Impact of Subordinate Threats On Leaders' Pay Allocation Decisions

In many different context within organizations today, attempts are made by direct reports to influence the decisions of their leaders. In no context does the resulting decision hit closer to home for a direct report than those related to the allocation of pay raises. Under what conditions are attempts by direct reports to influence their leaders' pay allocation decisions most effective? Wit at effect does a threat by the subordinate have on the leader's decision? Does the severity of the threat used matter? In an attempt to answer these questions, a study was conducted of leaders' pay allocation decisions under the conditions of varying levels of dependence and varying levels of severity of threat used by a focal direct report. Results indicated support for the interactive effects between dependence and dependency threats on leaders' pay allocation decisions (i.e., leaders allocated significantly higher increases to those direct reports upon whom they were highly dependent only when the direct report threatened the dependence relationship). Support was also found for the effects of threat severity (i.e., when the leader was highly dependent on the subordinate, more severe threats led to higher allocations). The results allow a more complete understanding of managerial pay allocation decisions and provide the groundwork for additional research.