Job satisfaction is without doubt one of the most studied outcomes in organizational research (Spector, 1997). One of the reasons is probably its intuitive link with a wide range of important employee behaviors such as turnover, absenteeism, and performance (Schleicher, Hansen, & Fox, 2010). Therefore, the research on job satisfaction is widespread.
Traditionally, job rewards are considered a major determinant of job satisfaction. For example, according to the equity model of Adams (1965) people compare their input/output ratio – which reflects the rewards they receive in return for the work they perform – to that of a comparison person to determine whether they feel satisfied in their job. Similarly, in the discrepancy model of Porter and Lawler (1968) people's job satisfaction is determined by a comparison of their current job conditions (including the rewards they receive) to their ideal job. Apart from its role in theories on job satisfaction, the centrality of job rewards is also obvious when screening instruments that are utilized to measure job satisfaction. In particular, the two most important instruments, the Job Descriptive Index (JDI) and the Minnesota Satisfaction Questionnaire (MSQ) both include a subscale referring to satisfaction with job rewards (see Schleicher et al., 2010).
From the above, one would conclude that job rewards are indispensable for job satisfaction. However, important theories on job satisfaction conjecture that job rewards do not (always) affect job satisfaction. In particular, Herzberg's (1959) two-factor theory conceptualizes pay as a hygiene factor rather than a satisfier. Hence, it is predicted that satisfaction with pay does not affect job satisfaction. A similar conclusion can be drawn from self-determination theory (Deci and Ryan, 1985 and Deci and Ryan, 2002), which posits that satisfaction results from intrinsic motivation, and that intrinsic motivation is not or even negatively influenced by extrinsic rewards (for example by providing financial rewards Gagné & Forest, 2008).
In sum, conflicting views on the role of job rewards in relation to job satisfaction exist. In the present study, we argue that both views should not exclude one another. Rather, depending on the individual under consideration, the one or the other may apply. In other words, we suggest that there are individual differences in the link between job rewards and job satisfaction in that for some people extrinsic rewards do indeed relate to satisfaction, whereas for other people this is not the case. In what follows, we will elaborate on this point. First we distinguish between two categories of job rewards; second we argue why individual differences in the relationship between rewards and job satisfaction are expected on the basis of existing work on work values, and finally we argue that these individual differences relate to other job-outcomes as well.
1.1. Categories of job rewards
Rewards are key components of the exchange relationship between employee and employer (Armstrong, 2010, Cropanzano and Mitchell, 2005 and White and Drucker, 2000). Hence, rewards are used as a tool to guide behavior and performance in an attempt to attract and retain the best-qualified employees and keep them satisfied and motivated (Bellenger et al., 1984, Bratton and Gold, 2003 and Rynes et al., 2004). Because of this reason, the research and theorizing on rewards is widespread and has a long history (e.g., Currall et al., 2005, Heneman and Judge, 2000 and Williams et al., 2008).
At the same time, the stream of research on rewards is heavily dominated by studies on the impact of financial rewards (often referred to as ‘pay’). This is somewhat surprising given that almost all major motivation and satisfaction theories explicitly stress the importance of alternative types of rewards (e.g., Adams, 1965, Deci and Ryan, 1985, Deci and Ryan, 2002, Herzberg, 1959 and Porter and Lawler, 1968). In line with these theories, the total reward management movement has recently conceptualized rewards as any valued outcome an employee receives from the employer in exchange for the employee's effort and contribution (Henderson, 2003). Total reward management hereby acknowledges that it is important to provide the appropriate financial rewards, but stresses the necessity to complement these with other reward types (Armstrong, 2010). To date, there are several total reward categorizations available (e.g., Christofferson and King, 2006, Milkovich and Newman, 2005 and Zingheim and Schuster, 2000), but the underlying categorization principle appears to be quite similar. In this study, we focus on two major categories of rewards, that is, financial and psychological rewards. Because several authors have long noted that not the working conditions themselves, but rather how these are experienced and valued (Porter and Lawler, 1968 and Vroom, 1964) are more influential (Steel, 2002), we study the satisfaction with these two types of rewards, rather than the rewards themselves.
1.2. Individual differences in the link between job rewards and job satisfaction
While there are studies on the relationship between job rewards and employee behaviors and attitudes, they focus almost exclusively on general (or average) patterns. In other words, they do not take individual differences in this relationship into account. The few exceptions that have studied individual differences in (the perception of) job rewards have limited themselves to comparisons between a priori defined groups, such as men and women (e.g., Buchanan, 2005, Graham and Welbourne, 1999 and Keaveny and Inderrieden, 2000), people from different cultures (e.g., Fong & Shaffer, 2003), with different educational levels (Klein & Maher, 1966) or from different age groups (Clark, Oswald, & Warr, 1996). Consequently, our understanding of individual differences in the link between reward satisfaction and job satisfaction is limited at best.
