Employee reactions to gainsharing under seniority pay systems: The mediating effect of distributive,procedural, and interractiotnal justice

Abstract

This study examines the effects of gainsharing under seniority-based pay systems on employee attitudes in Korea. It is hypothesized that gainsharing, which emphasizes performance, employee participation, and cooperation enhances employee perceptions of distributive, procedural, and interactional justice, and that this, in turn, produces positive employee attitudes. The participants were a sample of individuals from five firms that combined seniority-based pay and gainsharing incentives and five comparable firms that used only seniority-based pay. The results supported the partial mediation model whereby distributive and interactional justice partially mediated the effects of gainsharing on employee attitudes, but procedural justice did not. The practical implications of this international compensation research include careful consideration of the integration of gainsharing with the total rewards mix in an organization.