Week 6 - The Psychology of Fairness

Week 6 – The Psychology of Fairness - Understanding the impact unfair treatment at work can have on a person. Key fairness at work theories: psychological contract, equity theory and organisational justice. Why does fairness at work matter? - Negative attitudes could lead to lower motivation, withdrawal of organisational citizenship behaviours, increased likelihood of leaving the business. Organisational outcomes for individuals’ reacting to unfairness include the impact of dissatisfied employees (i.e. HR costs), bad press and legal challenges. Legal challenges are interesting as well because in business law, the court typically favours the less powerful party. Being fair in the workplace isn’t a choice, it can be a legal obligation. Legislation covers many fairness issues, as a result, employers can’t afford to ignore them. Examples of unfairness includes discrimination, bullying, sexual harassment and damaging health and well-being. PSYCHOLOGICAL CONTRACT THEORY The psychological contract – a subjective and unwritten set of perceived reciprocal promises and obligations. Rousseau (1995) – a set of perceptions, expectations, beliefs, and schemas about what each party is entitled and obligated to give in exchange for another party’s contribution. The informal and unwritten promises e.g. something that has been said verbally (i.e. a spoken promotion promise) but can also be implied. These promises driven behaviour and motivation in the workplace. These implied expectations are where issues arise, as nobody has technically promised anything. Terms: - Norm of reciprocity – contributions are reciprocated, and parties are bound to one another. Social exchange mechanism – based on voluntary actions motivated by expected returns. The individuals trust the other party will follow through on their promises/claims whether implied or verbal. This is a framework for understanding the basis of the employment relationship: the “deal” between employer and employee. The Employment Relationship: - Employer: Pay, Benefits, Pensions, Job Security, Training, Career Development etc Employee: Hard work, loyalty, commitment, confidentiality, long service etc Characteristics of the psychological contract: unwritten, highly subjective – therefore open to different interpretations by the people involved, perceived reciprocal promises and obligations, individuals have psychological contracts – organisations do not (i.e. it is with an agent of the organisation like a manager or HR contact), dynamic (i.e. changes over time). Key Elements: - - Expectations: beliefs held by an individual stemming from past experiences, social norms and observations o Explicit expectations are one which are expressed, stating what individuals want or need from others. These range from general to specific. o Implicit expectations are unspoken ideas about what you really want or need. Obligations – beliefs held by an employee or employer that each is bound by a promise or debt to an action in reaction to another party. Obligations result from perceived promises, but expectations can occur for a variety of reasons such as past experience. The distinction is important because there are different consequences when these are violated. A violation of obligations is likely to create a more intense, damaging response that damage to expectations, that’s because obligations feel like they’ve have been actually promised (Robinson and Rousseau, 1994). Expectations being broken could produce a more disappointing reaction. Guest and Conway (2002) – model of the causes and consequences of the psychological contract. Wolfe, Morrison and Rousseau (1997) – Contract Breaking - Perceived promises and obligations are not fulfilled. This includes emotional, behavioural ,and cognitive responses. We, then, have to adapt our expectations and it may change our perceptions of personal value within the organisation. Perceived breach – refers to the cognition that one’s organisation has failed to meet one or more obligations within one’s psychological contract in a manner commensurate with one’s contribution. Violation – the feelings of anger and betrayal that are often experienced when an employee believes that the organisation has failed to fulfil one or more…obligations. A violation refers more to deliberate actions i.e. being furloughed due to COVID may be classed as a perceived breach. A key to this is the employers reaction to a situation, if the employer is good at communicating with employees, they may not see it as a violation. Reaction to violations – voice, silence, retreat, destruction/neglect, exit. Violations correlate positively with turnover and negatively with trust, satisfaction and intention to remain (Robinson and Rousseau, 1994). Contract breach is more likely if previous history of mistrust between parties, losses appear to be significant to the affected parties, event appears to be deliberate/voluntary – not accidental