Because I'm worth it? Understanding inequality in a performance-based pay system

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Abstract

How do workers understand pay inequality? Every organizational field has a taken-for-granted compensation system that shapes understandings of rewards. Using data from 76 Wall Street professionals, I analyze how individuals interpret, understand, and justify inequality in a performance-based reward system where pay is supposed to be based on merit. A majority of securities workers believed that the performance-based pay system produced equitable rewards. But a substantial minority challenged the procedural and/or distributive justice of this pay system, producing counterinstitutional accounts. These accounts took three general forms: accounts of arbitrariness, accounts of misinformation, and accounts of discrimination. All of these counterinstitutional accounts pointed to nonmerit influences on bonuses. I argue that these challenges might undermine the legitimacy of the pay system, but most men and women who challenged the system exited their firms or the industry, so that their challenges did little to destabilize Wall Street's pay practices. Wall Street appears to maintain its legitimacy in part through the self-selection of dissenters out of the system.

Original languageEnglish (US)
Pages (from-to)116-139
Number of pages24
JournalSociological Inquiry
Volume76
Issue number1
DOIs
StatePublished - Feb 2006

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performance
reward
legitimacy
worker
distributive justice
discrimination
minority
firm
industry

ASJC Scopus subject areas

  • Sociology and Political Science

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Because I'm worth it? Understanding inequality in a performance-based pay system. / Roth, Louise M.

In: Sociological Inquiry, Vol. 76, No. 1, 02.2006, p. 116-139.

Research output: Contribution to journalArticle

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