RELATIVE IMPORTANCE OF REFERENTS ON PAY SATISFACTION - A REVIEW AND TEST OF A NEW POLICY-CAPTURING APPROACH

Two approaches for estimating the relative importance of various refer ents in affecting pay satisfaction are reviewed. The first approach us es the most frequently reported referents by the respondents as the mo st important referents. The logic of this approach is questioned becau se frequency of using a referent is different from his/her relative im portance. The second approach uses a policy-capturing method by which respondents are asked to evaluate their pay satisfaction when compared to various referents. The respondents' overall pay satisfaction is th en regressed on these evaluations. This approach may have the problem of the common method effect (i.e. the problem of common method varianc es between predictors and criterion) and the dominance effect (i.e. hi gher measurement errors for referents with narrower pay ranges). hn al ternative policy-capturing approach that minimizes these two limitatio ns is suggested. Data from a sample of 106 bank clerks show that the u se of the above three approaches can result in three different conclus ions. Because some important methodological Limitations are avoided in this new policy-capturing approach, and given the reasonable results derived from it, we conclude that this new approach should be consider ed for future research on pay referent selection.