships.
Design/methodology/approach – The study was conducted at a Chinese private-owned company in the
beauty industry, and a survey was conducted with the frontline employees in each office, asking information
about their perceptions and attitudes toward the PFP scheme implemented in the company, work attitudes and
performance, individual characteristics and their perceptions of group and organizational characteristics.
Findings – Results show that PFP perception and pay level satisfaction are significant predictors of work
attitudes and extra-role behaviors. Further, depending on the specific work outcome examined, the three
conditioning factors are found to strengthen the hypothesized main-effect relationships. The findings of the study
have important theoretical and practical implications for the implementation of PFP schemes in organizations.
Originality/value – The findings contribute to the scholarship on PFP schemes in two ways. First, the
findings show that PFP perception and pay level satisfaction are important for understanding employee work
attitudes and extra-role behaviors. Second, the investigation of the moderating roles that intrinsic motivation,
LMX and POS play in the relationships of PFP perception and pay level satisfaction with the work outcomes
provides evidence to the limited understanding about the conditions that may strengthen or weaken the
effectiveness of PFP schemes.
Keywords Motivation, Perception, Attitudes, Pay policies
Paper type Research paper
The human resources management (HRM) system plays a very important role in managing
employee attitudes and behaviors to be in accordance with organizational objectives and,
thus, contributes to organizational performance (Combs et al., 2006; Delaney and Huselid,
1996; Huselid, 1995). With the rapid changes of external environment and increasing
competition among organizations, effective HRM practices have become a critical factor for
organizational development and success. It has become increasingly important for
 managers to use HRM practices effectively to inspire the employees to perform well at work. Investigation
One such HRM practice for organizations to achieve better performance is to link pay of of moderating
employees with their job performance (Nyberg et al., 2016; Rynes et al., 2004). The pay–job
performance link has been shown to further improve overall organizational performance
effects
and, thus, is critical for organizations to achieve strategic objectives (Gerhart and Fang,
2014; Gerhart and Fang, 2015; Lawler, 1981). As a result, organizations have been
increasingly tempted to implement the pay-for-performance (PFP hereinafter) scheme to
motivate employees to increase productivity and enhance job performance. 95
In the organizational perspective, the success of the HRM system relies upon a strong
climate that arises from employees’ interpretation and consensus of the practices (Bowen
and Ostroff, 2004). Employees’ characteristics can alter the effectiveness of HR practices in
different ways (Liao et al, 2009), and their perceptions of HR practices may serve as the
intermediate channel that connects the practices and organizational performance (Kehoe
and Wright, 2013).
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In the PFP context, the effectiveness of the PFP scheme is dependent on employees’
perceptions of and attitudes toward the attributes of the scheme (St-Onge, 2000). Indeed,
investigating the perceived PFP and work outcomes relationships is helpful, given that
employee work motivation is based on perception. Research has suggested that specific
perceptions of and attitudes toward the PFP scheme, such as PFP perception (i.e. the extent
that performance is perceived to be based on performance) and pay level satisfaction (i.e.
satisfaction with one’s base pay; Miceli and Lane, 1991), play important roles in influencing
employees’ subsequent work attitudes, behaviors and job performance (O’Donnell and
O’Brien, 2000).
However, a close examination of the literature suggests that extant research
predominantly considers the simple main-effect relationship between pay-related variables
and outcomes. The knowledge is deficient about the situational or individual conditions that
may explain how people react to the perceptions and attitudes they form toward the PFP
scheme differently. Taking up this challenge, the present study aims to examine the
relationships of pay-related variables (PFP perception and pay level satisfaction) with work
outcomes (attitudes and extra-role behaviors), and how contingent factors strengthen or
weaken such main-effect relationships. In so doing, the study contributes to the literature by
providing a better understanding of how managers can effectively use the PFP scheme to
improve performance of both employees and organizations. According to Gupta and Shaw
(2014), there is an overall dearth of research in employee compensation. Therefore,
extending current stream of research on employee compensation to employee perception of
PFP can help to provide nuanced evidence in the literature.
Furthermore, the study focuses on several dimensions of work attitudes (job satisfaction,
quit intention and affective commitment) and extra-role behaviors (discretionary effort and
interpersonal helping). Employees’ actual work attitudes and behaviors are the most important
factors for maintaining and increasing organizational performance (Spreitzer, 1995; Elangovan
and Xie, 1999). Research has well examined three aspects of work attitudes – job satisfaction,
turnover intention and organizational commitment – and behavioral outcomes, including in-
role performance (Borman and Motowidlo, 1993) and extra-role performance (e.g. discretionary
effort and interpersonal helping). In organizations, employees’ work attitudes such as job
satisfaction and organizational commitment have generally been shown to influence their in-
role and extra-role performance (Williams and Anderson, 1991). Thus, we focus on job
satisfaction, quit intention, affective commitment, discretionary effort and interpersonal
helping behavior for our understanding of how employees respond to the PFP scheme
implemented in the organization.
 JCHRM This paper is structured as follows. First, focusing on PFP perception and pay level
8,2 satisfaction for understanding organizational implementation of PFP schemes, we examined
their main relationships with employee attitudes (job satisfaction, quit intention and
affective commitment) and extra-role behaviors (discretionary effort and interpersonal
helping). Second, we examine how contingent factors, including intrinsic motivation that
reflects individual-level motivational basis, leader–member exchange (LMX) that captures
96 employees’ interactions with leaders and perceived organizational support (POS) that
describes employees’ relationships with organizations, influence the main-effect
relationships. Third, we discuss the theoretical and practical implications of our findings.

