The Role of Organizational Fairness in Reward Allocation: Argumentative Essay

The Role of Organizational Fairness in Reward Allocation: Argumentative Essay

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The Role of Organizational Fairness in Reward Allocation: Argumentative Essay

This essay aims to explore the role of fairness or justice in reward allocation in organizations. Fairness or justice refers to the perception of decision or an action as morally right, based on tenets of equity, fairness, religion, ethics or law. People have the tendency to asses the level of fairness present in any decision or action in different contexts. As such, employees are always attentive to determine the level of fairness involved in any decision or action undertaken by the managers or the leaders. In turn, the perception of fairness influences employee’s attitudes towards the management, organization, fellow workers and job (Prathamesh, 2012, p. 33). The attitudes of the employees resulting from their perception of fairness usually influence them to react. In many organizations, workers asses the fairness in the decisions and actions related to reward allocation. In particular, they asses fairness in the allocation of both tangible and intangible rewards offered by the leaders, including remuneration, promotions, bonuses, time-off and praises (Prathamesh, 2012, p. 36). The workers’ perception of fairness in the allocation of such rewards has an impact on their attitudes towards the job as well as their behaviors at work. In turn, the attitudes and behaviors of a worker have a positive correlation with the level of his or her own performance, as well as the overall performance of an organization. Given that the workers’ perception of fairness in reward allocation influences performance, this paper suggests that it is imperative for organizational leaders to embrace fairness or justice when allocating all kinds of rewards. On top of offering a critical evaluation of the importance of organizational fairness in reward allocation, the paper presents a critical analysis of the factors that influence fairness in reward allocation. Lastly, the paper explains how fairness in reward allocation can be achieved.

Firstly, the level of fairness in reward allocation influences the trust of the workers towards the management or the whole organization. Trust simply refers to the belief of someone or something as being truthful and reliable. The relationship between the workers and the leaders in organizations is usually based on reciprocity. Employees develop trust towards an organization when they believe that the organization’s decisions and actions are fair, and the future decisions and actions will also be fair. When employees trust an organization, they are usually willing to fulfill their part of employment contract. On the other hand, employees may not be wiling to fulfill their part of employment contract when they do not have trust in an organization (Latham & Pinder 2005, p. 487). However, for the reciprocal relationship to persist, organizational leaders must also have trust in the workers. In order for the reciprocal relationship to persist, the leaders must distribute rewards in a way that does not erode employee’s trust. In other words, the employees must perceive the allocation of rewards as being fair or just. Previous studies have shown that worker’s trust towards an organization is mainly influenced by procedural justice. Procedural justice refers to the fairness of the processes that take place in an organization. Procedural justice occurs in processes with characteristics such as ethicality, accuracy, consistency and lack of bias. A study conducted by Hubbell and Chory-Assad (2005, p. 47) found that between procedural justice, interactional justice and distributive justice, procedural justice has the largest influence on employee’s trust. However, interactional justice and distributive justice may also have a significant impact on trust in some cases (Hubbell & Chory-Assad, 2005, p. 47). In short, employee’s perception of justice or fairness enhances trust towards the organization. Conversely, an employee’s perception of unfairness towards an organization erodes trust towards an organization.

Secondly workers’ perception of fairness influences their performance and the performance of the organization. This is due to the fact that employee’s perceptions of fairness influence their attitudes towards work. In turn, attitude towards work influences the drive to produce the desired quality and quantity of work. The impact of employee’s perceptions of fairness on performance can be explained using the equity theory originally developed by John Adams in 1963. The theory suggests that individuals make judgments of equality and inequality by making comparison of themselves and others with consideration to inputs and outcomes (Latham & Pinder 2005, p. 489). Input, in this case, refers to the labor defined in terms of effort and knowledge, whereas outcomes refer to the expected compensation such as recognition and pay. According to the theory, justice is achieved when the expected input is satisfactorily compensated for and when the tenets of equality are respected. The theory suggests that when workers perceive lack of justice, they usually respond by altering their input as a way to restore it. In other words, employees are likely to alter their performance when they perceive the reward allocation in the organization to be unfair. Previous studies have shown that procedural justice has a significant impact on the attitudes of the employees towards work and thus, it affects performance. However, as demonstrated by a study conducted by Karriker and Williams (2009, p. 112), distributive justice also affects the performance of employees when productivity and efficiency are involved. Distributive justice refers to fairness in the distribution of both tangible and intangible resources. It is essential to note that, however, employees’ perception of justice in the distribution of rewards may not always lead to an improvement in performance. Despite this, it is clear that employees’ perception of injustice or unfairness in reward allocation is likely to alter their performance, and ultimately alter the performance of the organization.

