MG105 Org Behaviour and Leadership

Fairness in Organisations

Prof. Connson Chou Locke

Week 4
 Why do we learn theories?

Rerum
Cognoscere Theory
Causas

Aha!
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 Fairness in Organisations

Organisational Justice (OJ)

Psychological Contracts (PC)

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 Organizational Justice contains
multiple facets
Distributive Procedural Interactional
Justice Justice Justice

Fairness of the Fairness of the Quality of interactions

outcome process during the process
(informational and
Am I happy with Do I think the interpersonal)
what I received? process was fair?
Did I feel respected and
dealt with honestly?

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 Distributive Justice is based on
social comparison

Fairness Experiment
Outcome (self) Outcome (other)
compared to
Input (self) Input (other)

Three ways of distributing resources:

EQUITY EQUALITY NEED

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 Procedural Justice is comprised of
six criteria (Leventhal, 1980)
1. Consistency: across people and across time
2. Free from bias: e.g. vested interest, nepotism
3. Accuracy of information
4. Correctability: opportunity to correct mistakes,
grievance procedures
5. Representativeness: opinions of all concerned
parties are heard and taken into account
6. Ethicality: conform to prevailing standards of ethics or
morality, e.g., no racial discrimination

Leventhal, G. (1980) What should be done about equity theory? New approaches to the study of fairness in social relationships. In K.
Gergen, M. Greenberg, and R. Willis (Eds.), Social Exchange: Advances in Theory and Research, pp. 27-55. New York: Plenum Press.

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 Interactional Justice is the most
recently introduced facet

An individual's perception of their treatment

by authority figures

Interpersonal Informational
Justice Justice
• Respect • Justification
• Propriety • Truth

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 Interactional Justice includes both
informational and interpersonal
A manufacturer lost a major contract and, instead of layoffs, decided to
enforce a 15% pay cut for 10 weeks. This only affected two factories.

Plant A
• 30 minute presentation,
60 minutes of Q&A
• President of company
• Apologized and expressed
remorse: “It really hurts me to
do this and the decision didn’t
come easily”, “I really wish this
weren’t necessary”
• Extensive information, e.g.,
charts and graphs on cash flow
and need for pay cut.
Plant B
• 15 minute announcement,
no Q&A
• Vice President of company
• No apology or remorse: “I realize
this isn’t easy, but such
reductions are an unfortunate fact
of life in the manufacturing
business”
• Minimal information

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 The effect of Interactional Justice
on employee theft was significant
8%
Employee Theft

4.7%

3%

Before During After

the pay cut
Greenberg, J. (1990). Employee theft as a reaction to underpayment inequity: The hidden cost of pay cuts. Journal of Applied
Psychology, 75: 561-568.

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Theft is a form of Counterproductive
Work Behaviour (CWB)
Voluntary intentional behaviour that
causes harm to the organization or its
members. Also called:
• Organizational Retaliatory Behaviour (ORB)
• Deviance
• Aggression

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 CWB can be directed at the
organisation or an individual
Organisation (CWB-O) Individual (CWB-I)
• Property Deviance • Personal Aggression
(serious): sabotage, (serious): harassment,
theft assault, verbal abuse
• Production Deviance • Political Deviance
(minor): wasting (minor): gossiping,
resources, extending being rude
overtime

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 Different factors can result in
different types of CWB
Job
dissatisfaction CWB-O

Interpersonal
CWB-I
conflict

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 Why does perceived injustice result
in CWB?
Fairness Theory (Folger & Cropanzano, 2001)
• Favourability: Would I have been better off if a
different outcome or procedure had been used?
and
• Accountability: Could the authority have taken
a different course of action?
• Morality: Should the authority have behaved
morally and ethically differently?
Coyle-Shapiro, J.A-M., & Dhensa-Kahlon, R. (2011). Justice in the 21st century organization. In K. Townsend & A. Wilkinson (Eds.)
Research handbook on the future of work and employment relations (pp. 385-404)

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 Organizational Citizenship Behaviour
(OCB) is more widely studied than CWB
“Behaviour that is discretionary, not directly
or explicitly recognized by the formal
reward system, and that in aggregate
promotes the effective functioning of the
organization.”
– The behaviour is not an enforceable requirement
of the role or the job description.
– The behaviour is a matter of personal choice.
(Organ, 1988, p.4)

Organ, D. W. (1988). Organizational citizenship behavior: The good soldier syndrome. Lexington, MA: Lexington Books.

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 OCB can also be directed at the
organisation or an individual
Organisation (OCB-O) Individual (OCB-I)
• Conscientiousness: not • Altruism: helping a
missing a day at work, colleague, showing a
coming early/staying late, new employee the
adherence to rules, use of ropes
work time
• Courtesy: keeping
• Civic Virtue: keeping people informed of
abreast of developments in decisions or issues that
the org, attending meetings might affect them
that are not required
• Sportsmanship: avoiding
petty grievances, defending
the org
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 OJ affects OCB and CWB more than
task performance
Frequency of
OCB
+
Org Justice
- Frequency of
CWB

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 Other factors affected by
organisational (in)justice
• Commitment
• Trust
• Customer service
• Absenteeism
• Turnover
• Stress
Conlon, D. E., Meyer, C. J., & Nowakowski, J. M. (2005). How does organizational justice affect performance, withdrawal, and
counterproductive behavior? In J. Greenberg & J. A. Colquitt (Eds.), Handbook of organizational justice (pp. 301-327). Mahwah, NJ:
Lawrence Erlbaum.