Theory and hypotheses

In the literature, researchers have often referred to expectancy theory and equity theory for
explaining the main effects of pay-related variables on work outcomes. Expectancy theory
(Vroom, 1964) proposes that individuals will be motivated to behave or act based on two
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expectancies. The first one is the subjective probability that a given performance will lead to
certain desired results. The second one is the subjective probability that effort exerted will
lead to the desired performance. These two interact to determine the overall level of
motivation. In essence, the motivation of the behavior chosen is determined by the
expectancy of the outcome. A visible connection between pay and performance will meet
expectancies and motivate an employee for accomplishment, thus fostering favorable work
attitudes and behaviors.
Equity theory (Adams, 1965) proposes that individuals always compare their inputs and
corresponding outcomes with those of others and form perception of equity on this basis. If
the ratios they perceived for themselves and with comparative others are not equal,
perception of inequity will emerge and cause a decrease of motivation. Instead, employees
who are certain that their performance is going to be evaluated objectively and fairly will
feel satisfied with their pay and work harder to expect more rewards such as pay or bonus.
In addition, according to Hackman and Lawler (1971), the effects of the PFP system on work
outcomes such as job satisfaction, motivation, involvement and performance are largely a
function of how much pay one receives, how much pay comparative others are perceived to
receive and how much pay one perceives that he or she should receive. These concerns about
pay equity and pay allocation outcomes will influence employees’ perception of and attitude
toward PFP schemes, which in turn affects their subsequent work attitudes and behaviors.
Overall, expectancy theory and equity theory provide the theoretical foundations for our
understanding of the impact of PFP perception and pay level satisfaction on the important
work attitudes and extra-role behaviors.

Pay-for-performance perception
Bowen and Ostroff (2004) suggested that the strength of employees’ common
interpretation and agreement affects the effectiveness of HRM practices. The advocated
framework can be extended to the PFP circumstances. PFP perception refers to the
extent to which individuals believe that their pay is actually tied to performance
(Heneman, 1992; Heneman et al., 1988). It is suggested that PFP perception can be
considered as a specific form of procedural justice perception such that there is no
concern whether the distributions are fair but whether the individuals believe that the
procedures used to make pay decisions are fair (Scott et al., 2008). Jenkins et al. (1998)
argued that PFP perception has a strong influence on employee job performance.
Heneman et al. (1988) found that PFP perception has a positive relationship with job
satisfaction, but its relationship with job turnover was negative. In addition, PFP
 perception positively affected how well employees actually perform at work (St-Onge, Investigation
2000). of moderating
Although the relationships between PFP perception and discretionary effort are less
clear, previous studies have suggested that the PFP scheme inspires employees to make a
effects
greater effort to increase earnings through high productivity and performance. For instance,
a proper PFP system increases employees’ effort and productivity at work (Heneman, 1992;
Lawler, 1981; Lazear, 2000; Paarsch and Shearer, 2000). Although discretionary effort has
not been examined in the pay literature, these previous studies suggest there is a positive 97
link between PFP perception and discretionary effort.
Researchers have also examined the impact of the PFP scheme on extra-role behavior
such as organizational citizenship behavior, and the findings have been mixed. However,
some scholars have pointed out that the PFP scheme may result in employees focusing on
only behaviors that will be rewarded or compensated by the organization, sometimes at the
cost of other favorable organizational behaviors (Beer et al., 2004). In contrast, Tsui et al.
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(1997) found increased organizational citizenship behavior resulting from the PFP scheme.
Given the well-established relationships of work attitudes (e.g. job satisfaction,
organizational commitment) and justice perception with organizational citizenship behavior
(Organ and Ryan, 1995), we propose here that PFP perception will help improve employees’
engagement in interpersonal helping, one specific aspect of organizational citizenship
behavior.
In summary, we propose the following hypothesis for the main-effect relationships
between PFP perception and employee work attitudes and extra-role behaviors.
H1a. PFP perception is positively related to job satisfaction, affective commitment,
discretionary effort and interpersonal helping but negatively related to turnover
intention.

