Fair dues

Promotion often directly link to immediate and future monetary reward. If employee perceive unfair when a under performer gets more money than he deserved, it would be even worse if the under performer is promoted.

Feb 11th 2010, The Economist
Employees sniff out unfairness when money is involved

IF YOU can count your money you don’t have a billion dollars, opined Jean Paul Getty, an oil magnate. You may feel peeved for other reasons, too. A study published this month in the journal Psychological Science reveals that employees’ perceptions of how fairly they are being rewarded depend on whether they are getting bonuses in the form of goods or money.

Sanford DeVoe of the University of Toronto and Sheena Iyengar of Columbia University asked 268 participants to read a scenario about a manager handing out equal rewards to ten employees with vastly different performance records. In some scenarios the participants were told that the manager divided up 20 boxes of chocolates or 20 extra days of holiday equally among employees. In others, they were told that the managers divided up $20,000 or $20,000-worth of credit-card reward points equally. Participants were asked to rate the fairness of the manager’s behaviour on a nine-point scale, where one was extremely unfair and nine was extremely fair.

The researchers found these egalitarian tactics won average fairness values of 6.66 and 6.63 respectively for chocolates and extra holiday, but much lower average values of 5.46 and 5.93 for money and points, a statistically significant difference. This suggested to the authors that something about these rewards made people feel more strongly that they should reflect individual effort.

To test this further, they ran a similar study on another 427 participants. This time they presented them with one of five scenarios involving credit-card reward points. Managers gave their differently performing employees equal amounts of points that could be used only on electronics, only on books, only on films, only on music, or on all four of these types of products.

When points could be spent on only a single type of product, participants rated managers’ behaviour as 6.18 on the fairness scale. But this number dropped to 5.56 when credit-card points could be spent on all four of the product types. The authors suggest that the exchangeability of currency invokes a market mindset. “This is one reason why cutting all workers’ hours equally, such as moving from a five-day to a four-day work week, can come off as a much fairer approach than making equal pay cuts across the board,” says Mr DeVoe.

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