Salary comparison: Internal and External (In)Congruence, Distributive Justice, and Employee Withdrawal

Abstract

Relative salary compared with similar others (i.e. horizontally) has well-established implications for employee attitudes and behaviors at work. Yet, how employees process information on comparisons, such as when internal and external comparison information is incongruent, remains controversial. In this paper we integrate the model of dispositional attribution and equity theory to derive predictions on how congruence and incongruence of internal and external salary comparisons affect perceptions of distributive justice and subsequent employee withdrawal behavior. We hypothesize that the effect of salary comparisons on perceived distributive justice follows a hierarchically restrictive schema where lower salary in comparison is more impactful on justice perceptions than higher salary in comparison. And this effect would further affects employee withdrawal. Two studies were conducted to test our hypotheses: a quasi-experimental study (n = 127) and a time-lagged survey (n = 252). Consistent with our framework, we found that internal and external salary comparisons were positively related to perceived distributive justice, and that when comparison information was incongruent, disadvantaged information more strongly impacted perceived distributive justice than advantaged information. Moreover, this impact on distributive justice negatively related to employee withdrawal. Theoretical and practical implications of these findings are discussed.