Date of Award
Master of Business Administration
Daniel W. Kemper
Jan R. Kniffen
This thesis seeks to determine if a relationship exits between income level and employee preferences for various benefits as measured against a form of wage trade- off value utilizing Maslow's theory of hierarchy of needs as a basis.
The ever increasing cost of providing benefits makes it important for organizations to formulate benefit packages that maximize their value to employees as part of the overall compensation package . Research which adds to the understanding of how benefits are valued by employees can aid in the formulation of successful and efficient compensation structures.
A limited amount of research has been conducted to date seeking predictors of benefit satisfaction or employee valuation. Many of these studies have produced limited or sometimes contradictory results.
The purpose of the current study is to determine if income can be used as a predictor of the importance level an employee places on pay to predict their tradeoff preference between pay and non-wage benefits . This study will test two hypotheses . The first hypothesis predicts that pay will rank ahead of non-wage benefits in importance to employees but that this importance level will be negatively correlated to income . The second hypothesis predicts that employees with lower household incomes will be more likely to trade benefits for increased pay in order to address unmet income needs . This should be reflected by a negative correlation between income level and the willingness to trade benefits for increased cash wages.
One hundred fifty- two employees of a suburban hospital completed a written compensation questionnaire. The questionnaire measured income level, the ability of income to meet or exceed living expenses, the respondent ' s importance ranking of compensation attributes, and the respondent ' s willingness to trade benefits for additional cash wages. Data were analyzed on a percentage basis, by a Chi squared and by a correlation coefficient review.
While pay did rank ahead of other compensation attributes, and a substantial number of respondents indicated a willingness to trade benefits for additional pay, the Chi squared test as well as the correlation coefficient analysis failed to produce evidence to support any significant relationship of these variables with income level . Thus both hypotheses were rejected with respect to t heir anticipated correlation with income level .
Hirtz, Perry G., "Correlations of Income Level and Employee Tradeoff Preference Between Wages and Fringe Benefits" (1996). Theses. 127.