Pay level satisfaction

Pay level satisfaction refers to “an individual’s satisfaction with his or her base pay” (Miceli
and Lane, 1991, p. 245). Pay level satisfaction is one of the four dimensions of pay
satisfaction proposed by Heneman and Schwab (1985), followed by a stream of research
works that have suggested that the broad definition of pay satisfaction should be replaced
by a multidimensional conceptualization of pay satisfaction (Judge and Welbourne, 1994;
Carraher and Buckley, 1996). This suggests that research related to various dimensions of
pay satisfaction should be examined separately. The present study focuses on pay level
satisfaction to understand its impact on work attitudes and behaviors owing to the
deficiency of study of the issue (Kuvaas, 2006). Some evidence about overall pay satisfaction
provides indirect evidence for our expectations here (Panaccio et al., 2014). For example, pay
level enhances performance through increased organization-based esteem (Gardner et al.,
2004), and base pay was positively related to work motivation (Igalens and Roussel, 1999).
The meta-analysis on pay level satisfaction (Williams et al., 2006) shows that pay level
satisfaction is negatively related to all aspects of withdrawal cognitions and behaviors (i.e.
turnover intentions, absenteeism and voluntary turnover) but positively related to job
performance. Building on these findings, we propose the relationships of pay level
satisfaction with employee work attitudes and extra-role behaviors as follows:
H1b. Pay level satisfaction is positively related to job satisfaction, affective
commitment, discretionary effort and interpersonal helping but negatively related
to turnover intention.
 JCHRM Moderating effects
8,2 Beyond the main-effect relationships proposed above, much less is known about how
contingent factors may strengthen or weaken the influences of PFP perception and pay level
satisfaction on employee responses. We explored this possibility by focusing on employees’
motivational basis as well as social exchange relationships with their leaders and
organizations, respectively, a perspective that has been adopted in various prior research
98 studies (Alfes et al., 2013; Dulac et al., 2008; Hofmann and Morgeson, 1999; Wayne et al.,
1997).
We first examined the moderating role of intrinsic motivation. The self-determination
theory (Deci and Ryan, 1985, 1991) differentiates different causes and sources that motivate
individuals to bring about a certain behavior. Theory of intrinsic motivation suggests that
people attribute their action to either internal or external sources (Bem, 1967). Such internal
and external sources are described as intrinsic and extrinsic motivation, respectively.
Conceptually, intrinsic motivation means that people are willing to and tend to take part in
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some tasks because those tasks are meaningful or enjoyable in their own right. To the
contrary, extrinsic motivation suggests that people are motivated to do something owing to
some desirable outcomes externally imposed. Generally, employees with high intrinsic
motivation care more about their job and try to seek better means to solve problems with full
energy. Hackman and Oldham (1975) pointed out that intrinsic motivation significantly
influenced work attitudes and behaviors.
Among early studies, for example, Deci (1976) insisted that the implementation of
external motivation in inspiring beneficial behaviors may be at the expense of original
internal motivation; thus, the two factors are interactive rather than additive.
Supportively, Calder and Staw (1975) found that monetary rewards interacted with
intrinsic motivation upon task satisfaction rating. In addition, Turnage and Muchinsky
(1976) also argued that the effects of intrinsic and extrinsic motivation were not
additive but rather interactive in determining decisions made by college students for
monetary rewards. However, recent meta-analysis has shown that intrinsic and
extrinsic motivations are complementary rather than antagonistic, with intrinsic
motivation more predictive to quality and extrinsic motivation more predictive to
quantity aspects of performance (Cerasoli et al., 2014).
The PFP scheme, as a typical external incentive, plays an important role in
improving employees’ productivity and job performance. A number of research studies
have examined the effects of intrinsic and extrinsic motivations on employee outcomes,
mainly finding the positive effects. For example, Porter and Lawler (1968) found the
additive impacts of intrinsic and extrinsic motivation on actions with the assumption
that the effects of these two variables are independent. Similarly, Eisenberger et al.
(1999) suggested that PFP increased perceived autonomy and intrinsic motivation
among college students.
These studies have drawn our attention to testing the moderating effect of intrinsic
motivation on the relationships of PFP perception and pay level satisfaction with work
attitudes and extra-role behaviors. We argue that employees with higher intrinsic
motivation are more likely to be motivated by the implementation of the PFP scheme and
thus enhance the relationships of PFP perception and pay level satisfaction with work
attitudes and extra-role behaviors.
H2a. Intrinsic motivation moderates the relationship between PFP perception and work
outcomes (job satisfaction, affective commitment, discretionary effort, interpersonal
helping and turnover intention) such that the relationship is stronger among
employees with higher intrinsic motivation.
 H2b. Intrinsic motivation moderates the relationship between pay level satisfaction and Investigation
work outcomes (job satisfaction, affective commitment, discretionary effort, of moderating
interpersonal helping and turnover intention) such that the relationship is stronger
among employees with higher intrinsic motivation.
effects
In the sections below, we explore the moderating effects of LMX and POS that capture
employees’ relationships with leaders and organizations, respectively. In the literature,
social exchange theory (Blau, 1964) has been extensively used to explain employment 99
relationship. The exchange between employees and organizations includes both social and
economic exchanges. According to Blau (1999), the PFP scheme captures a kind of economic
exchange which would enhance employees’ in-role behavior. However, social exchanges are
more complicated than economic exchanges. Indeed, employee–organization relationship
may go beyond short-term economic exchanges and evolves into social exchanges which
would inspire employees to exert extra efforts into their work and cultivate mutual trust on
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which employees and organizations share a series of values and goals. With implementation
of PFP schemes in circumstances of mutual trust and support, the relationships between
workers and the organization contain long-term social exchanges rather than only economic
exchanges. At this time, employees realize that improving their performance and helping
others are very helpful for organizational performance in the long run, and their behaviors
would be rewarded as a result. As such, the PFP scheme will be more likely to motivate
employees in high-level social exchange relationships.
There are two types of social exchange relationships between employees and
organizations: social exchanges between employees and organizations and social exchanges
between employees and their leaders (or supervisors). POS captures the former and LMX
represents the latter (Graen and Scandura, 1987). The more support employees perceive
from their organizations and the stronger the exchange relationships they share with their
leaders, the stronger the social exchange relationship. Although a number of studies have
shown the contribution of POS and LMX to job performance and organizational citizenship
behavior, little is known about their roles as moderators, particularly in the relationship of
PFP perception and pay level satisfaction with the work outcomes.
LMX captures the extent of reciprocal exchange relationships between leaders and their
subordinates. Such relationships indicate the vertical dyadic linkage between leaders and
team members. LMX is a function of resource sharing and information exchanging, mutual
trust and mutual support and help offering in employment relationship (Dansereau et al.,
1975). Among previous studies on LMX, Graen and Cashman (1975) indicated that
employees tend to display better performance and higher productivity when they perceived
extra supports and resources provided by leaders. Considerable research has examined the
impacts of LMX on employees’ work outcomes (Liden et al., 1997; Erdogan et al., 2006). LMX
has been shown to improve employees’ overall job performance (Gerstner and Day, 1997).
Moreover, in specific aspects, such an exchange relationship was pointed out to play vital
roles in enhancing job satisfaction and reducing employee turnover (Graen et al., 1982;
Ferris, 1985). Considering the above relationships, we expect that PFP perception and pay
level satisfaction are more likely to have a stronger impact on the work outcomes when
employees have a higher level of LMX.
H3a. LMX moderates the relationship between PFP perception and work outcomes (job
satisfaction, affective commitment, discretionary effort, interpersonal helping and
turnover intention) such that the relationship is stronger among employees with a
higher level of LMX.
 JCHRM H3b. LMX moderates the relationship between pay level satisfaction and work
8,2 outcomes (job satisfaction, affective commitment, discretionary effort,
interpersonal helping and turnover intention) such that the relationship is stronger
among employees with a higher level of LMX.
POS refers to employees’ overall perception of the extent to which their organizations view
them and care about them (Eisenberger et al., 1986). If employees perceive support from their
100 organizations that satisfies their needs, they tend to express belongingness and loyalty to
the organization and consider the gain and loss of the organization as of their own.
Therefore, POS increased employee efforts and reduced staff quit intention (Eisenberger
et al., 1986). Additional benefits of POS include positive effects on in-role behaviors
(Eisenberger et al., 1986), organizational commitment (Shore and Tetrick, 1991) and
organizational citizenship behavior (Moorman et al., 1998). Overall, employees tend to have
more positive reactions toward their work, coworkers and organizations if they feel the
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organization cares about their well-being and provides supports in the workplace (Kuvaas,
2008). We expected that POS is a situational factor which could impact the effects of the PFP
scheme on work outcomes. We propose that the PFP scheme is more likely to affect
employee work attitudes and behaviors when they perceive stronger organizational support.
H4a. POS moderates the relationship between PFP perception and work outcomes (job
satisfaction, affective commitment, discretionary effort, interpersonal helping and
turnover intention) such that the relationship is stronger among employees with a
higher level of POS.
H4b. POS moderates the relationship between pay level satisfaction and work outcomes
(job satisfaction, affective commitment, discretionary effort, interpersonal helping
and turnover intention) such that the relationship is stronger among employees
with a higher level of POS.

