October 24, 2012

MU0012 [Employee Relations Management] Set2 Q3

Q.3 Write note on organizational justice.


Organisational Justice

Organisational Justice is the main factor of citizenship behaviour and its related outcomes are satisfaction, and commitment towards work. It also focuses on employee’s equality in outcomes such as payment and the procedures to determine those outcomes. Organisational justice builds trust in employee, which in turn gets displayed in citizenship behaviour.

The concept of justice differs based on the people’s cultural values. The people with collectivistic cultures differ from the people with individualistic cultures, in terms of equity and equality.

With good organisational justice, you can have more positive outcomes from an employee in the workplace. If employees are treated with full justice, they follow all the rules and regulations of an organisation. They will be more committed towards work, have more trust in organisation, and feel more satisfied with the justice they receive.

The term organizational justice was coined by Greenberg (1987) and is defined as an individual’s perception of and reactions to fairness in an organization. Justice or fairness refers to the idea that an action or decision is morally right, which may be defined according to ethics, religion, fairness, equity, or law. People are naturally attentive to the justice of events and situations in their everyday lives, across a variety of contexts (Tabibnia, Satpute, & Lieberman, 2008). Individuals react to actions and decisions made by organizations every day. An individual’s perceptions of these decisions as fair or unfair can influence the individual’s subsequent attitudes and behaviors. Fairness is often of central interest to organizations because the implications of perceptions of injustice can impact job attitudes and behaviors at work. Justice in organizations can include issues related to perceptions of fair pay, equal opportunities for promotion, and personnel selection procedures.

Organizational justice is conceptualized as a multidimensional construct. The four proposed components are distributive, procedural, interpersonal, and informational justice. Research also suggests the importance of affect and emotion in the appraisal of the fairness of a situation as well as one’s behavioral and attitudinal reactions to the situation (e.g., Barsky, Kaplan, & Beal, 2011). A myriad of literature in the industrial/organizational psychology field has examined organizational justice as well as the associated outcomes. Perceptions of justice influence many key organizational outcomes such as motivation (Latham & Pinder, 2005) and job satisfaction (Al-Zu’bi, 2010).

Corporate Social Responsibility
A concept related to organizational justice is corporate social responsibility (CSR). Organizational justice generally refers to perceptions of fairness in treatment of individuals internal to that organization while corporate social responsibility focuses on the fairness of treatment of entities external to the organization. Corporate social responsibility refers to a mechanism by which businesses monitor and regulate their performance in line with moral and societal standards such that it has positive influences on all of its stakeholders (Carroll, 1999). Thus, CSR involves organizations going above and beyond what is moral or ethical and behaving in ways that benefit members of society in general. It has been proposed that an employee’s perceptions of their organization’s level of corporate social responsibility can impact that individual’s own attitudes and perceptions of justice even if they are not the victim of unfair acts (Rupp et al., 2006).

Roots in Equity Theory
The idea of organizational justice stems from Equity Theory (Adams, 1963, 1965), which posits that judgments of equity and inequity are derived from comparisons between one’s self and others based on inputs and outcomes. Inputs refer to what a person perceives to contribute (e.g., knowledge and effort) while outcomes are what an individual perceives to get out of an exchange relationship (e.g., pay and recognition). Comparison points against which these inputs and outcomes are judged may be internal (one’s self at an earlier time) or external (other individuals).

Type of Organisational Justice
Organisations focus on three specific forms of justice. They are:
• Procedural Justice – Procedural justice is identified by the equality of processes that helps to determine the type of outcomes used, the way they are distributed, and to whom the outcomes are given. Some of the organisational procedural justice includes freedom from bias, accuracy, consistency, and correction of errors.
• Distributive Justice – Distributive Justice is identified by the reasonable employees in an organisation that recognise the actual outcomes they obtain. Issues may arise if the employee experiences something negative in the workplace that cannot be prevented. Issues may also arise if they do not get the same outcome they expected to have or when the outcomes are inadequate. 
• Interactional Justice – Interactional justice is identified by the awareness of equality in the procedural treatment of others. Issues may arise if the employees are judged wrongly and denied of respect or privacy.A low level of interactional justice can be related to possibility of sexual harassment. Recent study shown that differences in personality and aggressive behaviour of an individual effect the way they react to the inequality in the organisation. Employees’ perception of procedural justice is determined by re-organising their performance rating. With this rating system, employees’ view of organisational justice increases.  

