A Global Study of Pay Preferences and Employee Characteristics

Abstract

Companies are managing more diverse work forces, and pay systems must be designed to attract, retain and motivate employees who may have very different pay preferences from employees of even a decade ago. This study examines how employee characteristics (i.e., gender, age, education, work experience, annual pay and number of dependents) are related to pay preferences. We found that older respondents with more education and more dependents had a stronger preference for variable pay than did respondents who were younger, less educated and had fewer dependents. Older respondents and those with higher pay preferred less pay transparency than did younger and lower paid respondents. Pay differences based on capability were preferred by better educated employees. When controlling for the other demographic characteristic, we found significant differences among nationalities for all four measures of pay preferences, that is, pay differences, pay variability, bonus plans and pay transparency.