At the same time, traditional theories on job satisfaction and motivation do not agree on the role of various categories of rewards. In particular, for equity theory (Adams, 1965) and the discrepancy model of Porter and Lawler (1968) both financial and psychological rewards are expected to relate to job satisfaction, whereas Herzberg's (1959) two-factor theory and self-determination theory (Deci and Ryan, 1985 and Deci and Ryan, 2002) state that financial rewards do not satisfy people. We believe that this theoretical disagreement does not imply that one theoretical proposition has to be rejected in favor of the other. Rather, we believe that different theories may hold for different individuals. Therefore, we expect that financial reward satisfaction relates to job satisfaction for only a subset of employees (as there is disagreement as to the impact of this type of reward), whereas the relationship between psychological reward satisfaction and job satisfaction holds for every employee. In other words, we hypothesize that two person types exist, for the first person type both financial and psychological reward satisfaction relate to job satisfaction, whereas for person type two only psychological reward satisfaction does.
1.3. Work values as antecedents of individual differences in the reward satisfaction–job satisfaction relationship
The literature on work values provides us with a framework to explain why the link between reward satisfaction and job satisfaction varies from individual to individual. Values are criteria or goals that serve as guiding principles in people's life, thereby transcending specific situations (Schwartz, 1999). Work values are more specific than general values in that they refer to people's working life. As such, they can be considered general and stable goals employees want to realize through working (Nord, Brief, Atieh, & Doherty, 1988). Because work values are relatively stable across time and situations, and because they differ between individuals by definition (e.g., De Cooman et al., 2008 and Kalleberg, 1977), they affect the way in which people differentially perceive their working situation. As such, work values can be conceived as antecedents of the predicted individual difference pattern.
Whereas the literature on work values reports a wide variety of them (Zytowski, 1970), a commonly used differentiation is between intrinsic or self-actualization, extrinsic or material, and social or interpersonal work values (De Cooman et al., 2008 and Nord et al., 1988). Especially the latter two categories are relevant when studying financial and psychological rewards, and more specifically the work values financial security and recognition. In particular, for individuals who strongly value financial security, it may be logically hypothesized that financial reward satisfaction relates to job satisfaction. Otherwise, individuals who highly value recognition are expected to show a strong link between job satisfaction and psychological reward satisfaction.
1.4. Turnover intention and affective commitment as consequences of individual differences in the reward satisfaction–job satisfaction relationship
Finally, we expect individual differences in the link between job rewards and job satisfaction to relate to two important job-related employee outcomes, that is, turnover intention and affective commitment. A first reason is that it has repeatedly been shown that satisfaction with the rewards one receives affects both turnover intention and affective commitment (De Gieter et al., 2008, DeConinck and Bachmann, 2005 and DeConinck and Stilwell, 2004). Second, from a theoretical point of view, turnover intention and affective commitment are considered a consequence and correlate of job satisfaction respectively (Schleicher et al., 2010 and Williams et al., 2006). In line with this reasoning, a recent meta-analysis showed high to very high correlations between turnover intention (r = − .65) as well as affective commitment (r = .60) and job satisfaction (Schleicher et al., 2010).
Along the lines of SDT (Deci and Ryan, 1985 and Deci and Ryan, 2002), we suggest that individuals whose satisfaction is determined by satisfaction with their financial rewards are less intrinsically motivated. Therefore we expect these people to be less committed to the organization and to be more inclined to leave.
In sum, this study examines individual differences in the relationship between satisfaction with financial as well as psychological rewards on the one hand and job satisfaction on the other hand. Concerning satisfaction with financial rewards, a large body of studies has shown that people are more satisfied with their job when they experience higher pay satisfaction (see Williams et al., 2006). Moreover, it has been shown that satisfaction with psychological rewards also plays a key role in satisfying people, and is sometimes even more important than pay (De Gieter, De Cooman, Pepermans, & Jegers, 2010). However, individual differences research on the relationship between satisfaction with the two aforementioned types of rewards and job satisfaction remains missing. Therefore, the present study tests (1) the presence of individual differences in the relationship between satisfaction with financial as well as psychological rewards and job satisfaction; (2) the role of the work values financial security and recognition as antecedents of these individual differences; and (3) turnover intention and affective commitment as differential consequences of the individual differences pattern. We believe that this will provide us with a deeper, more profound insight into how satisfaction with different job rewards relates to job satisfaction.
The results of the three studies reveal that there are important individual differences in the relationship between satisfaction with financial and psychological rewards and job satisfaction, in that both reward types relate differently to job satisfaction for different person types. In line with equity theory (Adams, 1965) and the discrepancy model (Porter & Lawler, 1968), and contrary to the two-factor theory (Herzberg, 1959) and SDT (Deci and Ryan, 1985 and Deci and Ryan, 2002), we find that financial reward satisfaction relates positively to job satisfaction. However, this relationship holds for a subgroup of participants only. Otherwise, and in line with the two-factor theory (Herzberg, 1959) and SDT (Deci and Ryan, 1985 and Deci and Ryan, 2002) satisfaction with psychological rewards relates to job satisfaction for everyone. These findings suggest that there is a need for further theorizing on job satisfaction also including individual differences.
