Fairness in reward
Welcome to these learning resources looking specifically at the topic of fairness in reward. The resources aim to define this – and how fairness differs, although subtly, from equity, consistency and transparency – and to explore its significance to reward in organisations.
The resources are divided into two sections and the table below identifies how the learning relates to the CIPD units.
1. Fairness - defined
Armstrong (2007) offers the following definition of fairness in reward:
“A fair reward system is one that operates in accordance with the principles of distributive and procedural justice.”
From this it’s clear that there are two aspects to fairness, with distributive justice referring to how individuals see the distribution of reward between themselves and others and procedural justice identifying the need for fairness in how the level of reward is determined. The important point to note from this is that fairness in reward is very much about how individuals perceive the level of reward they receive, against the skills and effort deployed and how it compares to others. This makes fairness hard to manage, although efforts to ensure equity, consistency and transparency help.
2. The significance of fairness
To help build your understanding of what fairness, or more specifically unfairness, in reward looks like and it’s significance to the workplace, we need to enlist the help of two monkeys…
The video clip below uses two monkeys to demonstrate the impact of unfair reward decisions. Watch it and make a note of the following points:
- What is it in how the monkey on the left was treated differently that made the reward unfair?
- How did the monkey react? What was the impact on her of this perceived unfairness?
- How might this be applied to the workplace? Are there any examples you’ve experienced or heard about?