Methods
Sample
We conducted the study at a Chinese private-owned company in the beauty industry in June
2011. The company, which is headquartered in a coastal city of Guangdong Province, owns
a plastic surgery hospital, beauty chain stores and a beauty school. The company has more
than 20 years of history and high reputation and market position in the beauty industry and
has introduced the PFP scheme for several years. During these years, its business expanded
but some problems associated with pay also came out. For example, the bonus workers
received did not represent their actual performance, and some frontline employees felt
unsatisfied because the base pay did not meet their expectation. As such, this company
represents a suitable setting for understanding the impact of the PFP scheme on employee
work attitudes and behaviors and the potential moderating roles of the contingent factors
that reflect employees’ motivational basis and exchange relationships with both leaders and
organizations.
We conducted a survey with the frontline employees in each office, asking information
about their perceptions and attitudes toward the PFP scheme implemented in the company,
work attitudes and performance, individual characteristics and their perceptions of group
and organizational characteristics. A total of 223 employees from 11 departments completed
the survey, with valid responses from 222 employees, which were included in our analyses.
About 75 per cent of the participants were female (consistent with industry characteristics)
and their average organizational tenure was 29.3 months. About 68 per cent of the
 respondents were in their 20s to 30s, and 85 per cent had the education level of junior college Investigation
and below. of moderating
Participants completed self-report surveys in Chinese, their native language. Using
published multi-item measures with known psychometric properties, we followed
effects
established procedures for translation and back-translation of measures and items (Brislin,
1970). Unless otherwise specified, response options ranged from 1 (strongly disagree) to 5
(strongly agree).
101
Measures – independent variables
PFP perception. PFP perception (a = 0.72) was measured by a five-item scale used in
previous studies (Heneman et al., 1988; Pearce and Perry, 1983). Example items include: “My
pay in next pay period will depend on how well I’ve performed” and “The best performers
make the most money in this company”.
Pay level satisfaction. Pay level satisfaction (a = 0.92) was measured by a five-item scale
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which was part of the Pay Satisfaction Questionnaire developed by Heneman and Schwab
(1985). Example items include: “Considering my skills and efforts I put, my pay is
reasonable” and “In view of my responsibilities, my pay is reasonable”.
Intrinsic motivation. Intrinsic motivation (a = 0.95) was assessed by a four-item scale
(Cameron and Pierce, 1994; Kuvaas, 2006). Example items include: “My job is so interesting
itself” and “The tasks that I do at work are enjoyable”.
Leader–Member exchange. LMX (a = 0.90) was measured by a 12-item scale (Liden and
Maslyn, 1998). An example item was “I like my manager very much as a person”.
Perceived organizational support. POS (a = 0.78) was assessed with a nine-item scale
adapted from Eisenberger et al. (1990). Sample items include: “My organization really cares
about my well-being” and “My organization cares about my general satisfaction at work”.