Organisational Misconduct
Organisational misconduct has now been recognised as the matter of serious social and economic concern. It has also been estimated that the annual cost of corporate crime, is much greater than ordinary crime. Organisational misconduct are typically hidden, hence their scope and nature are not very clear. Thus, investigations remains limited to self-report surveys.

Basic Organisational Liability Standards
There are three basic organisational liability standards to deal with agent misconduct. These liabilities are called duty-based liability regimes that identify the presence of internal work structure, to determine if the organisation has met its duty of care or not. The three basic Organisational liability standards are:
• Strict vicarious liability
• Negligence
• Composite Regimes Compliance

(1)Strict vicarious liability
This liability is imposed when organisational staff conducts some punishable crime, despite many warnings given to them by the organisation, to stop the harm. The basic idea behind strict vicarious liability is to incorporate all of the costs, associated with their activities. This leads to appropriately priced organisation’s products and delivery of the finest amount of services.
Strict vicarious liability systems compel the organisations to implement the most favourable level of internal organisational enforcement and prevention technique. When the organisation starts to cover up all the costs of any damage it causes, this technique helps to reduce the frequency of the harm. The rate of the harm is reduced up to the point such that, reduction equals the benefits.

This liability is imposed when organisational staff conducts some punishable crime and the organisation fails to provide standard of care. This clearly states that organisation was not able to avoid the harm. This in turn implies that, they failed to observe industry standards with regards to various operating methods.

Negligence-based Organisational Liability Systems do not compel organisations to implement level of organisational enforcement and production. As this liability fails to cover up all the cost of their harmful conduct, it is considered as inferior to strict liability regimes.

(3)Composite Regimes Compliance
This liability regime is imposed by combining liabilities of both strict vicarious liability and negligence. Composite Liability Regimes assign liability, based on strict liability standard, however approves this allocation of liability based on a negligence standard.

Proposed Models of Organizational Justice
Three different models have been proposed to explain the structure of organizational justice perceptions including a two factor model, a three factor model, and a four factor model. Many researchers have studied organizational justice in terms of the three factor model (e.g., DeConinck, 2010; Liljegren & Ekberg, 2010) while others have used a two factor model in which interpersonal justice is subsumed under procedural justice while yet some other studies suggest a four factor model best fits the data (Colquitt, 2001). Greenberg (1990) proposed a two-factor model and Sweeney and McFarlin (1993) found support for a two-factor model composed of distributive and procedural justice. Through the use of structural equation modeling, Sweeney and McFarlin found that distributive justice was related to outcomes that are person-level (e.g., pay satisfaction) while procedural justice was related to organization-level outcomes (e.g., organizational commitment).

The accuracy of the two-factor model was challenged by studies that suggested a third factor (interactional justice) may be involved. Bies and Moag (1986) argue that interactional justice is distinct from procedural justice because it represents the social exchange component of the interaction and the quality of treatment whereas procedural justice represents the processes that were used to arrive at the decision outcomes. Generally researchers are in agreement regarding the distinction between procedural and distributive justice but there is more controversy over the distinction between interactional and procedural justice (Cohen-Charash & Spector, 2001). Colquitt (2001) demonstrated that a four-factor model (including procedural, distributive, interpersonal, and informational justice) fit the data significantly better than a two or three factor model. Colquitt’s construct validation study also showed that each of the four components have predictive validity for different key organizational outcomes (e.g., commitment and rule compliance).

The Role of Affect in Organizational Justice Perceptions
One of the key constructs that has been shown to play a role in the formation of organizational justice perceptions is affect. The precise role of affect in organizational justice perceptions depends on the form of affectivity being examined (emotions, mood, disposition) as well as the context and type of justice being measured. Affect may serve as an antecedent, outcome, or even a mediator of organizational justice perceptions.

