Justice and Culture in the Perception of Compensation Fairness

Abstract

While compensation is a central component in the relationship between employees and employers, it is a relatively under-researched area within human resource management and industrial-organisational psychology. Instead, where much of the compensation research has occurred is within the disciplines of economics and finance, areas where agency theory dominates. This article explores the relationship between culture and compensation practices through the lens of organisational justice theory and contrasts the role of distributive justice with the more recent procedural and interactional justice theories. The article articulates how fairness perceptions are instrumental in determining which compensation practices fit different cultures. The consideration of individual perception is important as there is considerable variability within cultures and many organisations have to deal with increasingly multicultural workforces. A particular contribution of this paper is that it explicitly discusses justice perceptions as an explanatory variable of the relationship between culture and compensation practices, something that frequently has been omitted in prior scholarship. The article further explores the extent to which employee participation in compensation decisions may modify perceptions of fairness, and subsequently how this participation effect may be modified by culture.

Employee Engagement and Remuneration Justice in Lithuania and Poland

“…It is crucial for employee satisfaction and commitment (Klendauer & Deller, 2009), the lack of which results in higher absenteeism rates and poorer results (Williams et al, 2006). Fairness can be considered the most important factor in developing a remuneration system which, as a component of the overall human capital management system, should be consistent with the overall culture and strategy of the organisation (Petersen, 2014). The sense of injustice of compensation triggers as counterproductive behaviour in the workplace.…”

Factors Influencing Evaluation of Remuneration Justice

“…Fairness is the most important factor in the assessment of the remuneration system, which -as a component of the overall human capital management system should be consistent with the common culture and strategy of the organization [Petersen, 2014]. It plays a crucial role in employee satisfaction, the lack of which results in higher level of absenteeism and lower efficiency [Williams, et al, 2006].…”

“…In the management literature, remuneration justice is analysed in the context of organizational justice [Petersen, 2014]. It is recognized as the basis for shaping trust and, as a result, leads to productive employee behavior.…”

Zróżnicowanie oceny sprawiedliwości wynagradzania w zależności od poziomu płac

“…W literaturze z zakresu zarządzania, badania nad sprawiedliwością wynagradzania są prowadzone w kontekście sprawiedliwości organizacyjnej (Petersen, 2014). Oznacza ona poczucie sprawiedliwości, dotyczące funkcjonowania organizacji w szerokim zakresie: podziału wynagrodzeń, możliwości rozwoju, awansowania, procedur obejmujących kryteria premiowe, awansowania, zwalniania oraz interakcji społecznych, czyli zasady komunikacji, informacji zwrotnych itp.…”