Does a Higher Ratio of Salary-Per-Contribution Impact Employees’ Work Efficiency?

This study analyzes the effect of the pay gap in salary-per-contribution on employee work efficiency, where salary-per-contribution is the ratio between an employee’s annual salary and his or her contribution to the organization. We find that the efficiency of employees with above-average salary-per-contribution decreases as the difference from the average increases. However, the efficiency of employees with below-average salary-per-contribution increases as the difference from the average increases. Furthermore, the degree of team cooperation mediates the relationship between the pay gap and work efficiency, which is more prominent among low-salary or non-starting players. These conclusions are generally consistent with comparisons of the effects of salary variations in organizations and by industry.