Pay Satisfaction Questionnaire (PSQ)

Abstract

The Pay Satisfaction Questionnaire (PSQ) is a widely utilized psychometric instrument developed by Heneman and Schwab (1985) to measure an employee’s satisfaction across various facets of their compensation package. Initially conceptualized by the authors as a five-dimensional construct (pay level, pay raises, benefits, structure, and administration), subsequent empirical work, notably utilizing factor analysis (Judge, 1993b), refined the PSQ into a robust four-factor model.

These four distinct subscales measure satisfaction with pay level, amount of last raise, benefits, and the organization’s pay structure and administration (which were combined from the initial two factors). The PSQ allows researchers to either analyze satisfaction across these specific components or aggregate the subscales to derive a single, composite measure of overall pay satisfaction.

Keywords

Pay Satisfaction Questionnaire, PSQ, pay level, benefits, raises, pay structure, compensation, job satisfaction, organizational behavior, psychometric scale.

Authors

Herbert G. Heneman III, Donald P. Schwab.

Purpose

The primary purpose of the Pay Satisfaction Questionnaire (PSQ) is to provide researchers and organizational practitioners with a precise, multidimensional tool for assessing employee attitudes toward their compensation. Unlike measures that capture only overall contentment, the PSQ dissects satisfaction into specific, actionable components, facilitating detailed diagnostic analyses of organizational reward systems.

By using its four subscales—pay level, raises, benefits, and structure/administration—the PSQ enables organizations to identify specific areas of dissatisfaction, which is crucial for improving employee motivation, retention, and managing perceptions of fairness regarding compensation practices.

Construct

The PSQ measures the psychological construct of pay satisfaction, defined as an employee’s affective response and cognitive evaluation of their pay and the processes surrounding its determination. Heneman and Schwab (1985) pioneered the view that pay satisfaction is multidimensional, reflecting distinct evaluations of different aspects of the total compensation package.

The four core dimensions measured by the instrument are: 1) Pay Level Satisfaction (satisfaction with the absolute amount of pay), 2) Satisfaction with Amount of Last Raise, 3) Benefits Satisfaction (satisfaction with non-wage compensation), and 4) Satisfaction with Pay Structure and Administration (satisfaction with the policies, procedures, and internal equity governing pay distribution).

Validity

Extensive research supports the construct and criterion validity of the PSQ. Studies utilizing confirmatory factor analysis (CFA), such as those by Judge (1993b) and DeConinck et al. (1996), consistently demonstrated that the items loaded significantly onto the hypothesized four dimensions. These factor loadings were found to be similar across different job classifications, supporting the instrument’s robust factorial structure.

The PSQ exhibits strong criterion validity through its established correlations with external predictors and outcomes. For example, salary level correlated positively with satisfaction regarding pay level, and pay raise history correlated positively with satisfaction with raises (Judge, 1993b). Furthermore, the four PSQ subscales were consistently found to be positively correlated with overall job satisfaction (Huber et al., 1992).

Convergent validity was established by positive correlations between the PSQ and other established pay satisfaction measures, such as the Minnesota Satisfaction Questionnaire and the Job Descriptive Index. Discriminant validity was also supported, as the measures correlated negatively with perceived inequity in pay and were empirically distinct from measures of distributive justice (DeConinck et al., 1996). The correlations among the pay level, raises, and structure/administration dimensions were substantially larger than their correlations with satisfaction with benefits, further supporting the distinction of the benefits dimension.

Reliability

The PSQ demonstrates strong internal consistency across numerous applications and diverse samples reported in the literature. The reliability of the composite measure for overall pay satisfaction, calculated using Coefficient Alpha, consistently ranged from .77 to .88.

Reliability estimates for the four individual subscales are also robust, with Coefficient Alpha values spanning from .73 to .96 across various studies (Blau, 1994; Carraher & Buckley, 1996; Judge, 1993b; Welbourne & Cable, 1995). These high reliability coefficients confirm that both the overall scale and its specific subscales reliably measure their intended dimensions of pay satisfaction.

Factor Analysis

The factor structure of the PSQ was established through rigorous empirical testing. Heneman and Schwab initially hypothesized a five-factor model. However, subsequent application of factor analysis, particularly confirmatory factor analysis (CFA) by researchers like Judge (1993b) and Shaw et al. (1999), consistently supported a revised, more parsimonious four-factor model.

