The importance of justice perceptions on pay effectiveness: A two-year study of a skill-based pay plan

We conducted a survey across a two-year period to examine the attitudinal e ffects of skill-based pay (SBP) plans in a consumer products company in the Northeast region of the United States. We examined the relationship betwee n SEP plan characteristics and employees' evaluation of (and reactions to) the pay system; fairness perceptions were consider-ed as the explanatory me diating variable. The results demonstrate that SEP plans, which provide tra ining and are better understood and communicated, will lead to an increased general perception of fairness which, in turn, will lead to more positive evaluations of the plans a year later: implications for the relationships b etween fairness perception and pay system design are discussed (C) 1999 Els evier Science Inc. All rights reserved.