Measures – dependent variables

Job satisfaction. Job satisfaction (a = 0.72) was measured by Cammann et al.’s (1983) three-
item scale, including: “In general, I like working here”, “All in all, I am satisfied with my job”
and “In general, I don’t like my job”.
Intention to quit. Turnover intention (a = 0.90) was measured by Meyer et al.’s (1993)
three-item scale, including: “I frequently think of leaving this company”, “I would explore
jobs in other companies next 12 months” and “I would leave this company within 12
months”.
Affective commitment. Affective commitment (a = 0.71) was measured by Meyer et al.’s
(1993) six-item scale. Example items include: “I would be very happy to spend the rest of my
career with this organization” and “I do not feel a strong sense of belonging to my
organization”.
Discretionary effort. Discretionary effort is a multidimensional construct (Brown and
Leigh, 1996; Morrison and Phelps, 1999). In the present study, in conjunction with practical
knowledge and feasibility, discretionary effort (a = 0.72) was measured by a three-item
scale, including: “I always put more effort beyond what is required into my job”, “I always
put less effort than required into my job” and “If my colleague violate the regulation of
company, I would report it to the company”.
Interpersonal helping. Interpersonal helping (a = 0.88) was measured by a six-item scale
adapted from Van Dyne and LePine (1998). Example items include: “Help orient new
employees in this group” and “Assist others in this group with their work for the benefit of
the group”.
 JCHRM Control variables
8,2 Demographic variables such as sex, age, education, position and organizational tenure
may influence job satisfaction, commitment and contextual performance (Podsakoff
et al., 2000; Van der Vegt and Janssen, 2003). As such, we controlled these variables in
the study. Sex was dummy-coded as 0 for “male” and 1 for “female”. Age had five
categories: 20 or under, 21-30, 31-40, 41-50 and over 50. Education had five categories,
102 ranging from low to high (1 = technical secondary school and below, 2 = junior college,
3 = undergraduate, 4 = graduate, 5 = PhD and above). Position had three levels,
ranging from low to high (1 = frontline staff, 2 = middle level manager, 3 = senior
manager). Organizational tenure was measured in months.

Analysis
We used established hierarchical regression procedures to test our hypotheses concerning
the main effects of PFP perception and pay level satisfaction on the work outcomes, as well
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as the moderating effects of intrinsic motivation, LMX and POS on the main effects. All
variables were mean-centered before interaction terms were calculated.

Results
We present descriptive statistics for and correlations among the variables in Table I,
followed by hierarchical regression results that pertain to hypothesis tests in Table II.

Main-effect relationships
H1a proposed that PFP perception is positively related to job satisfaction, affective
commitment, discretionary effort and interpersonal helping but negatively related to
turnover intention. The results in Table II (Model 2) show that PFP perception has a
significant and positive influence on job satisfaction ( b = 0.33, p < 0.001), affective
commitment ( b = 0.23, p < 0.01), discretionary effort ( b = 0.23, p < 0.01) and interpersonal
helping ( b = 0.24, p < 0.01). However, its relationship with turnover intention is not
significant ( b = 0.10, n.s.). Thus, H1a is supported for most work outcomes examined,
except turnover intention.
H1b proposed that pay level satisfaction is positively related to job satisfaction, affective
commitment, discretionary effort and interpersonal helping but negatively related to
turnover intention. The results in Table II (Model 2) show that pay level satisfaction has a
significant and positive influence on job satisfaction ( b = 0.20, p < 0.01), discretionary effort
( b = 0.18, p < 0.05) and interpersonal helping ( b = 0.19, p < 0.05). It has a marginally
significant relationship with affective commitment ( b = 0.13, p < 0.10) but a nonsignificant
relationship with turnover intention ( b = 0.03, n.s.). Thus, H1b is supported for job
satisfaction, discretionary effort and interpersonal helping.

Moderating effects
First, for intrinsic motivation, H2a proposed its moderating role in H1a about PFP perception.
The results in Table II (Model 4) show the interaction of PFP perception and intrinsic
motivation is not significant in relating to job satisfaction (b = 0.03, n.s.), turnover intention
( b = 0.11, n.s.), affective commitment (b = 0.03, n.s.), discretionary effort 9 b = 0.05, n.s.) or
interpersonal helping (b = 0.01, n.s.). Thus, H2a is not supported at all.
H2b proposed the moderating role of intrinsic motivation in H1b about pay level
satisfaction. The results in Table II (Model 4) show the interaction of pay level satisfaction
and intrinsic motivation has a significant effect on job satisfaction ( b = 0.23, p < 0.01) and
 Downloaded by Professor Ting Ren At 17:33 24 November 2017 (PT)

