MGMT20001 Chapter Notes - Chapter 6: Equity Theory, Procedural Justice, Distributive Justice
25 May 2018
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Money is one of the oldest and most widespread applied performance practice
Money and other financial rewards represent a form of exchange - employees provide labour, skill
and knowledge in return for money and benefits from the organisation
Symbol of achievement and status
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Motivator
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Source of enhanced or reduced anxiety
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Influence on propensity to make ethical or risky decisions
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Money relates to needs, emotions and self-concept
A symbol of status and prestige
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A source of security
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A source of evil
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A source of anxiety or feelings of inadequacy
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Money is viewed as
Money generates a variety of emotions, most of which are negative (anxiety, depression, anger,
helplessness)
People have a strong "money ethic" when they believe that money is not evil
Men view money as a symbol of power and status
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Women view its value in terms of things for which it can be exchanged
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Men attach more importance to money
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Meaning of money differs between men and women
People in countries with high power distance have a high respect and priority for money
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People in countries with a strong egalitarian culture are discouraged from openly talking about
money or displaying their personal wealth
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Meaning of money varies across cultures
Entrepreneurs need to obtain adequate external financing
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Money is important in the formation of organisations
The Meaning of Money in the Workplace
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3:37 PM
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Distributive justice refers to perceived fairness in the individual's ratio of outcomes to
contributions compared with another's ratio of outcomes to contribution
1.
Procedural justice refers to perceived fairness of the procedures used to decide the
distribution of resources
2.
Two forms of organisational justice:
Equity theory:
Equality principle - when we believe that everyone in the group should receive the same
outcomes
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Need principle - when we believe that those with the greatest need should receive more
outcomes than others with less need
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Equity principle - people should be paid in proportion to their contribution
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What is considered "fair"
Inputs = skill, effort, reputation, performance, experience, hours worked
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Outcomes = pay, promotions, recognition, interesting jobs, opportunities to improve
one's skills and knowledge
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Employees compare their own outcome/input ratio to the outcome/input ratio of others'
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Compared with a "comparison other" that is generalised from collected information
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Equity theory is a theory explaining how people develop perceptions of fairness in the distribution
and exchange of resources
Inequity and employee motivation:
If employees believe they are under-rewarded or over-rewarded, they experience inequity tension
(negative emotions)
Reduce inputs if under-rewarded
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Change our inputs
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Increase outcomes if under-rewarded
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Change our outcomes
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Ask co-worker to do a larger share of the work
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Change other's inputs
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Make co-worker have less desirable jobs or working conditions
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Change other's outcomes
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Change our perceptions
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Compare with someone in a similar job
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Change comparison other
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Move to another department
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Join another company
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Keep away from where the comparison other is located
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Leave the field
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Ways to reduce inequity tension
Equity sensitivity:
Equity sensitivity refers to how strongly people feel about outcome/input ratios with others
Quite successful at predicting behaviour, performance, wellbeing and other outcomes
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Not easy to put into practice as it doesn’t identify the comparison other or indicate which
inputs or outcomes are most valuable to each employee
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Evaluation of equity theory:
Give employees "voice" in the process - encourage them to present their facts and
perspectives on the issue
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Ways to improve procedural justice:
Organisational Justice
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4:30 PM
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perspectives on the issue
Decision maker is perceived as unbiased, relies on complete and accurate information, applies
existing policies consistently and has listened to all sides of the dispute
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Give employees a full explanation of the decision and treat them with respect throughout the
complaint process
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Employees tend to experience anger towards the source of the injustice
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Being treated unfairly threatens self-concept and social status
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Employees may engage in counterproductive behaviours to educate the decision maker
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Consequences of procedural injustice:
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