The performance effects of pay dispersion on individuals and organizations

Pay distribution research is relatively scarce in the compensation literatu re, yet pay distributions are viewed as critically important by organizatio nal decision makers. This study is a direct test of the relationship betwee n one form of pay distribution-pay dispersion-and performance conducted in a field setting where individual and organizational performance could be re liably observed and measured. Findings suggest more compressed pay dispersi ons are positively related to multiple measures of individual and organizat ional performance.