Variables Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13

1. Sex 0.75 0.44

2. Age 2.21 0.54 0.12
3. Education 1.65 0.75 0.18** 0.15*
4. Tenure 29.18 27.49 0.25** 0.32** 0.21**
5. Position 1.46 0.57 0.02 0.37** 0.02 0.49**
6. Pay-for-performance perception 3.78 0.62 0.03 0.21** 0.17* 0.15* 0.10
7. Pay level satisfaction 3.54 0.84 0.15* 0.02 0.30** 0.10 0.06 0.38**
8. Intrinsic motivation 4.19 0.75 0.10 0.08 0.28** 0.18* 0.19** 0.31** 0.45**
9. Leader–member exchange 4.07 0.61 0.12 0.21** 0.06 0.01 0.09 0.32** 0.37** 0.53**
10. Perceived organizational support 3.44 0.52 0.04 0.06 0.15* 0.01 0.04 0.41** 0.59** 0.44** 0.48**
11. Job satisfaction 3.49 0.53 0.01 0.17* 0.12 0.10 0.08 0.41** 0.32** 0.24** 0.28** 0.55**
12. Affective commitment 3.26 0.65 0.01 0.11 0.10 0.04 0.01 0.30** 0.28** 0.22** 0.22** 0.41** 0.36**
13. Intent to quit 2.18 1.02 0.02 0.20** 0.13* 0.11 0.16* 0.15* 0.11 0.10 0.05** 0.32** 0.25** 0.32**
14. Interpersonal helping 4.46 0.50 0.12 0.08 0.11 0.16* 0.17* 0.28** 0.30** 0.63** 0.50** 0.28** 0.20** 0.17** 0.08
15. Discretionary effort 3.54 0.64 0.24** 0.24** 0.18** 0.10 0.05 0.35** 0.31** 0.38** 0.39** 0.41** 0.48** 0.30** 0.21**

Notes: *p < 0.05; **p < 0.01; two-tailed tests

Descriptive statistics
effects

103
of moderating
Investigation

and correlations
Table I.
 Downloaded by Professor Ting Ren At 17:33 24 November 2017 (PT)

8,2

104

Table II.
Results of
JCHRM

hierarchical

work outcomes
regression models of
Job satisfaction Intent to quit Affective commitment Discretionary effort Interpersonal helping
Variables Model 1 Model 2 Model 3 Model 4 Model 1 Model 2 Model 3 Model 4 Model 1 Model 2 Model 3 Model 4 Model 1 Model 2 Model 3 Model 4 Model 1 Model 2 Model 3 Model 4

Controls
Sex 0.01 0.05 0.03 0.07 0.11 0.12 0.10 0.10 0.03 0.06 0.05 0.03 0.19* 0.16* 0.17* 0.14* 0.06 0.02 0.02 0.01
Age 0.01 0.00 0.03 0.04 0.07 0.06 0.13 0.15 0.03 0.02 0.03 0.03 0.21** 0.21** 0.19** 0.21** 0.15† 0.15 0.06 0.05
Education 0.19* 0.06 0.05 0.01 0.11 0.08 0.12 0.18 0.09 0.01 0.02 0.06 0.13† 0.02 0.02 0.02 0.04 0.07 0.10 0.10
Tenure 0.15 0.07 0.05 0.05 0.05 0.03 0.02 0.03 0.03 0.08 0.09 0.10 0.03 0.09 0.09 0.09 0.07 0.14 0.07 0.07
Position 0.00 0.02 0.06 0.06 0.12 0.12 0.08 0.05 0.01 0.02 0.02 0.03 0.10 0.09 0.05 0.06 0.22** 0.20* 0.13† 0.12†

Main effects
Pay-for-performance
perception (PFPP) 0.33*** 0.25** 0.24** 0.10 0.07 0.12 0.23** 0.16* 0.21* 0.23** 0.13† 0.14 0.24** 0.13* 0.14*
Pay level
satisfaction (PLS) 0.20** 0.03 0.07 0.03 0.03 0.07 0.13† 0.00 0.03 0.18* 0.01 0.01 0.19* 0.01 0.00
Intrinsic motivation
(IM) 0.04 0.17† 0.32** 0.42 0.03 0.12 0.11 0.17 0.48*** 0.51***
Leader–member
exchange (LMX) 0.05 0.11 0.03 0.00 0.08 0.12 0.10 0.07 0.26*** 0.25**
Perceived
organizational
support (POS) 0.36*** 0.30** 0.33*** 0.34 0.23* 0.21* 0.23** 0.19* 0.07 0.11