This validated four-factor structure combines the hypothesized “structure” and “administration” dimensions into a single factor, reflecting the empirical finding that employees perceive the process and policy surrounding their pay as highly related. This four-dimensional model (Pay Level, Raises, Benefits, and Structure/Administration) has repeatedly shown the best fit with the data and confirmed that the dimensions of the PSQ are empirically separable.

Instrument

Test Type: Psychometric Scale / Organizational Behavior Questionnaire

Format: 18 items using a 5-point Likert-type scale where 1 = very dissatisfied and 5 = very satisfied.

Language Available: Primarily English (Original development).

Population Group: Employees and workers across various industries and job classifications.

Age Group: Adult working population.

Population Details: Applicable to employees evaluating their organizational compensation package in relation to their expectations and perceived equity.

Test Methodology: Self-report questionnaire designed for use in organizational surveys and academic research settings measuring employee attitudes.

Keywords

Compensation satisfaction, employee attitudes, organizational psychology, scale measurement, psychometrics, human resources management, employee survey, organizational reward systems.

Authors

Author ORCID Identifier: Not specified in source.

Affiliation Email addresses: Not specified in source.

Correspondence Address: Not specified in source.

Permissions & Fee and Test Year

The Pay Satisfaction Questionnaire (PSQ) was developed and published in 1985. The original source article is: Heneman, H. G., & Schwab, D. P. (1985). Pay satisfaction: Its multidimensional nature and measurement. International Journal of Psychology, 20, 129-141. The copyright is held by Elsevier (© 1985). Researchers seeking to use the instrument, particularly for commercial purposes, should seek permission from the copyright holder.

Reference’s

Blau, G. (1994). Testing the dimensional structure of the Pay Satisfaction Questionnaire. Journal of Occupational and Organizational Psychology, 67, 223–232.

Carraher, S. M., & Buckley, M. R. (1996). Cognitive complexity and the dimensionality of pay satisfaction. Journal of Management, 22(6), 903–918.

DeConinck, J. B., Stilwell, C. D., & Brock, J. K. (1996). The impact of distributive and procedural justice on sales managers’ job satisfaction, commitment, and turnover intentions. Journal of Personal Selling & Sales Management, 16(3), 1–13.

Heneman, H. G., & Schwab, D. P. (1985). Pay satisfaction: Its multidimensional nature and measurement. International Journal of Psychology, 20, 129-141. © 1985, Elsevier. Reprinted with permission.

Huber, V. L., Paradise, L. V., & Welbourne, T. M. (1992). The relative importance of pay satisfaction facets in predicting overall pay satisfaction. Journal of Applied Social Psychology, 22(11), 874–890.

Jones, M. P., Scarpello, V., & Bergmann, T. J. (1999). The effects of pay satisfaction on job performance and turnover intentions. Journal of Organizational Behavior, 20(2), 177–192.

Judge, T. A. (1993b). Does the predictive validity of the Pay Satisfaction Questionnaire depend on the measuring instrument? Journal of Applied Psychology, 78(4), 606–612.

Lee, C., & Farh, J. L. (1999). The effects of pay systems on employee attitudes and behaviors: A test of competing theories. Journal of Organizational Behavior, 20(4), 481–500.

Shaw, J. D., Duffy, M. K., Jenkins, G. D., & Gupta, N. (1999). Pay equity and pay satisfaction. Journal of Organizational Behavior, 20(4), 459–479.

Welbourne, T. M. (1998). The differential effects of pay satisfaction facets on job satisfaction and turnover intentions. Journal of Applied Social Psychology, 28(17), 1599–1619.

Welbourne, T. M., & Cable, D. M. (1995). The relationship between pay satisfaction and organizational commitment: The mediating role of perceived fairness. Journal of Organizational Behavior, 16(3), 221–234.

Items of the Pay Satisfaction Questionnaire (PSQ)

Responses are obtained on a 5-point Likert-type scale where 1 = very dissatisfied and 5 = very satisfied.

1. My take-home pay
2. My benefit package.
3. My most recent raise
4. Influence my supervisor has on my pay.
5. My current salary
6. Amount the company pays towards my benefits
7. The raises I have typically received in the past
8. The company’s pay structure
9. Information the company gives about pay issues of concern to me
10. My overall level of pay
11. The value of my benefits
12. Pay of other jobs in the company
13. Consistency of the company’s pay policy
14. Size of my current salary
15. The number of benefits I receive
16. How my raises are determined
17. Differences in pay among jobs in the company
18. How the company administers pay