North Central Business Journal News
(August 2000 issue)
by Sandra Kay Neal, Ph.D.
Fairness is an important issue to employees.
Lack of fairness is the primary reason employees give for quitting a job.
To reduce this problem, it is helpful to understand the many ramifications
involved with fairness.
There are three aspects to fairness:
1. Outcomes, such as pay.
2. Procedures used to determine outcomes.
3. Manner in which people are treated in regard to these
Each of these aspects is important,
but research has shown that procedures and treatment are actually more
important than outcomes. People will accept outcomes which are
personally distasteful as long as the procedure used to arrive at that
outcome, and the manner by which they were treated by that procedure, are
fair. A good example of that is how people will accept a jury’s decision
which goes against them as long as the court process was fair.
Yet most employers focus primarily on outcome
fairness. When employees grumble about the company being unfair,
employers immediately look at all that they provide for their employees
in terms of compensation and benefits, notice how generous they are, and
then dismiss the complaints as baseless.
Instead, when employees become disgruntled about fairness, it
is helpful for employers to look for problems in the procedures or manner
in which decisions affecting employees are made.
When employers make decisions, they attempt to be
as fair as possible. But they neglect to bring the employee into
the decision-making process. Research has shown that when employees
are at least informed of how the decision was made, so that they know the
employer considered all the pertinent issues, they will more easily accept
the outcome, even if they don’t like it.
For instance, there was a company in which
two of three plants lost a major customer. The executives spent long
hours looking at every conceivable way to deal with the lost revenue and
ensure that all the employees kept their jobs until they could find new
customers. They decided that the fairest way was for everyone, including
themselves, to take a 15% pay cut for six months.
In one of the plants, the president made an
announcement over the in-plant broadcast system, telling the employees
of the decision, and briefly stating that it was done to be as fair as
possible to the employees. In the second plant, the president met
with the employees in the cafeteria for an open question and answer session
that lasted as long as the employees had questions. He showed them
the financial charts the executives had used. He showed them all
the various possible plans the executives had considered and explained
thoroughly why all the other options had been eliminated.
During the six-month period of the 15% pay
cut, the employees from the first plant started stealing from the company
and turnover doubled. In the second plant, there was no change in
theft or turnover rate. Both plants had the same “unfair” outcome
– a 15% pay cut. The difference was in the manner in which the
unfair outcome was explained. Procedure and treatment are more
important than outcomes.
If employees are complaining about unfairness,
employers would be well served to consider how outcome decisions are communicated
to the employees. Focus on procedures and treatment, not just outcomes.
Sandra Kay Neal holds a Ph.D. in Industrial/Organizational
Psychology and has 19 years experience helping organizations solve human
resource issues. Her company, Synergistic Organizational Solutions,
specializes in aiding small businesses. Dr. Neal can be reached at