A recent article (Barksy, Kaplan, & Beal, 2011) provides a model that explains the role of affect and emotions at various stages of the appraisal and reaction stages of justice perception formation and illustrates that injustice is generally an affect laden and subjective experience. Affect and emotions can be part of the reactions to perceived injustice, as studies have shown that the more injustice that is perceived, the higher degrees of negative emotions are experienced. In addition, affect can act as a mediator between justice perceptions and actions taken to redress the perceived injustice. Affect plays this role in Equity Theory such that negative affective reactions act as a mediator between perceptions and actions, as emotional reactions to justice motivate individuals to take action to restore equity.

A recent meta-analysis by Barsky and Kaplan (2007) condenses many studies on this topic and explains that state and trait level affect can influence one’s perceptions of justice. The findings of Barsky and Kaplan show that both state and trait level negative affect can act as antecedents to justice perceptions. State and trait level negative affect are negatively associated with interactional, procedural, and distributive justice perceptions. Conversely, positive state and trait affectivity was linked to higher ratings of interactional, procedural and distributive justice.

Based on the research regarding the central role of affect in justice perceptions, Lang, Bliese, Lang, and Adler (2011) extended this research and studied the idea that sustained clinical levels of negative affect (depression) could be a precursor to perceptions of injustice in organizations. Lang et al. (2011) tested longitudinal cross-lagged effects between organizational justice perceptions and employee depressive symptoms and found that depressive symptoms do lead to subsequent organizational justice perceptions. Thus, affect can serve as an antecedent to justice perceptions in this instance.

Antecedents of Organizational Justice Perceptions

Employee Participation
One antecedent to perceptions of organizational justice is the extent to which employees feel that they are involved in decision-making or other organizational procedures. Higher levels of justice are perceived when employees feel that they have input in processes than when employees do not perceive that they have the opportunity to participate (Greenberg & Folger, 1983; Bies & Shapiro, 1988). The opportunity or ability to participate in decision making improves an individual’s perceptions of procedural justice, even when the decision is unfavorable to the individual (Bies & Shapiro, 1988). In addition, other studies have shown that employee input is related to both procedural and interpersonal justice perceptions (Kernan & Hanges, 2002).

A second antecedent to organizational justice perceptions is organizational communication with employees. Communication has been shown to be related to interpersonal and informational justice perceptions (Kernan & Hanges, 2002). The quality of communication by an organization or manager can improve justice perceptions by improving employee perceptions of manager trustworthiness and also by reducing feelings of uncertainty (Kernan & Hanges, 2002). It is important that the information provided be accurate, timely, and helpful in order for the impact on justice perceptions to be positive (Schweiger & DeNisi, 1991).

Justice Climate
Perceptions of organizational justice can be influenced by others, such as co-workers and team members. Recent research suggests that team level perceptions of justice form what is called a ‘justice climate’ which can impact individuals’ own views of justice (Li & Cropanzano, 2009). Employees working within a team may share their perceptions with one another which can lead to a shared interpretation of the fairness of events (Roberson & Colquitt, 2005). Research findings show that individuals can “learn” justice evaluations from team members and these can lead to homogeneity of justice perceptions within teams, creating a strong justice climate (Roberson & Colquitt, 2005). Thus, group-level perceptions of justice can be conceptualized as an antecedent to individuals’ justice perceptions.

Outcomes of Organizational Justice Perceptions
Employees’ perceptions of injustice within the organization can result in a myriad of outcomes both positive and negative. Outcomes are affected by perceptions of organizational justice as a whole or by different factors of organizational justice. Commonly cited outcomes affected by organizational justice include trust, performance, job satisfaction, organizational commitment, organizational citizenship behaviors (OCBs), counterproductive work behaviors (CWBs), absenteeism, turnover, and emotional exhaustion.

