Compensation Preferences

Article from Lappley & Associates, Ltd. E-Newsletter

The study outlined in this article, defines diversity in the workplace and gives insight into compensation incentives that will attract, retain, motivate and engage modern-day employees per their individual preferences.  Professor Dow Scott, a Loyola University Chicago HR Professor, along with other worldwide university faculties led a study that examined how pay preferences are related to employee characteristics.  The survey conducted covered 1,077 respondents in seven countries.  Professor Scott and his colleagues appeared in the newest Compensation & Benefits Review.  They discovered that participants who had a strong preference for variable pay were older, more educated, and had more dependents.  Participants that were younger, lower paid, and had fewer dependents preferred greater pay transparency.

Results listed by category:


  • Older workers prefer more of their pay in benefits, such as retirement programs, job security, and variable pay. Younger workers prefer time and work/life balance, pay in transparency, and career development.

Annual Pay:

  • The only significant relationship between pay preferences is between annual pay and pay transparency. There isn’t enough evidence to prove that higher paid workers have the capacity to take risks and thus prefer variable pay.  The only proven variable is that workers who make less money prefer pay transparency.


  • Education had a positive relationship with annual pay. More educated participants preferred differences based on variable pay and capability versus that of pay transparency.

Number of Dependents:

  • Participants who had more dependents had a stronger preference for pay variability.

Work Experience:

  • No significant relationships between experience and pay preferences were measured.


Men prefer jobs that place an emphasis on extrinsic rewards, such as pay and rewards. Women prefer a job with good coworker relationships, work/life balance, and developmental opportunities.  Men primarily prefer pay based on performance.  Women prefer skill and seniority-based pay systems.  Overall, more men prefer variable pay than women.