Inequities created by overpayment do not seem to have a very significant impact on behavior in most work situations. Apparently people have a great deal more tolerance of overpayment inequities than of underpayment inequities or are better able to rationalize them. It is pretty damaging to a theory when one-half of the equation (how people respond to over-reward) falls apart. Not all people are equity sensitive. For example, there is a small part of the working population who actually prefer that their outcome input ratios be less than the referent comparison’s. Predictions from equity theory are not likely to be very accurate with these benevolent types.
It’s also important to note that while most research on equity theory has focused on pay, employers seem to look for equity in the distribution of other organizational rewards. For instance, it has been shown that the use of high status job titles as well as large and lavishly furnished offices may function as outcomes or some employees in their equity equation.
Finally, recent research has been directed at expanding what is meant by equity or fairness. Historically, equity theory focused on distributive justice is the employee’s perceived fairness of the amount and allocation of rewards among individuals. But increasingly equity is though from the standpoint of organizational justice, which we define as an overall perception of what is fair in the workplace. Employees perceive their organizations as just when they believe the outcomes they have received, the way in which the outcomes were received the way the outcomes were received, are fair. One key element of organizational justice is an individual’s perception of justice. In other words, under organizational justice, fairness or equity can be subjective, and it resides in the perception of the person. What one person may see as unfair another may see as perfectly appropriate. In general, people have am egocentric or self serving bias. They see allocations or procedure favoring themselves as fair. For example a recent poll showed that 61 percent of all respondents say that they are personally paying their fair share of taxes, but an almost equal number 54 percent of those polled feel the system as a whole is unfair, saying that some people skirt the system. Fairness often resides in the eye of the beholder, and we tend to be fairly self serving about what we see as fair.
Beyond its focus on perceptions of fairness, the other key element of organizational justice is the view that justice is multidimensional. Organizational justice argues that distributive justice is important. For example, how much we get paid, relative to what we think we should be paid (distributive justice) is obviously important. But, according to justice researchers, how we get paid is just as important.
Beyond distributive justice, the key addition under organizational justice was procedural justice – which is the perceived fairness of the process used to determine the distribution of rewards. Two key elements of procedural justice are process control and explanations. Process control is the opportunity to present one’s point of view about desired outcomes to decision makers. Explanations are clear reasons given to a person by management for the outcome. Thus, for employees to see a process as fair, they need to feel they have some control over the outcome and feel they were given an adequate explanation about why the outcome occurred. Also for procedural fairness, it’s important that a manager is consistent (across people and over time) is unbiased makes decisions based on accurate information and is open to appeals.
Research shows that the effects of procedural justice become more important when distributive justice is lacking. This makes sense. If we don’t get what we want, we tend to focus on why. For example, if your supervisor gives a cushy office to a coworker instead of you, you are much focused on your supervisor treatment of you than if you had gotten the office. Explanations are beneficial when they take the form of post-hoc excuses (admitting that the act is an unfavorable but denying sole responsibility for it) rather than justification (accepting full responsibility, but denying that the outcome is unfavorable or inappropriate). In the office example, an excuse would be “I know this is bad. I wanted to give you the office but it was not my decision” and a justification would be, “Yes. I decided to give the office to Sam, but having the corner office is not that big of a deal”.