The relationship between trust and organizational justice perceptions is based on reciprocity. Trust in the organization is built from the employee’s belief that since current organizational decisions are fair, future organizational decisions will be fair. The continuance of employee trust in the organization and the organization continuing to meet the employee’s expectations of fairness creates the reciprocal relationship between trust and organizational justice (DeConick, 2010). Research has found that procedural justice is the strongest predictor of organizational trust (Hubbell & Chory-Assad, 2005; Cohen-Charash & Spector, 2001). A positive relationship between an employee and supervisor can lead to trust in the organization (Karriker & Williams, 2009).

The impact of organizational justice perceptions on performance is believed to stem from Equity Theory. This would suggest that when people perceive injustice they seek to restore justice. One way that employees restore justice is by altering their level of job performance. Procedural justice affects performance as a result of its impact on employee attitudes. Distributive justice affects performance when efficiency and productivity are involved (Cohen-Charash & Spector, 2001). Improving justice perceptions improves productivity and performance (Karriker & Williams, 2009).

Job Satisfaction & Organizational Commitment
Job satisfaction was found to be positively associated with overall perceptions of organizational justice such that greater perceived injustice results in lower levels of job satisfaction and greater perceptions of justice result in higher levels of job satisfaction (Al-Zu’bi, 2010). Additionally, organizational commitment is related to perceptions of procedural justice such that greater perceived injustice results in diminished commitment while greater perceived justice results in increases commitment to the organization (DeConick, 2010; Cohen-Charash & Spector, 2001).

Organizational Citizenship Behavior
Organizational citizenship behaviors are actions that employees take to support the organization that go above and beyond the scope of their job description. OCBs are related to both procedural justice (DeConick, 2010; Cohen-Charash & Spector, 2001; Karriker & Williams, 2009) and distributive justice perceptions (Cohen-Charash & Spector, 2001; Karriker & Williams, 2009). As organizational actions and decisions are perceived as more just, employees are more likely to engage in OCBs. Karriker and Williams (2009) established that OCBs are directed toward either the supervisor or the organization depending on whether the perception of just stems from the supervisor or the organization. Additionally, a relationship was found between interpersonal justice and OCBs; however, this relationship was not mediated by the source of justice perceptions (Karriker & Williams, 2009).

Counterproductive Work Behaviors
Counterproductive work behaviors are “intentional behaviors on the part of an organizational member viewed by the organization as contrary to their legitimate interests” (Zohghbi-Manrique de Lara & Verano-Tacoronte, 2007, p.716). Increased judgments of procedural injustice can lead to employee unwillingness to comply with an organization’s rules (Zohghbi-Manrique de Lara & Verano-Tacoronte, 2007; Cohen-Charash & Spector, 2001). However, the relationship between perceived procedural injustice and CWBs is mediated by perceived normative conflict, which is the extent to which employees perceive conflict between the norms of their workgroup and the rules of the organization. If the perceptions of procedural injustice result in perceived normative conflict, CWBs will occur (Zohghbi-Manrique de Lara & Verano-Tacoronte, 2007).

Absenteeism & Withdrawal
Absenteeism, or non-attendance, is another outcome of perceived injustice related to Equity Theory (Johns, 2001). Failure to receive a promotion is an example of a situation in which feelings of injustice may result in an employee being absent from work without reason. Johns (2001) found that when people saw both their commitment to the organization and the organization’s commitment to them as high absenteeism is diminished. Additionally, withdrawal, or leaving the organization, is a more extreme outcome stemming from the same Equity Theory principles. Distributive justice perceptions are most strongly related to withdrawal (Cohen-Charash & Spector, 2001).

Emotional Exhaustion
Emotional exhaustion, which related to employee health and burnout, is related to overall organizational justice perceptions. As perceptions of justice increase employee health increases and burnout decreases (Liljegren & Ekberg, 2009). Distributive, procedural, and interactional justice perceptions are able to capture state specific levels of emotional exhaustion which fade over time; however, overall organizational justice perceptions give the most stable picture of the relationship between justice perceptions and emotional exhaustion over time (Liljegren & Ekberg, 2009).

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