Two-way interactions
PFPP  IM 0.03 0.11 0.03 0.05 0.01
PLS  IM 0.23** 0.16† 0.15 0.11 0.07
PFPP  LMX 0.06 0.21* 0.06 0.02 0.04
PLS  LMX 0.14 0.10 0.25* 0.01 0.13†
PFPP  POS 0.15† 0.24** 0.11 0.10 0.01
PLS  POS 0.10 0.10 0.02 0.01 0.04
F 1.98* 8.12*** 8.12*** 6.10*** 2.33* 2.00† 4.01*** 3.94*** 0.44 2.84** 2.91** 2.66** 5.35*** 7.80*** 7.89*** 5.37*** 3.06* 6.21*** 17.17*** 11.66***
R2 0.05 0.23 0.30 0.35 0.06 0.07 0.18 0.26 0.01 0.10 0.14 0.19 0.12 0.22 0.30 0.32 0.07 0.19 0.48 0.51
DR2 0.18*** 0.07*** 0.05* 0.01 0.11*** 0.08** 0.09*** 0.04* 0.05* 0.10*** 0.08*** 0.02 0.12*** 0.29*** 0.03
Adjusted R2 0.02 0.20 0.27 0.29 0.03 0.04 0.13 0.19 0.01 0.06 0.09 0.12 0.10 0.20 0.26 0.26 0.05 0.16 0.45 0.46
†
Notes: p < 0.10; *p < 0.05; **p < 0.01; ***p < 0.001; two-tailed tests. Standardized coefficients are reported
 marginally significant effect on turnover intention ( b = 0.16, p < 0.10). However, this Investigation
interaction term is not related to affective commitment ( b = 0.15, n.s.), discretionary effort of moderating
( b = 0.11, n.s.) and interpersonal helping ( b = 0.07, n.s.). Further, the interaction plot
(Figure 1(a)) shows that the positive relationship between pay level satisfaction and job
effects
satisfaction is positive among employees with high intrinsic motivation but negative among
employees with low intrinsic motivation. The interaction plot (Figure 1(b)) shows that the
negative relationship between pay level satisfaction and turnover intention is significantly
negative among employees with high intrinsic motivation but nonsignificant among 105
employees with low intrinsic motivation. Thus, H2b is supported for job satisfaction and
turnover intention.
Second, for LMX, H3a proposed its moderating role in H1a concerning PFP perception. The
results in Table II (Model 4) show the interaction of PFP perception and LMX is significantly
related to turnover intention (b = 0.20, p < 0.05) but not to the remaining work attitudes and
behaviors. The interaction plot (Figure 2(a)) shows that the relationship between PFP
Downloaded by Professor Ting Ren At 17:33 24 November 2017 (PT)

perception and turnover intention is negative among employees with high LMX but positive
among employees with low LMX. Thus, H3a is supported for turnover intention.
H3b proposed the moderating role of LXM in H1b concerning pay level satisfaction. The
results in Table II (Model 4) show the interaction of pay level satisfaction and LMX is
significantly related to affective commitment ( b = 0.25, p < 0.05) and has a marginally
significant relationship with interpersonal helping ( b = 0.13, p < 0.10). However, this
interaction term does not relate to the remaining work outcomes. The interaction plot
(Figure 2(b)) shows that the relationship of pay level satisfaction with affective commitment
is positive among employees with high LMX but negative among employees with low LMX.
Similarly, the interaction plot (Figure 2(c)) shows that the relationship of pay level

4.0
3.8
3.6
Job Satisfaction

3.4 Low Intrinsic

Motivation
3.2 High Intrinsic
3.0 Motivation

2.8
2.6
Low High
Pay Level Satisfaction
(a)
Figure 1.
(a) Two-way
3.0
interaction of pay
2.8
level satisfaction and
2.6
intrinsic motivation
Intent to Quit

2.4
Low Intrinsic in relation to job
2.2 Motivation satisfaction and
2.0 High Intrinsic
Motivation
(b) two-way
1.8 interaction of pay
1.6 level satisfaction and
1.4 intrinsic motivation
Low High
Pay Level Satisfaction
in relation to turnover
intention
(b)
 JCHRM 3.0
8,2 2.8
2.6

Intent to Quit
2.4 Low LMX
2.2 High LMX

2.0
106
1.8
1.6
Low High
Pay-For-Performance Perception
(a)

4.0
Downloaded by Professor Ting Ren At 17:33 24 November 2017 (PT)

3.8
Affective Commitment

3.6
3.4 Low LMX
3.2 High LMX
3.0
2.8
2.6
Figure 2. Low High
(a) Two-way Pay Level Satisfaction
interaction of pay-for- (b)
performance
perception and LMX 5.0
in relation to turnover
intention; (b) two-way 4.8
Interpersonal Helping

interaction of pay
4.6 Low LMX
level satisfaction and
LMX in relation to High LMX
affective 4.4
commitment; and
(c) two-way 4.2
interaction of pay
4.0
level satisfaction and Low High
LMX in relation to
Pay Level Satisfaction
interpersonal helping
(c)

satisfaction with interpersonal helping is positive among employees with high LMX but
negative among employees with low LMX. Thus, H3b is supported for affective
commitment and interpersonal helping.
Third, for POS, H4a proposed its moderating role in H1a regarding PFP perception. The
results in Table II (Model 4) show the interaction of PFP perception and POS has a
significant relationship with turnover intention ( b = 0.24, p < 0.01) and a marginally
significant relationship with job satisfaction ( b = 0.15, p < 0.10). However, this interaction
term is not related to the remaining work outcomes. The interaction plot (Figure 3(a)) shows
that the positive relationship of PFP perception with job satisfaction is stronger among
 4.0 Investigation
3.8 of moderating
3.6
effects
Job Satisfaction
3.4
3.2
Low POS
3.0
High POS
2.8 107
2.6
2.4
Low High
Pay-For-Performance Perception
(a)

3.0 Figure 3.
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(a) Two-way
2.8
interaction of pay-for-
2.6 performance
Intent to Quit

2.4 perception and POS

Low POS
in relation to job
2.2
satisfaction and
2.0 High POS
(b) two-way
1.8 interaction of pay-for-
performance
1.6
Low High perception and POS
Pay-For-Performance Perception in relation to turnover
intention
(b)

employees with high POS. In contrast to our prediction, the interaction plot (Figure 3(b))
shows that the relationship of PFP perception with turnover intention is negative among
employees with low POS but positive among employees with high POS. Thus, H3a is
supported only for job satisfaction but not for turnover intention.
H3b proposed the moderating role of POS in H1b about pay level satisfaction. The
results in Table II (Model 4) show that the interaction of pay level satisfaction and POS is not
related to any of the work outcomes examined. H3b is not supported.

