Personal Finance

Ensuring fairness in your firm’s pay spread

An open floor office. Managers must familiarise themselves with work-to-effort levels of their subordinates. FILE PHOTO | NMG
An open floor office. Managers must familiarise themselves with work-to-effort levels of their subordinates. FILE PHOTO | NMG 

Employees care ferociously about fairness. If a workplace hires more of one ethnicity than another, the unfavoured tribes will feel slighted. If men get promoted more often, the women in an office will harbour disdain for the firm. If former pupils from the same secondary as the boss receive higher salaries than other workers, then emotions of inequality will abound.

Unlike canines who survive as pack animals with regimented accepted hierarchies, humans by nature favour equitable distribution of resources and both dislike as well as notice unfairness. Unfortunately, what we as a species prefer in fairness, we do not always find in our employment relationships.

Many organisations promulgate and accept glaring injustices that tinge our internal natural desire for fairness. In continuing the Business Talk series on organisational justice, this week we delve into the distributive side of firm-level fairness.

As researchers Russell Cropanzano, David Bowen, and Stephen Gilliland delineate, distributive justice encompasses the appropriateness of outcomes. Outcomes fall into three different categories of equity, equality, and need. Rewarding staff based on their specific contributions involves equity fairness. Providing each worker with roughly the same compensation entails equality fairness. Providing benefits based on an employee’s personal requirements comprises need fairness.

Now let us uncover the level of distributive justice that you, the Business Daily reader, experience at your workplace utilising social scientists Sania Usmani and Siraj Jamal’s fairness factor loading research. Please rate the following six statements on a five-point scale with whether you 1) strongly disagree, 2) disagree, 3) neither agree nor disagree, 4) agree, or 5) strongly agree. I consider my work load to be quite fair. Overall the rewards I receive are quite fair. My work schedule is fair. I think that my pay is fair. I feel that my job responsibilities are quite fair. I feel that my work benefits are fair.

Please total up all the numbers that you assigned to each statement. Take your total and divide by six. Those whose average score exceeds four should feel comfortable in the fair outcomes with their employer. The resources inside the firm get distributed equitably based on the level of effort put in by specific employees. If one’s average score landed between three and four, then employees exist in a workplace with a middling level of outcome fairness. Scored under three? Then your organisation fails to compensate you or give you benefits based on your real contribution to the firm as compared to underperformers. Star workers scoring under three should seek alternative employment where their input gets valued and rewarded.

Managers must familiarise themselves with work-to-effort ratios. A firm’s best employees are the most sensitive because they expect more equity fairness. Employers in Kenya often provide a range of annual zero to six per cent salary increases dependent on employee output. However, the best staff produce far more output than six per cent greater than the worst workers, yet only a six per cent incremental raise separates the two categories.

In the technology field as an example, Google’s Vice President of Engineering, Alan Eustace, famously stated that “one top-notch engineer is worth 300 times or more than the average engineer”. Several popular Google products such as Google News and Gmail were started solely by star engineers working alone. Inasmuch, managers across Kenya should tie compensation more towards employee value added rather than standardisation. Otherwise, the mediocre employees stay with a firm and the best workers leave.

Dr Scott may be reached on [email protected] or on Twitter: @ScottProfessor