This research aims to investigate the dispersion among gross pay of public servants and examine the causes, rationale and effects of such disparity. In this regards, the purpose of this study was two-fold. First, to find out dispersion in gross pay of the employees serving in the same Basic Pay Scales (BPS) in the federal government of Pakistan and the causes of such disparity. Second, to investigate the impact of perceived pay satisfaction on employees’ Organizational Citizenship Behavior (OCB). To focus and operationalize the purposes of this study, in first phase actual pay slips were collected to find gross pay dispersion. Narrative data was collected from 40 participants through semi-structured interviews by employing key respondents approach to find the causes of such dispersion. The data analysis reveal substantial dispersion in gross pay received by equally placed (in the same BPS) employees of the federal government of Pakistan. In the second phase, a conceptual model was developed linking pay satisfaction and organizational citizenship behavior with motivation, job satisfaction and organizational commitment as mediating variables. The model was tested using data collected from 619 respondents of eight public sector organizations through questionnaire survey. The results reveal that pay satisfaction has positive significant impact on OCB. Furthermore, motivation, job satisfaction and organizational commitment mediated the relationship between pay satisfaction and OCB. The results indicate that pay disparity contributes towards dissatisfaction of the federal government employees and vice versa; while pay satisfaction significantly affects OCB, motivation, job satisfaction and organizational commitment. The study suggests that a harmonized pay structure improves OCB, motivation, job satisfaction, and organizational commitment and enhances organizational performances.