Discussions
Theoretical contributions
This paper echoes the call for research on employees’ interpretation of HRM practices on the
effectiveness of the HRM system (Bowen and Ostroff, 2004; Kehoe and Wright, 2013), and
compensation and pay in particular (Gupta and Shaw, 2014; Shaw, 2014). Our findings
contribute to the scholarship on the PFP scheme in two ways.
First, our findings show that PFP perception and pay level satisfaction are important for
understanding employee work attitudes and extra-role behaviors. These findings provide
further support for previous studies that have shown that the implementation of the PFP
scheme is effective in enhancing employees’ positive work attitudes and behaviors but
reducing their withdrawal intentions. In particular, by showing the positive impacts of PFP
perception and pay level satisfaction on discretionary effort and interpersonal helping, our
findings extend the previous literature that has mixed findings regarding the influences of
 JCHRM PFP perception and pay level satisfaction on organizational citizenship behaviors. As we
8,2 described earlier, studies on impacts of PFP scheme on organizational citizenship behaviors
failed to reach a consensus. Our findings in this study suggest that the implementation of
the PFP scheme is conducive to employees’ engagement in extra-role behaviors such as
making discretionary efforts and performing interpersonal helping to coworkers.
Second, our investigation of the moderating roles that intrinsic motivation, LMX and
108 POS play in the relationships of PFP perception and pay level satisfaction with the work
outcomes provides evidence to the limited understanding about the conditions that may
strengthen or weaken the effectiveness of PFP schemes (Shaw, 2014). Our findings show
that conditional factors such as individual motivational basis and their exchange
relationships with leaders and organizations play an important role in influencing the
relationship of pay-related variables and work outcomes. Thus, more research attention
should be paid to understanding individual and situational factors for a better insight into
the effectiveness of PFP schemes.
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Practical implications
The findings of our study also have some practical implications for organizations
concerning their effective implementation of PFP schemes. Our findings about the
moderating roles that three situational factors play in strengthening the relationships of
PFP perception and pay level satisfaction with the work outcomes suggest that
organizations and managers should take serious concern with the understanding of the
situational conditions – both individual and organizational – that may enhance or hinder the
effective implementation of PFP schemes. That is, PFP schemes cannot be seen as an
isolated activity within compensation and benefits management. Instead, managers should
support the PFP schemes in the organization by creating environments that inspire intrinsic
motivation, establish effective exchange relationships with employees and provide potent
organizational support to employees.
Specifically, given that intrinsic motivation is often driven by an interest or enjoyment in
the work itself, increasing employees’ intrinsic motivation through job design may be a good
way to develop the motivation sources for the effectiveness of the PFP scheme. It is also
important for leaders and managers, who act as representatives and spokespersons of
organizations, to understand employees’ confusions, difficulties and expectations in their
organizational life and provide support that employees need for development. Furthermore,
managers should try to increase POS by implementing management practices, policies and
work processes that send signals to employees that organizations care about their needs and
expectations and view their efforts and contributions. Cultivating a high-quality LMX
relationship and increasing employees’ perception of organizational support consolidate the
ground for the effective implementation of PFP schemes.

Limitations and directions for future research

The present paper has several limitations that should be considered and improved in future
research. First, we relied on self-report measures that may evoke concerns about common
method bias, although researchers commonly use such measures to assess employees’
perceptions and attitudes toward the implementation of PFP schemes as well as attitudes
toward their works. Also, common method provides no viable explanation for significant
higher-order interactions such as those that are consistent with theory (Evans, 1985), such as
the significant two-way interactions in our study. Nonetheless, we encouraged future studies
to obtain data from both employees about their perceptions and attitudes and supervisors or
coworkers about their behaviors such as extra efforts and interpersonal helpings. Second,
 the cross-sectional nature of our design limits the capacity to draw conclusions about the Investigation
causality of the relationships of PFP perception and pay level satisfaction with employee of moderating
work attitudes and extra-role behaviors. Future research with multi-wave data collection is
needed for testing the causality. Third, the results of our study are based on a privately
effects
owned company in the beauty industry, which may limit the generalization of our findings
to organizations in other industries and with a different ownership structure. We encourage
future research to test the hypotheses in other organizational settings.
109
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Further reading
Borman, W.C. and Motowidlo, S.J. (1997), “Task performance and contextual performance: the meaning
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organizational performance: a review and suggestion for future research”, Human Performance,
Vol. 10 No. 2, pp. 133-151.
Tett, R.P. and Meyer, J.P. (1993), “Job satisfaction, organizational commitment, turnover intention, and
turnover: path analyses based on meta-analytic findings”, Personnel Psychology, Vol. 46 No. 2,
pp. 259-293.

Corresponding author
Ting Ren can be contacted at: renting@phbs.pku.edu.cn

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