Matching reward to organisational values

Do your employees have a strop of ‘Kevin and Perry’ proportions every time you mention the words “benefits review”?

We all have strategies to retain and motivate top talent. Who doesn’t? But why is it that no matter how hard HR managers and benefits managers try, their efforts are often perceived as unfair?

The concept of fairness in an organisational context is a complex one. Essentially, when employees question the fairness of the reward policy they are likely to mean one of three different things.

Firstly, there is outcome or distributive fairness. This is the popular definition of fairness – the outcome of a situation being fair or unfair according to the referent or benchmark of the victim. In the workplace, this sort of unfairness can cause workers to lower their job performance, engage in withdrawal behaviours, co-operate less with their co-workers and generally complain to HR. When people make a distributive fairness judgement, they are evaluating whether an outcome is appropriate, moral, or ethical for them. Making this decision is harder than it may appear, for there is seldom an objective standard of fairness. But because distributive fairness is judged by referent standards, two people with the same outcomes may perceive different levels of fairness if they are not using the same referent, which is the perennial HR problem. Distributive fairness is concerned only with the outcome and not the procedure behind it. But that isn’t the end of the story. People generally care about how they are treated and procedural fairness (which is the second type) does much to shape their relationships with their employers.

For this reason, it is important to clearly articulate the attributes of fair decision-making procedures. To be considered fair, research suggests that a procedure should be: consistent, free from bias, accurate, correctable in case of an error, representative of all concerned and based on prevailing ethical standards.

Get this right and employees may still not like the outcome, but at the very least, they will more readily accept it.

Finally, the third and most critical (and the cheapest to implement) is interactional fairness. Get this right and you could be an HR or benefits superstar. Interactional fairness refers to the quality of the interpersonal treatment received by an individual in the process. It comprises two elements: an interpersonal component which relates to treating individuals with dignity and respect, and an informational component that refers to the provision of adequate information to explain the outcome or decision.

So what is the practical application of all this theory? Well in short, get your interactional fairness right, your procedural fairness visible and in order, and you will get less complaints and a more understanding workforce. And the really good part is that interactional fairness costs next to nothing.

Ensure you have transparent processes and tell your employees what benefits and rewards cost the organisation. Let them into your world, share information, and communicate with them like adults to demystify the black art of rewards. Have fair and visible procedures and the outcomes will be received by an adult population rather than with the shrugs and grunts of discontented teenagers.