Blog Article

Even monkeys are looking for greater reward fairness

Posted by Tom McMullen

Tom McMullen

“Monkeys that had previously been perfectly happy with a slice of cucumber suddenly stopped accepting it when they saw their partners getting a grape.”  – Nature Magazine (2004)

Concepts of fairness and equity are developed at a young age and persist for a lifetime.  Research indicates that children are easily able to recognize unfair practices and the potential harm of such practices to themselves and others. Primates also exhibit an understanding of inequity by throwing tantrums in response to unfair rewards. The notion of fairness is basic and not something that we abandon when we walk through the entrance of our workplace. While an important business topic, it is also a murky one.

Lack of fairness in the workplace increases counter-productive behavior.  Employees may resort to “self correcting” behaviors such as limiting work effort to stealing office supplies in an attempt to re-balance the fairness scales. From Hay Group’s global employee opinion research database of 4 million employee records, factors that drive employees out of organizations include (in rank order):

  • Lack of career development opportunities
  • Dissatisfaction with compensation
  • Poor work climate
  • Manager/supervisor conflict
  • Lack of challenging work
  • Unclear direction of organization
  • Lack of recognition

Fairness in rewards is a multi-faceted concept which is a challenge to manage.  Employees gauge fairness in rewards relative to other employees in different ways, including:

  • Distributive fairness – are rewards allocated fairly?  Is there understandable logic in how they are allocated?
  • Procedural fairness – are we consistent in how we allocate rewards?
  • Interactional fairness – is the relationship and level of trust between manager and employee strong?

While these three forms of justice are distinct, the presence of one often correlates with the presence of the other two.  In the absence of these forms of justice, the work environment can become divisive and hostile, making individual, team and enterprise goals challenging or impossible to achieve.

We see several areas where organizations should focus on improving fairness in their reward programs.  Here is a top 5 list:

1. Understand your employees’ perspectives
The best reward programs balance the needs of the organization and employees.  But, most organizations don’t do a good job in understanding employee opinions.  Organizations should consistently probe employees’ and managers’ perspectives of fairness and equity via targeted surveying and focus-groups.

2. Decode your organization’s value system
Understand your organization’s value system and what your reward program really stands for.  This is important because they are best understood by senior leadership (as they develop them) and least understood by employees and first-level managers.  This also goes for the organization’s reward strategy.  Few reward program strategies explicitly address how fairness and equity are defined and managed.  In fact, most reward strategies and philosophies are not sufficiently robust and need to be made more explicit.

3. Define what fairness means in your reward programs
How do you define fairness (or unfairness) in your reward program?  As part of your reward strategy, articulate the rationale for the following:

  • What aspects of fairness/equity cause us the most/least concern?
  • What are the dominant factors that should vary in financial and non-financial rewards?  Do criteria vary by reward element?
  • How is the concept of performance defined and measured?  Are they enterprise, team and/or individual measures?  How do measures relate to rewards?
  • Should reward programs and policies vary by employee group?
  • What values should we be recognizing in non-financial reward programs?
  • What is the degree of openness/transparency in reward communications?

4. Focus on rewards that most impact fairness
Fairness in rewards must extend beyond monetary rewards.  Rewards that have the most direct impact on fairness concerns include job design and work valuing systems, career development platforms, performance management processes  and recognition processes.

5. Develop strong reward communication processes
Most organizations have reward philosophies – but few have written them down and fewer report high levels of employee understanding.  If the rationale behind reward program elements is not clearly articulated, employee confidence in fairness will be low.  Focus needs to be on key messages, linking them to a larger performance message and sustaining them via communications from leaders.

Organizations face numerous challenges in determining how to effectively reward their employees.  Issues of “fairness” underlie many aspects of the organization’s total rewards program.  No matter how sophisticated their design, reward programs, policies and practices that are not perceived as fair by employees (and monkeys) will not be successful.

 

Leave a comment

Comment with Facebook

4 comments

  1. Emil Hassing

    Emil Hassing

    August 9, 2013 at 6:34 am

    Dear Tom,

    Is it possible that you would elaborate upon your points e.g including suggestions for “How to Succed” in the 5 tasks you propose. If you have some ideas of how to create or generate a performance management system build upon fairness.

    Best Regards
    Emil Hassing

  2. Venkatesh

    Venkatesh

    August 9, 2013 at 9:49 am

    My two cents:
    Here are three programs that can be called fair.
    1. The first three to reach the tape will be rewarded.
    The distance is 100 mts. All of you have the same starting point. You will have to start after the gun shot. You shall run only in your lane. You shall not touch others. You shall not use vehicle or any other support. You shall not use any drugs that gives you an unfair advantage over others. (We have a program to check and catch those who do it.) You are welcome to practice as hard as you want.
    2. The top three longest throws (of the javelin we provide) will be rewarded.
    3. The top three highest jumps will be rewarded./The top three highest jumps with a pole will be rewarded.

    In addition:
    Request your thoughts on my view that – one of the best ways to make things fair is to make the entire program transparent. Blog post – Four tips to enhance your R&R program at spvenkatesh.wordpress.com

  3. Tom McMullen

    Tom McMullen

    August 19, 2013 at 3:03 pm

    Emil — appreciate your response. The attached will provide some insight on principles re: establishing a more effective, aligned and fair performance management process:

    http://www.haygroup.com/us/press/details.aspx?id=36406

  4. Tom McMullen

    Tom McMullen

    August 19, 2013 at 4:23 pm

    Venkatesh –

    Thanks for your response. I generally agree with your comment regarding transparency. Although thought needs to be given to where the line is between transparency being an asset vs. a liability. For example, disclosing all the minute details of how incentive plan exception administration or the job evaluation program could be a distraction. The following two articles provide some thoughts around effective reward communication practices. Tom

    http://www.haygroup.com/ww/downloads/details.aspx?id=8786

    http://www.haygroup.com/us/downloads/details.aspx?id=34093

Related posts  

Subscribe to our mailing list

To access our latest thinking and get regular updates fill in your email address below

Latest video blog

More from Hay Group