What satisfies younger versus older employees, and why? An aging perspective on equity theory to explain interactive effects of employee age, monetary rewards, and task contributions on job satisfaction

Abstract

AbstractIn light of increasingly age‐diverse workforces, organizations face the challenge of fostering job satisfaction among both younger and older employees. Combining equity theory with an aging perspective, we propose that due to age‐related shifts in motives and goals, younger versus older employees’ job satisfaction will depend differently on monetary rewards (outcome side of equity theory), task contributions (input side of equity theory), as well as on imbalances (inequity) in the relationship between monetary rewards and task contributions. In a multisource study with 166 managers, we found that while younger employees were satisfied primarily by monetary rewards, older employees were satisfied primarily by their task contributions. Most importantly, a three‐way interaction indicated that younger versus older employees react differently to two types of inequity: Being proportionally over‐rewarded (i.e., receiving high monetary rewards for low task contributions) reduced older (but not of younger) employees’ job satisfaction. By contrast, under‐reward inequity (i.e., receiving low monetary rewards for high task contributions) decreased younger (but not of older) employees’ job satisfaction. These age‐dependent effects of job features on job satisfaction reveal important theoretical as well as practical implications.