Perceived Fairness in Reward Allocation- Management Essay Assignment Solution

HR Management Essay Assignment

Purpose

The primary purpose of this assessment is to assist students develop skills in use of human resource management (HRM) principles, theories and models in the analysis of fairness/justice issues in reward management. The assignment task encourages exploration of the importance of organisational fairness/justice, various factors

influencing (un)fairness and how fairness can be achieved in reward allocation.

The second purpose of this assignment is to give students the opportunity to enhance their research, analysis, critical thinking and written communications skills including the identification and development of an argument.

Before starting this assessment, please read the marking criteria (at the end of this document and also available on the course profile) and refer to Academic Learning Centre (https://www.cqu.edu.au/student-life/services-and-facilites/academic-learning-centre) and its Moodle site (https://moodle.cqu.edu.au/course/view.php?id=1498) for the guidelines regarding writing academic essays.

The Moodle course website also provides useful information in regard to the development of this assessment task. You should always check the course website for course-specific instructions, which may be updated continuously

Description

Assessment task 3 requires the writing of an academic essay. The essay should be an ‘argumentative essay’, and must therefore contain an argument that is used as the structuring element of the paper. The assignment is based on a discussion piece that highlights a number of points such as the importance of fairness in reward allocation,

factors leading to fairness, and the consequences of (un)fair reward distributions. The purpose of the essay is to identify the roles of fairness in reward allocation and related influences on employees’ work outcomes. Students are expected to engage in extensive research within the academic literature relating to human resource management.

Details

This assignment MUST be a properly constructed academic essay. It MUST NOT contain headings and sub-headings. Refer to the university’s guide for writing academic essays for details

https://www.cqu.edu.au/__data/assets/pdf_file/0011/28577/4EssayWriting.pdf. You are required to follow this guide to structure your essay.

The assignment should contain a coherent, but necessarily restricted review of the academic literature on HRM topics in question. The literature review should be integrated into the assignment and not be a separate section. A reference list formatted in the prescribed Harvard style is compulsory. Further information regarding formatting of assignments and other information is available at https://www.cqu.edu.au/about-us/service-and-facilities/referencing

This assessment item involves researching your assigned topic to enhance your understanding of and utilisation of academic literature. Whilst you should AVOID using only textbook, the prescribed textbook for the course should be cited in regard to broad HRM principles. You will be expected to present information and evidence from, and cite, at least fifteen (15) relevant peer reviewed journal articles (absolute minimum requirement). These do not include other academic references such as books, conference papers, and book chapters and so on. Although you can cite these other academic references in your essay, they will not be counted as part of the 15 journal articles. Refer to your recommended readings for examples of academic journals. While you can cite these recommended references, it is expected that you find fifteen (15) peer reviewed journal articles not listed in the course materials. The quality and number of citations will demonstrate the breadth and depth of the literature used to support your arguments. Your marker is interested in the analysis that you have developed from YOUR review of the literature and how well you use the literature to discuss the topic.

AVOID presenting a descriptive account ONLY of your readings. What is required in this assessment is a critical evaluation of the academic literature as it relates to the specific details of the case study. Your marker is also interested in the conclusions that you reach by evaluating the literature and the case scenario.

Tasks

Write an essay titled “Fairness in Reward Allocation” to critically discuss the following questions:

• How important is organisational fairness (or organisational justice) in compensation management? What roles does organisational fairness (or organisational justice) might play in reward allocation?
• What factors might influence the implementation of fair human resource management practices in reward allocation?
• What influences can fair reward distribution have on employees’ work outcomes (e.g., job attitudes and work behaviours)?

Your essay should be a properly constructed academic essay. It should contain an effective introduction, body, and conclusion. The introduction should introduce the essay and include your argument. The body should present the

evidence you have collected to support your argument, and the conclusion should restate your argument, summarise the evidence and make a conclusion regarding your argument. You are required to support your argument with

appropriate theoretical discussion and references.

The essay should contain a coherent, but necessarily restricted review of the academic literature on the Human Resource Management topic in question. The literature review should be integrated into the essay, not a separate

section. Advice regarding formatting of the essay can be found at the link above. Do not use headings or include an abstract. A reference list is compulsory.

This assessment item involves researching your assigned topic to enhance your understanding of Human Resource Management (HRM) concepts and utilisation of academic literature. AVOID using only textbooks, however, the prescribed textbook for the course should be cited in regard to broad HRM principles. You will be expected to present information and evidence from, and cite, at LEAST fifteen (15) relevant peer-reviewed, academic journal articles (twelve relevant and well applied academic articles will gain a pass mark for this criterion). Refer to your recommended readings for examples of academic journals. While you can cite these you must find fifteen (15) journal articles not listed in the course materials. Your citations will show the breadth and depth of the literature used to answer the questions. Your marker is interested in the analysis that you have developed from YOUR review of the literature and how well you use the literature to respond to the topic.

