Compensation satisfaction in the Baltics and the USA

Abstract

PurposeThis study aims to examine the extent to which the demographic and work‐related variables of educational level, gender, age, salary level, organizational tenure, and union membership are useful predictors of satisfaction with pay level, benefits, raises, and the structure/administration of a compensation system. These variables have previously been utilized in the prediction of satisfaction with pay levels, but have not been tested as useful predictors of the other three dimensions of compensation satisfaction.Design/methodology/approachThis study used multiple regression analyses and samples of 423 employees in the USA with a 63 percent response rate and 519 employees in the Baltics with a 73 percent response rate.FindingsIt was found that not all of the variables are equally useful predictors of each of the four dimensions of compensation satisfaction and that differential prediction is occurring among the four dimensions and across the two world regions. Surprisingly, it was found that in seven of the eight analyses the strongest predictor of satisfaction with the four dimensions of compensation satisfaction is job tenure, while actual compensation level, which was expected to be the strongest predictor, was found to be quite weak.Research limitations/implicationsA major weakness is that all of the data were self‐reported. Ideally the demographic and work‐related variables would have been collected directly from the organization in addition to being collected from employees. A second limitation is that the characteristics of the present sample may limit the generalizability of the results. An inordinate number of the subjects were unionized, female, and married. The major implication is that the paper supports the differential prediction for various dimensions of compensation satisfaction and for the need to explore for additional variables that can account for significant proportions of the variance in these dimensions.Originality/valueThe paper is the first of its kind to examine in a single or cross‐cultural setting the relationship between common demographic and work‐related factors and compensation satisfaction while controlling for organizational level. The literature review traverses the research in the area stretching from the 1940s to 2005 and makes specific suggestions for future research that could advance the field.