Thirdly, employee’s perception of fairness influences the level of job satisfaction and commitment to an organization. The more employees perceive an organization’s decisions and actions to be fair or just, the more they are satisfied with their work. Job satisfaction, on the other hand, motivates workers to work hard towards achieving both individual and organizational goals. In other words, the motivation that is driven by job satisfaction influences workers to commit themselves to an organization and its objectives. Conversely, workers’ perception of injustice in decisions and actions of an organization makes them dissatisfied with the work. As a result of the dissatisfaction, they become less committed to achieving organizational goals. Previous studies have found a positive link between employees’ perceptions of organizational fairness and job satisfaction. For instance, a study conducted by Al-Zu’bi (2010, p. 102) showed that greater perception of fairness in organization’s decisions and actions by employees leads to higher levels of job satisfaction. On the other hand, lower perception of fairness in organization’s decisions and actions by employees leads to lower levels of job satisfaction. Another study conducted by DeConick (2010, p. 1349) found that greater perceptions of fairness by the employees are associated with higher commitment to an organization and its objectives, while lower perceptions are associated with lower commitment to the organization and its objectives. Although the two studies did not focus on rewards only, their results also apply to the case of reward allocation. While employee’s perceptions of fairness in reward allocation facilitate job satisfaction and commitment to the organization, perceptions of injustice lead to low levels of job satisfaction and commitment to the organization. DeConick (2010, p. 1349) noted, satisfaction and commitment to an organization are usually influenced by perceptions of procedural injustice.

Further, a worker’s perception of organization’s fairness influences his or her organizational citizenship behavior. Organizational citizenship behavior simply refers to employee’s actions aimed to support the goals of an organization, which are beyond his or her job description (DeConick, 2010, p. 1351). Volunteering to orient new workers to an organization is a good example of a citizenship behavior usually demonstrated by the workers. Workers engage in such activities when they feel that the organization values them. Conversely, they may be reluctant to engage in such activities in case they feel that the organization does not value them. As Barsky, Kaplan and Beal (2011, p. 251) note, workers feel valued when decisions and actions of an organization are fair to all. Consequently, they feel as if they are part of the organization. The feeling leads them to portray organizational citizenship behavior.  As (DeConick, 2010, p. 1351) and Karriker and Williams (2009, p. 114) explain, organizational citizenship behavior is related to the perceptions of both distributive justice and procedural justice. The study conducted by Karriker and Williams (2009, p. 112) demonstrated that employees are likely to portray organizational citizenship behavior when they perceive the reward allocation of an organizations as being fair. The opposite occurs when the employees perceive the reward allocation as unfair. Karriker and Williams (2009, p. 112) found that an employee may direct citizenship behavior towards a leader or the organization. In addition to the procedural justice and distributive justice, the study conducted by Karriker and Williams (2009, p. 112) showed that the perception of interactional justice also influences a worker’s organizational citizenship behavior. Interactional justice refers to fairness in the treatment of individuals by others. In an organization, interactional justice refers to the extent to which leaders treat workers and other stakeholders with respect, dignity and politeness.

As well, workers’ perceptions of organization’s fairness influence their counterproductive work behaviors. Counterproductive work behaviors are intentional behaviors or actions that an organization perceives as violating their legitimate interests. Workers often react to the decisions and actions made by organization through portraying certain behaviors (Gruys and Sackett, 2003, p. 30). When a worker disapproves an organization’s decision or action that he or she perceives as unfair, he or she may respond through showing counterproductive work behaviors. For instance, when a worker is subjected to heavier punishment than other workers for the same offense, he or she may become less willing to comply with the rules of an organization. This is due to the fact that the worker may perceive a conflict between the norms of the work and the organizational rules. A study conducted by Zoghbi-Manrique-de-Lara and Verano-Tacoronte (2007) found that procedural injustice has a direct impact on the increase in the incidences of counterproductive work behaviors. Although reward allocation may not always have an impact on the development of counterproductive work behaviors, there are cases in which it may influence the occurrence of such behaviors, especially when the workers perceive extreme level of injustice.

In addition, workers’ perception of justice influences their rates of absenteeism and withdrawal in an organization. As mentioned earlier, the perception of injustice by workers may lead to the feeling of job dissatisfaction. In extreme cases, job dissatisfaction may lead to absenteeism or withdrawal from the job (Hubbell & Chory-Assad, 2005, p. 48). For instance, when a worker experiences discrimination during promotion based on factors such as gender, race and religion, he or she may fail to attend the work without a reason. The find.............