Perceived Fairness in Reward Allocation

An organisation can be viewed as an arena where the employees exchange or invest resources like talent and effort in anticipation of a return either tangible (payment) or intangible (self-esteem) in nature, which can be referred as organisational rewards. It is important for the employees to get return on their investment that is perceived fair (Aryee, Chen & Budhwar 2004, p.1). Reward allocations can be considered from different perspectives of equity, equality and need. This essay argues that there is a requirement to find the balance between both equity and equality to be completely fair to reward recipients and allocators.

Fairness in reward allocation plays an important role in an organisation and has an impact on individual employee attitudes and behaviours including satisfaction, commitment, citizenship behaviour and absenteeism (Colquitt et al., 2001, cited in Simons & Roberson 2003, p.432). The concept of fairness is oriented on the fairness theory that stresses on the importance of equity in transactions where individuals are concerned (Sharma, Borna & Stearns 2009, p.254). It is important for the employees to be satisfied with the reward allocation procedure because it impacts employee’s effective commitment, job performance, their decisions to stay with the company and hence the turn over (Simons & Roberson 2003, p.435). Commitment plays an important role in the organisation because it helps in maintaining the behavioural direction of the employee including pro-social, altruistic behaviours and sacrifices that will be done for the company (Simons & Roberson 2003, p.435). Job

performance is the out come that employees pave way to by realising the goals and objectives allocated to that employee by the organisation (Sharma, Borna & Stearns 2009, p.253). It also increases employee motivation (Zhu 2007). This inturn enhances the organisations success.

There is a strong relation between reward fairness and justice to pay satisfaction, intention to quit, perceived support from the organisation, individual performance and hence organisational outcomes (Scott, McMullen, Royal 2011, p.2). Allocating rewards systematically is important so that employees will perceive these pay decisions as fair and equitable (Day et.al 2014, p.74). When rewards are allotted they have both tangible and symbolic values. According to a recipient, it is the worth his work has in others eye, and hence it is measure of his/her status symbolically (Hung 1986, p.239).

Shared justice perceptions impact the organisational-level of operational outcomes (Simons & Roberson 2003, p.442). The three types of fairness perceptions include distributive justice which is the perceived fairness of an actual appraisal rating, procedural justice which is fairness that is followed in the procedures of determining

an appraisal rating and interactional justice which is the perceived fairness of the allocators interpersonal treatment of the employee during the process of allocation (Narcisse & Harcourt 2008, p.1152). It is important for the employees to believe that these procedures are fair to all the employees.

The importance of procedural fairness is such that, employees have reported a high level of satisfaction and their intention to remain with the company, when they felt there is a higher level of procedural fairness irrespective of lower extrinsic rewards (Burnett, Williamson & Bartol 2009, p. 469). There is a higher scope for influencing the job attitudes, behaviours and workplace attributes of employees by treating them fairly by writing down and implementing a reward strategy that explains the importance of having fair and non-discriminatory pay (Brown 2009, cited in (Burnett, Williamson & Bartol 2009, p. 470). Employee’s intention to serve the company can be positively influenced through the combination of intrinsic, extrinsic and social rewards allocated on the basis of procedural fairness (Burnett, Williamson & Bartol 2009, p. 469).

It is very important to understand the nature of the reaction of employees when they are rewarded. Certain principles can be used for understanding the employee’s response to the reward allocation programs and decision-making. They are the equality principle, the equity principle and the need principle. The reward allocation

principles are based on them and hence are referred to as allocation principles. Along with this seniority is also considered as a fourth allocation principle (Fisher, 2004, p152).

The equality principle holds that every one should be given rewards irrespective of their performance rate and other contingencies. Equity principle hold that rewards and resources will be allocated on the basis of the performance of the employee. The need principle demands consideration of needs and context of the individual employees before reward allocation (Daverth, Cassell & Hyde 2016, p.98).

Distributive justice theories that propose how people from a different culture would consider perceive fairness of reward on the basis of justice norms. People can do a comparison of the justice evaluation by comparing it to a situational distribution that is normatively considered a ‘fair distribution’ (Hysom & Fisek 2011, p.1263). The

three types of situational factors that are considered in justice norm preference are individual level factors, group level factors consisting of both individual evaluator & group of actors, and the task factors related to gender and preference of the evaluator. Environmental factors like culture and organisational factors also play an important role in determining the context (Hysom & Fisek 2011, p.1266).

