Equity

People want to work in organizations that are fair. Fairness is a perception based on outcomes (e.g. people who are promoted should have been selected properly — “distributive justice”), decisions (e.g. people who are terminated are judged against a standard that applies to all — “procedural justice”) and treatment of individuals (positive regard and respect for all — “interactional justice”).^{1(p. 84 – 85)}

It is the leader’s role to manage the fairness perceptions. One method is by giving people the opportunity to provide opinions as to how things should be done and/or influence outcomes in the organization (e.g. permitting input on colleagues' annual performance evaluations).¹ Even when one’s advice is not followed, having a say reduces the sensitivity to fairness. Further, when there is an event impacting individuals, workers want and need to understand what happened (e.g. providing explanation for a layoff, why it was necessary and how the separated individuals were selected).¹

 

Fairness has a strong relationship with important human resource variables. For example, job satisfaction and commitment are positively related to distributed justice. In addition, “procedural justice relates most strongly to job satisfaction, employee trust, withdrawal from the organization, job performance and citizenship behaviors,”^{1 (p. 86)} making it a foundational matter.

Increased levels of fairness can improve these measures. That is, the extent to which the organization applies a standard and logical approach to decisions (i.e. fairness), a reduction in negative impacts can result. For example, when an organization uses a standard recruitment and selection process (e.g. application, interview and documentation), it is more likely that internal candidates will view the decision as appropriate. The same applies to promotions. Alternatively, if someone is fired, it is important for the “victim” and the survivors to feel that a fair process was used. This suggests that terminations should not be abrupt (unless for something like stealing) and the worker should be given every opportunity to correct performance issues. Progressive counseling is designed for this purpose. It is a step-by-step process of counseling the individual with an objective of helping him/her overcome performance problems and keeping them in the organization.² “It is [always] important…to follow consistent and unbiased procedures [when making these kinds of decisions].”^{1 (p. 86)}

Once the procedural elements are in place, leaders can consider distributive justice or perceptions of equity. Equity theory¹embodies an individual’s perception of what they have received (pay, rewards, recognition) in relation to the level of input applied to achieve the work (effort, time, energy, etc.).¹ That is, the worker relates their ratio to that of others. An individual wants the ratio of inputs to outputs to be the same with those compared; when it is considered unequal there is a compelling need to rebalance the equation. That is, behaviors are implemented, positive or negative, to restore parity. For example, a worker discovers that he is paid much lower than his counterpart in the same job (assuming same perceived skills, abilities and performance). As a result, the worker may do things to equalize the situation as follows:¹

• Reduce work performance to equalize the ratio of inputs to outputs. (“I will do less until the ratio is equal.”)
  
• Reconsider the other person and change the perception to make the individual superior.

• Look for another comparison individual.

• Leave the organization to seek a fairer situation.

Alternatively, more egregious behaviors can be used, such as sabotage or political behavior.

The equity perception can play out in the other direction. In this scenario, the individual discovers that he or she is paid more than the other person performing the same job in the same way with the same skills. The individual is compelled to right this wrong:¹

• Increase their work output to bring equity.

• Reconsider the other person as inferior.

Given that workers are perceptive and interested in fairness, managers need to be concerned about organizational justice overall so as to maintain the motivational momentum. Here are some actions to consider: 

•  Develop and maintain an effective job-grading system; grading is a classification system that bunches jobs with similar responsibilities and provides a salary range for jobs in the same class.² It remains possible that one individual can be higher in the range than another, triggering the perception of inequity, but a well-structured classification system can prevent these problems.

• Maintain diligence in the performance evaluation system, salary increases and awards; a fair procedure can assist with perceptions of equity.

• Use effective reinforcements; intrinsic reinforcements can be just as effective as extrinsic, and often more so.

• Treat everyone fairly and consistently; organizations have many work distractions and adding fairness challenges to the mix diverts attention away from what is important to the business.

Fairness in organizations is important and can impact important organizational variables (e.g. job satisfaction). Organizations should be particularly attentive to procedural justice but also address equity and interactional fairness.

Please feel free to make comments.

 References

¹ Robbins, S., & Judge, T. (2012). Essentials of Organizational Behavior (11th ed.). Upper Saddle River, NJ: Prentice Hall.

 ²  Noe, R.A., Hollenbeck, J.R., Gerhart, B., & Wright, P.M. (2008). Human Resource Management: Gaining a Competitive Advantage. Boston: McGraw-Hill Irwin.