Fair pay dispersion: A regulatory focus theory view

- Employees' regulatory focus is an important contingent factor determining the fairness of pay dispersion.
- When employees are strongly promotion focused, they tend to perceive large pay dispersion as fair.
- When employees are strongly prevention focused, they tend to perceive compressed pay dispersion as fair.
- Supportive evidence is found in two multilevel field datasets from South Korea and Taiwan.

The authors propose that the debate on the fairness of large pay dispersion can be advanced by considering people's regulatory focus. While some argue that pay dispersion is fair only when it reflects individual contribution differences, others argue that large pay dispersion is fair as employees perceive others' high pay as a signal of their own future pay. Invoking the view of regulatory focus theory, the authors suggest that pay dispersion increases pay fairness perception when employees have a strong promotion focus, whereas pay dispersion decreases fairness perception when employees have a strong prevention focus. Using two multilevel field studies-Study 1 with 827 employees in 137 teams at 42 organizations in South Korea and Study 2 with 186 employees in 46 teams at 5 high-technology organizations in Taiwan-the authors present supportive evidence of the promotion focus moderation effect. Evidence of the prevention focus moderation effect is not found.