Cultures can be distinguished on the basis of being individualistic and collective. Individualistic cultures tend to prefer rewards allocation done on the basis of the individual inputs there by leading the best performer to yield the highest of reward, thus preferring the equity theory. In this case the focus of the recipients will be on

effort, skill, status of the individual, pay, benefits etc. Collectivism tends to encourage the well being of the whole group and hence tends to prefer the equality principle. In this case preference will be on factors that are group relevant like loyalty, support, status in the group, cohesiveness, and harmony (Fadil et.al 2005, p.21). They believe in the concept of interdependency.

UK and Germany can be referred to as examples for learning the differences between allocations of reward. Though the countries are similar in a global scale and play an important role EU and have many similarities on terms of economic and political development, they are different in terms of intellectual, economical and philosophical

thinking. The difference is also extended to company structures and their management styles. UK is more individualistic in comparison to the Germany, and was more tolerant of uncertainty. Germans are higher on collectivism and hence prefers equality based reward allocation (Fisher 2004, p. 152).

The criterions that are used for allocating rewards are determined by contextual and individual factors. Individual factors will include the difference between the individual-group and the relationship that is shared by the in-group and out-group members. Goal orientation is an example for contextual factor. Non-equity criterions

will be used by companies that are oriented on objective realisation beyond profitability, like personal development or relationship building among employees. But allocation of rewards cannot be based on either equity principle of equality principle because there will inconsistency between the national values, individual decisions, contextual and organisational factors that influences decision making in a given situation (Day et.al 2014, p.76). This issue is becoming more prominent because of globalisation and the multi-cultural workforce that comes together to work in any chosen organisation.

It is equally important to allocate reward fairly. When employees perceive inequality in allocation of rewards, it induces indignation, anger and resentment (Daverth, Cassell & Hyde, 2016, p.89). When status of high significance is allotted to others, there is also a low accorded status that is allotted to the people silently, who was not rewarded. This incongruity between the high subjective status and low accorded status unsettles other employees who are working in the organisation and they will suffer from social identity security. Hence it is equally important to control the negativity bias that leads to situations where the employees give up responsibility and resists being in control. It may also lead to higher churn of jobs, demotivation and absenteeism (Hung 1986, p.242). But on the other side equality based reward allocation impacts performance of the employees. But again this impacts the key intrinsic motivation that is required to perform in a given job. According to intrinsic motivation theory, motivation is dependent on self-determination and perceived competence (Zhang, Long, Wu & Huang 2015, p.700)

All these factors lead to a situation where organisations should frame an adequate framework for unbiased rewards allocation. The most logical solution is to formulate a work environment that offers high level of fairness that gives favourable outcomes on the basis of the requirement of the employees (Burnett, Williamson & Bartol 2009, p.470).

The model by Burnett, Williamson and Bartol, analyses that when employees perceive a procedural fairness in reward allocation on the basis of the rewards requirements they prefer including extrinsic reward or social rewards on the basis of their personality that is extraversion or conscientiousness. There will be a positive impact on their job attitudes creating job satisfaction that reinforces their intention to remain with the company (Burnett, Williamson & Bartol 2009, p.470) (Refer Appendix 1).

A model suggested by Day et.al (2014) suggests that employee needs should be communicated across to the manager, which should be considered while performance evaluation is done. The employees can be allocated reward on the basis of performance and hence perceived fair by the employees (p.79). (Refer Appendix 2). According to Olsen (2015), joint effects will be present when it comes to both individualism and collectivism cultures. These national cultures tend to have preference or tolerance of equity or equality principle on the basis of individual values of achievement, benevolence, universalism and conformity (p.190)

Along with this there should be rules in an organisation against which fairness of procedures are evaluated. They are 1) consistency rule that makes sure that the allocation procedures are all consistent across all employees over time, 2) bias suppression rule where any depiction of personal interest in the allocation process should be prevented, 3) accuracy rule where decision will be made only on the basis of accurate information, 4) correctability rule where options should be there for communities to modify the decisions made, 5) representatives rule where the concerns of all recipients are involved in allocation and 6) ethicality rule where allocations are

made on the prevailing moral and ethical standards (Cropozano, Prehar & Chen 2002 cited in Aryee, Chen & Budhwar 2004). These rules help in making sure that the procedural justice is unviolated and corrupted.

Irrespective of the numerous models and theoretical suggestions a high level of importance should be allotted to direct experience and the contextual factors that is unique to every company in a given situation. Policies once framed should be adhered to and updated regularly. The employees should also be aware of the procedure undertaken to understand how their inputs are evaluated. This results understanding reward allocation and justification for its assignment (Brink, Fruitier & Thunnissen 2013, p.183).

To conclude, it can be seen that employee perceptions of reward are influenced by multiple variables including their need, context and the culture that they belong to. However, a performance appraisal that is favourable to both the employees and the organisation should be framed. Equity principle can be considered performance

oriented that favours the organisations profit where as equality principle may adversely impact the intrinsic motivation of the employees. So any policy and framework made for reward allocation should find a balance between equity and equality principle.