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 PJ (and IJ) can mitigate the effects
of poor DJ
High
High PJ
Low PJ
Favorability
of Reaction

Low

Low High
Outcome Favorability (DJ)

Brockner, J. & Wiesenfeld, B. (1996). An integrative framework for explaining reactions to decisions: Interactive effects of outcomes
and procedures. Psychological Bulletin.

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 Fairness in Organisations

Organisational Justice (OJ)

Psychological Contracts (PC)

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 The Psychological Contract (PC) is
also related to fairness perceptions
Org Justice (OJ) Psych Contract (PC)

To determine if being treated To determine if being treated fairly,

fairly, employee uses a ratio employee uses their expectations
to compare distribution of and (implicit or explicit) promises
resources. received.

Unfairness = inequitable Unfairness = broken promises,

distribution of resources breached expectations

Both situations can be mitigated by

Procedural and Interactional Justice

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 The PC is based on exchange
between the org and employee
Inducements Contributions
Organizations promise: Employees promise:
• pay commensurate with • to work hard
performance • to uphold company
• opportunities for training reputation
and development • to show loyalty to the
• opportunities for promotion organization
• recognition for innovation • to work extra hours when
or new ideas required
• feedback on performance • to develop new skills and
• interesting tasks update old ones
• an attractive benefits • to be flexible, for example,
package by taking on a colleague’s
• opportunities to learn work
• reasonable job security • to be courteous
• to come up with new ideas

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Contract breach is a violation of this
exchange and can result in CWB
• Pay: promised increases of pay not forthcoming
• Promotion: promised promotion doesn’t materialize
in expected time frame
• Type of work: important features of work
misrepresented to employee
• Training: employee does not receive promised
training
• Feedback: performance reviews inadequate or
absent compared to what was promised

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 What should you do? Why?
Your organisation is laying off 20% of its
staff. In your department, you can choose
how to implement the lay offs.
A) Ask HR to inform the laid off employees,
who must leave by the end of the day
B) Invite laid off employees to meet with you
individually for an exit interview

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 Some managers may be unwilling
to engage in PJ or IJ
• Time-consuming
– E.g., providing advance notice, allowing voice

• Seems risky or uncomfortable

– Employee might cause damage
– Questions may be difficult or embarrassing to
answer
– Employee voice may seem threatening
Brockner, J., Wiesenfeld, B.M., & Diekmann, K.A. (2009). Towards a “fairer” conception of process fairness: Why, when, and how
more may not always be better than less. Academy of Management Annals, 3: 183-216.

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 Other managers may be unable to
engage in PJ or IJ
• If feel unfairly treated by their own bosses
– May not have the motivation or psychological
resources to treat their subordinates fairly

• If (unconsciously) want to distance

themselves from the victim
– But ironically, this increases employee’s perception of
manager’s responsibility

Brockner, J., Wiesenfeld, B.M., & Diekmann, K.A. (2009). Towards a “fairer” conception of process fairness: Why, when, and how
more may not always be better than less. Academy of Management Annals, 3: 183-216.

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 There are cultural differences in the
importance of justice
Americans/Japanese Chinese/Koreans

The facet more

IJ strongly related to DJ
overall fairness

(both view PJ as
equally important)

Kim, T-Y., & Leung, K. (2007) Forming and reacting to overall fairness: A cross-cultural comparison. Organizational Behavior and
Human Decision Processes, 104, pp. 83-95.

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 Key Takeaways
• Employee expectations form the basis of a
“psychological contract” with the org
– Breach of this contract can lead to CWB
• Organizational Justice becomes relevant
when distributing resources
– Unfair distribution can lead to CWB
• Procedural and Interactional Justice can
mitigate the effects of perceived unfairness
– But they can also be difficult to enact

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 Readings
Cropanzano, R., Bowen, D. E., & Gilliland, S. W. (2007). The management of organizational justice.
The Academy of Management Perspectives, 34-48.

Kim, T-Y., & Leung, K. (2007) Forming and reacting to overall fairness: A cross-cultural comparison.
Organizational Behavior and Human Decision Processes, 104, pp. 83-95.

Optional Further Reading:

Blader, S. L., & Tyler, T. R. (2003). What constitutes fairness in work settings? A four-component
model of procedural justice. Human Resource Management Review, 13(1), 107-126.

Coyle-Shapiro, J.A-M., & Dhensa-Kahlon, R. (2011). Justice in the 21st century organization. In K.
Townsend & A. Wilkinson (Eds.), Research handbook on the future of work and employment relations
(pp. 385-404). Cheltenham, UK: Edward Elgar.

Greenberg, J. (1990). Employee theft as a reaction to underpayment inequity: The hidden costs of pay
cuts. Journal of Applied Psychology, 75(5) 561-568.

Hershcovis, M.S., Turner, N., Barling, J et al (2007). Predicting workplace aggression: A meta-
analysis. Journal of Applied Psychology, 92(1): 228-238.

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 Before class

• Read/skim the two required readings and fill

out the Article Summary Forms
– Bring hard copy to class

• Download the scenario from Moodle and bring

to class

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