Abstract: In recent years, a special form of pay dispersion between newcomers and incumbents, known as “pay inversion,” has attracted increasing attention. Since the pay system is influenced by the joint effort of market, position, and person factors, newly hired employees may receive higher pay than incumbent employees in the same position (i.e., horizontal pay inversion), or even than their direct supervisors (i.e., vertical pay inversion). Such substantial financial investment in recruiting new employees is likely to shape their organizational socialization process. Traditional socialization research emphasizes that newcomer adjustment results from the interaction between organizational contexts and individual behaviors. Incorporating pay inversion into the organizational socialization framework creates a novel context: organizations expect higher pay to retain newcomers and motivate them to adjust seamlessly; yet incumbents receive comparatively lower pay, which inevitably affects their work experiences and their interactions with newcomers—interactions that are critical to successful socialization. Consequently, in the context of pay inversion, established socialization mechanisms may undergo alteration. To comprehensively investigate the effects of pay inversion on organizational socialization, this study draws on multiple theories (i.e., social identity theory, social comparison theory, social information processing theory, and psychological contract theory) to develop a multi-level, multi-actor interactive framework encompassing four research foci.
From the newcomer perspective, this study examines the double-edged effects of pay inversion on newcomers’ proactive socialization behaviors, as well as the moderating role of talent identity (Propositions 1 to 6). From the incumbent perspective, this study differentiates between horizontal pay inversion between newcomers and mentors and vertical pay inversion between star newcomers and leaders. On the one hand, this study investigates the effects of horizontal pay inversion on mentors’ reactions and newcomer learning, incorporating distributive justice and newcomer traits as moderators (Propositions 7 to 11). On the other hand, this study explores the mechanisms through which vertical pay inversion influences leader empowerment and star newcomers’ creativity, emphasizing the moderating roles of leader attribution and organizational climate (Propositions 12 to 15). From the team perspective, this study compares the differentiated responses of newcomers and incumbents to pay inversion and their implications for key organizational outcomes, and further identifies the contingent effects of pay dispersion bases and pay communication in the context of digital intelligence (Propositions 16 to 19).
This study makes three primary theoretical contributions. First, whereas existing organizational socialization literature typically treats pay as an important outcome of adjustment, it has largely overlooked its predictive role in the socialization process. By incorporating pay structure into the antecedent framework of socialization and conceptualizing pay inversion as a contextual variable that shapes socialization dynamics, this study extends the theoretical boundaries of organizational socialization research. Second, despite the growing prevalence of pay inversion, scholarly attention to this phenomenon remains limited. By focusing on inverted pay dispersion between newcomers and incumbents and examining its effects on newcomers, incumbents, and their interactions, this study enriches pay dispersion research from a socialization perspective. Third, pay inversion reflects organizations’ disproportionate investments in newcomers versus incumbents, posing significant challenges for talent management. By uncovering talent management conflicts between newcomers and incumbents, as well as the corresponding responses under pay inversion, this study deepens theoretical understanding of organizational talent management. Accordingly, this study offers valuable insights for managerial practice in newcomer development, pay system optimization, and talent management. Moreover, aligned with the strategic human resource management emphasis on coherent combinations of human resource policies and practices, this paper calls for future research to examine human resource policies that are congruent with pay inversion.
In sum, by integrating the perspectives of newcomers, incumbents, and teams, this paper develops a process model that theorizes how pay inversion shapes organizational socialization outcomes. It offers theoretical and practical insights into organizational socialization, compensation design, and talent management.

Key words: pay inversion, newcomer, organizational socialization, compensation management, talent management