Editor's Note: What does it mean to be fair? It's a concept and question that comes up often in the lives of compensation and HR professionals - and for which Stephanie Thomas provides some Classic and useful guidance to help us understand and navigate the minefield.
"Mom!!! She has more marshmallows than I do - that's not fair!!!"
It's the classic complaint we've heard over and over. We've all been there - sometimes we're "Mom", sometimes we're "she" and sometimes we're the one whining.
We've scooped up half-melted marshmallows from "her" cup of cocoa in an effort to redistribute them "fairly" between the two cups (this often leads to more complaints and whining). We've ignored the complaint. We've been ignored when making the complaint. Sometimes we pout, and sometimes we relish in our self-justification that we got more because we deserve more.
Whether it's "Mom and marshmallows" or "Manager and money" the argument - and the underlying feeling - is the same. It's about being fair. But what does it really mean to be fair?
- Distributive Justice
- Procedural Justice
- Interactional Justice
- Informational Justice
Distributive justice is our perceived fairness of the actual outcome - the number of marshmallows in our cup of cocoa, the amount of our bonus check, the percentage increase in our base salary, and the size of our promotional increases. Distributive justice focuses on the outcome and addresses the question "did I end up with what I should have gotten?" When we talk about internal pay equity and disparate treatment, we're typically referring to distributive justice: are the dollars distributed among the employees equitably, given our policies and procedures?
Procedural justice is our percieved fairness of procedures used to arrive at the outcomes - how did Mom decide how many marshmallows to give in each cup, what criteria were used to determine my bonus payment, how was the percentage increase in base salary determined, and so forth. Procedural justice focuses on the processes and procedures that led up to the outcome. "Fair" processes and procedures are free from bias and are applied consistently. Procedural justice addresses the question "was what I got fairly determined?" When we talk about adverse impact, we're typically referring to procedural justice: do the rules we use to distribute dollars affect different groups of employees differently?
Interactional Justice is our perceived fairness of the treatment we receive in the application of the actual outcome. It refers to that "warm fuzzy / cold prickly" feeling we get based on the way the outcome is presented to us. It's all about presentation. Did Mom roughly throw the marshmallows into the cocoa and shove the cup across the table to us? Or did she take care in preparing it, gently presenting the cup to us on a saucer so we didn't burn our fingers or spill it in our lap? Interactional justice addresses the question "was I treated with politeness, dignity and respect?" It's a critical, yet often overlooked, aspect of fairness.
Informational Justice is our perceived fairness or adequacy of the information we're given about the actual outcomes. In compensation-speak, it refers to transparency. Without informational justice, there can be no fairness. Your pay decisions could be internally equitable, based on objective and well-defined factors, and communicated with the utmost courtesy and respect. But if you only communicate "your bonus is $X" or "your merit increase is Y%" and provide no supporting information, the decisions may be interpreted as unfair. Fairness doesn't reside in a black box; it's only revealed through the lens of transparency. Even if employees disagree with the ultimate decisions, they are more likely to see the decisions as "fair" if they understand how those decisions were made.
"Fairness" is both science and art. We can statistically test our policies and practices for adverse impact and our pay outcomes for disparate treatment. Only a true artist can incorporate just the right amount of transparency and communicate the decisions in just the right way, every time she drops marshmallows into cups of cocoa.
Stephanie Thomas, Ph.D., is a Lecturer in the Department of Economics at Cornell University. She teaches undergraduate and graduate courses on economic theory and labor economics in the College of Arts and Sciences and in Cornell’s School of Industrial and Labor Relations. Throughout her career, Stephanie has completed research on a variety of topics including wage determination, pay gaps and inequality, and performance-based compensation systems. She frequently provides expert commentary in media outlets such as The New York Times, CBC, and NPR, and has published papers in a variety of journals.