Affective reactions to a pay system reform and their impact on employee behaviour

Abstract

Consistent with some of the central tenets of Affective Events Theory, we argue in this study that viewing the introduction of a new pay system as an affective event can help to explain employee attitudes and behaviours. This study examines the impact of employees' initial affective reactions to a pay system reform on subsequent behaviours. The data were collected across 2 years in a context where a new pay system was implemented. We were able to match affective responses at the beginning of the reform with behavioural responses at the end of the reform and turnover data (N = 267–495). Positive affective reactions predicted higher levels of voice and, through organizational commitment, lower levels of turnover. Negative affective reactions predicted higher levels of voice and helping behaviours. These results shed light on how affective reactions can influence employee behaviours and attitudes following an important work event, such as the introduction of a new compensation system. The implications for theory and practice are discussed.Practitioner Points The results of the study suggest that the implementation of a new pay system can induce long‐lasting emotional responses which have implications for employee attitudes and behaviour. For example, positive affective reactions were associated with lower levels of turnover. As both positive and negative affective reactions were associated with expressing more voice, organizations may think about increasing the opportunity for employees to express their voice (e.g., having extra opportunities to talk with a manager or allowing for anonymous feedback) following the introduction of a pay system.