The established pattern of individual differences also associates with individual differences in work values (e.g., De Cooman et al., 2008 and Kalleberg, 1977). In particular, in one of two studies, we found that individuals for whom financial reward satisfaction relates to job satisfaction consider financial security as more important. On the other hand, no between-cluster differences were found regarding recognition, which is in line with the expectations since psychological reward satisfaction relates to job satisfaction for both person types.
Finally, our results show that the effects of the individual differences generalize beyond job satisfaction. In particular, employees for whom financial reward satisfaction relates to job satisfaction have a stronger affective commitment and a lower turnover intention. This suggests that the observed individual differences may be due to differences in the mechanisms that drive job satisfaction and related concepts such as affective commitment and turnover intention. However, as this is to our knowledge the first studies on this topic, additional process-based research is required to validate this claim.
4.1. Theoretical implications
One of the major debates regarding the definition of job satisfaction is whether it should be conceptualized at the global level or at the facet level (George and Jones, 1999 and Roznowski, 1989). According to the first approach, job satisfaction is the overall evaluation of the employee's job. Conversely, adepts of the facet level break the job down into different facets, assess satisfaction with each of them, and then integrate these different facets again into one overall concept. To date, the debate on which of both conceptualizations is superior has not yet been settled and both approaches tend to be used in research and practice depending on the preference of the researcher (Schleicher et al., 2010). However, the discussion on the conceptualization of job satisfaction is far from non-committal. In particular, both approaches are exchangeable only under very strict conditions, that is, when the facets contribute to job satisfaction in the same way for everyone. In other words, only if there are no significant individual differences in the link between satisfaction with the different facets and overall job satisfaction, both conceptualizations converge. Our results show that this crucial condition does not hold. Hence, both conceptualizations cannot simply be exchanged, and researchers should bear this in mind when choosing for one of both conceptualizations. In multifaceted scales such as the JDI and the MSQ the final job satisfaction score is always – in part – a function of satisfaction with pay. However, our results clearly show that for a specific person type pay satisfaction and job satisfaction are unrelated. Hence, their final job satisfaction score will be contaminated or biased since an unrelated facet (i.e., pay satisfaction) is included. Our results imply that it seems preferable to ask for an evaluation of the overall job satisfaction, without referring to separate facets. Then, individuals weigh the important domains themselves, which imply that only those domains that matter for job satisfaction are taken into account.
Second, this study also supports the claim of the more recent total rewards perspective emerging in both HR practice and research (Milkovich & Newman, 2005) that rewards include monetary and psychological payments. This conflicts with a lot of previous studies in which rewards were equated with satisfaction with pay or financial rewards. Our findings even go further, by showing that for some individuals not financial reward satisfaction, but rather psychological reward satisfaction has the largest effect on job satisfaction (see also De Gieter et al., 2010). Moreover, only for a subgroup of employees job satisfaction is linked to financial reward satisfaction. This result directly links up with the finding that the importance of satisfaction with pay or financial rewards varies across individuals (Kohn, 1993 and Mitchell and Mickel, 1999), and with the fact that some studies report strong nonmonetary orientations (Hansen et al., 2003 and Von Eckardstein and Brandl, 2004). In sum, these results clearly demonstrate that an operationalization of job rewards in terms of pay alone may be too constrained, and that multiple types of job rewards ought to be taken into account.
4.2. Practical implications
Provided that the role of rewards is to guide behavior and performance in an attempt to attract and retain the best-qualified employees and keep them satisfied and motivated (Armstrong, 2010, Bratton and Gold, 2003 and Rynes et al., 2004), the existence of two person types with a different job rewards satisfaction–job satisfaction relationship has important practical implications. In particular, psychological rewards such as recognition, compliments, appreciation, and encouragements are important for all employees and therefore deserve the full attention of the employer. However, this does not mean that optimizing financial reward satisfaction should be ignored, as this has still an important impact for a relevant number of employees. Anyway, the results of this study urge employers to go beyond pay, take on a total rewards perspective and think about the fit between the rewards they provide and the work values of the employee.
4.3. Limitations and future work
A first limitation of this study is that the results are empirically derived. Indeed, cluster-wise regression analysis is foremost an exploratory technique in which the different regression functions (and hence the cluster memberships) are inferred from the data. However, we have shown that the findings are stable by replicating the individual differences structure in three separate studies. Moreover, the results are logically sound, support previous research on work values, and the individual differences relate to other important work-related variables. As such, confidence can be placed on the stability and reliability of the findings.
Second, this study shows that individual differences are an empirical reality. Therefore, such differences should be taken into account when attempting to capture the mechanisms underlying the job rewards satisfaction–job satisfaction relationship. However, this study is only a first initiative in this direction and explores new foundations for extending our knowledge and theory. Therefore, further research is needed to fully grasp the mechanisms underlying these individual differences. Specifically, it would be interesting to study the impact of organizational-level variables on the individual differences structure. For example, does the organizational culture relate to differences in the reward satisfaction–job satisfaction relationship? Or, at a more micro-level, do the individual differences relate to specific job characteristics such as the level of autonomy in the job? Finally, it would be interesting to study alternative antecedents at the level of the individual as well. For example, does the observed individual differences structure relate to individual differences in personality or reward preference?