unavoidable, no evidence of good faith efforts to avoid the event, process is not seen to be fair. Contract breach is less likely if previous history of trust and good faith between parties, breach is seen as accidental or unavoidable, perceived losses are small… Stormbroek and Blomme (2017) – 132 Duch employees, lower ratings for PC fulfilment and feelings of violation of this contract can explain intentions to leave and self-employment intentions. Limitations include measures intentions not actual turnover and a small sample size. Key messages – we all have psychological contracts, we need to understand how to respond well to and avoid violating contracts (communication). EQUITY THEORY John Adams (1965) – linked to employee motivation, employees expect a fair balance between their inputs and outputs at work. You will be de-motivated if you feel you put more in than you get back. Employees may compare themselves to others inside or outside the organisation. Possible consequences include feeling overpaid, underpaid or equitably paid. Key here is who is the comparison group? And how to I react to the differences/similarities in this group? People are more likely to react to being under-rewarded than over-rewarded. ORGANISATIONAL JUSTICE People’s perception of fairness in organisations – Greenberg and Lind (2000) Important to note that the terms refers to people’s perceptions and as such, organisational justice is a subjective concept. Rupp (2011) – a key element of the employee experience is the formation of perceptions about how both the self and others are treated by organisational stakeholders… - Justice related events (directly experienced or observed) trigger automatic emotional responses. Employees determine if harm has been inflicted, if the actions of the perpetrator could have been avoided, and if the acts violated a norm of moral or ethical conduct. Organisational justice has three different types: - Distributive justice: evaluation of outcomes e.g. pay, promotions etc Folger and Cropanzano (1998) – perceived fairness of the outcomes or allocations that an individual receives. The outcomes can be tangible like pay or intangible like development opportunities. Links to Social Exchange Theory – I give you something I expect something in return. For both parties, it is expected that the reward of each will be proportional to the costs of each and net rewards or profits will be proportional to their investments. Adams (1965) Equity Theory suggested that when a person perceives that their input to output ratio is unequal to the corresponding ratio to a referent other, they experience tension. To solve this, the psychological approach can be to change the referent group. Behaviourally, we can make a change by if you feel you’re being unpaid, you can put less effort in. Strong correlations with outcome satisfaction, evaluation of authority, job satisfaction, organisational commitment etc. - Procedural justice: the evaluation of processes e.g. how is a decision made on employee promotions Folger and Cropanzano (1998) – Defined as fairness issues concerned methods, mechanisms and processes used to determine outcomes. Focuses on how organisational resources are allocated in terms of the processes and procedures. Brocker et al (1994) – high procedural justice reducing relationship between negativity and individual resentment. The voice effect – Thibaut and Walker (1975). It talks about the impact of employees’ voices on processes. The more impact they have, the more likely they are to a high perceived level of fairness, whether the outcome is what the employee wanted to or not. Leventhal, Karuza and Fry (1980) – when creating a procedure in an organisation, these 6 criteria should be considered: - Consistency Bias Suppression Accuracy Correctability Representativeness Ethicality Then employees are more likely to see the procedure as fair. Strong correlation with outcome satisfaction, trust, job satisfaction, organisational commitment etc. - Interactional justice: evaluation of interpersonal interactions e.g. am I treated with respect. Refers to employees’ perceptions of the quality of the interpersonal treatment received during the enactment of organisational procedures. Originally considered the social side of procedural justice, concerned with enactment or implementation of procedures, directly linked to behaviour of employer/management and people’s reaction to it. Two aspects of interpersonal treatment that affect perceptions of fairness: - Social sensitivity (interpersonal justice): personal delivery of justice in terms of dignified treatment. Informational justification (informational justice): the adequacy of explanation for decisions provided. Some applications of organisation justice research: employee theft, performance appraisal, organisational citizenship behaviour, organisational change, and selection procedures. Strong correlation with job satisfaction and evaluation of authority.