Equity Sensitivity in “Fringe” Benefit Value and Satisfaction

Abstract

This study evaluated Equity Sensitivity (ES) as an explanation for individual differences in employee valuation and satisfaction with non wage employee benefits (i.e., fringe benefits) utilizing both the Equity Sensitivity Instrument (ESI) and Equity Preference Questionnaire (EPQ). ES proposes that individuals vary in their tolerance for inequity. It was hypothesized that individuals lower on the ES spectrum would more accurately estimate employer contributions toward benefits compared to individuals higher on the spectrum and individuals lower on the ES spectrum would be less satisfied with their benefits compared to those higher on the spectrum. Results found that individuals higher on the ES spectrum (i.e., those more tolerant of inequity) more accurately estimated their benefits and were also more satisfied with them. Additionally, the ESI and EPQ exhibited equivalent reliabilities though the ESI was found to have only one underlying dimension while the EPQ had four. Implications for management and directions for future research are discussed.