Why are fairness and honesty in business important ethical concerns give examples?

INTRODUCTION 

Every organization must confront the challenge of motivating its work force. From research on fairness in organizational contexts (‘organizational justice research’) we know that fairness is one key. Organizational justice research consistently finds that employees are more motivated when they feel that organizational resources are allocated fairly, that organizational decisions are made in fair ways, and that their organization treats them fairly.

Moreover, employees who experience fairness at work are more likely to internalize the organization’s goals and values, and to develop close bonds with other organizational members. In this way, a ‘management-by-fairness’ approach motivates employees to work collaboratively for the long-term good of the organization and its members. Such a long-term collaborative focus tends to produce ethical behavior.

CONTENTS 

Ideas to Apply

Areas of Research

Case Studies

Open Questions

To Learn More

IDEAS TO APPLY (Based on research covered below)

• Focus on fairness. In particular, be attuned to whether employees feel fairly treated and feel that decisions are made in fair ways. Recognize that these judgments are just as important as—and sometimes more important than—how employees feel about their overall level of pay, benefits, opportunities for promotion, etc.
• Make fairness clear. Give employees more information about decision making. Provide clear explanations for decisions, especially those that may be unpopular and uncomfortable to discuss. Give them an opportunity to voice their perspective, and provide adequate responses to the points they raise.
• Focus on status, not power. Research finds that when people are focused on the power that they wield (i.e., their control over valued resources), they treat others less fairly. However, when they are focused on their status—on the respect they have in the eyes of others—they treat others more fairly. Focus managers more on issues related to status and tone down the focus on power.

AREAS OF RESEARCH

• What are the consequences of employees feeling that they are treated fairly or not? The list of consequences that follow from fairness judgments is extensive—and includes work performance, extra role behavior, commitment, trust, and retaliation.
• Why do people care so much about fairness? The effects of fairness are explained by a number of theories, and each of these in turn suggests different conditions under which fairness will matter more or less. It is therefore critical to consider this question when trying to capitalize on a fairness-based approach to management. One leading theory emphasizes that encountering fairness in one’s work organization communicates a message about inclusion and respect, leading employees to feel like they are an important part of the organization and thus to want to work hard on behalf of it. Another theory emphasizes the role fairness plays in reducing uncertainty and thus attenuating feelings of vulnerability. Still another emphasizes fairness a moral virtue in its own right.
• How do people evaluate fairness? Application of the insights of justice research requires that we understand the factors people consider when judging whether they are treated fairly or not. Work in this area has focused both on the development of scales to measure fairness judgments as well as consideration of the broader categories of concerns that define fairness, such as how decisions are made and employees are treated.
• What determines whether managers enact fairness in their organizations? Far more attention has been paid to employee reactions toward fairness as compared to the factors that shape managers’ behavior. Initial work on this question has considered personal and situational factors as well as the dynamics between subordinates and supervisors. Other more recent work has focused on the psychology of those at the top of organizational hierarchies to better understand the antecedents of fairness.

CASE STUDIES

Failures

• Ambrose, M., Seabright, M., & Schminke, M. (2002). Sabotage in the workplace: The role of organizational injustice. Organizational Behavior and Human Decision Processes, 89, 947-965.
• Lind. E.A., Greenberg, J., Scott, K, & Welchans, T. (2000). The Winding Road from Employee to Complainant: Situational and Psychological Determinants of Wrongful-Termination Claims. Administrative Science Quarterly, 45, 557-590.
• Greenberg, J. (1990). Employee theft as a reaction to underpayment inequity: The hidden cost of pay cuts. Journal of Applied Psychology, 75, 561-568.

Successes

• Blader, S. L. & Tyler, T. R. (2009). Testing & extending the Group Engagement Model: Linkages between social identity, procedural justice, economic outcomes and extra role behavior. Journal of Applied Psychology, 94, 445-464.
• Greenberg, J. (2006). Losing sleep over organizational injustice: Attenuating insomniac reactions to underpayment inequity with supervisory training in interactional justice. Journal of Applied Psychology, 91, 58-69.
• Tyler, T. R. (1990). Why people obey the law: Procedural justice, legitimacy, and compliance. New Haven, CT: Yale University.

OPEN QUESTIONS

• What can be done to encourage managers to act fairly towards their subordinates? How can we encourage organizational policy makers to build fairness as the paramount concern in the policies they establish?
• What precisely are the links between fairness and ethical behavior? Will organizational justice always lead to ethical behavior, or does it depend on the values and culture of the organization?
• How does fairness interact with other elements of ethical systems design?

TO LEARN MORE

Articles

• Tyler, T. R., & Blader, S. L. (2000). Cooperation in groups: Procedural justice, social identity and behavioral engagement. Philadelphia: Psychology Press.
• Brockner, J. (2006). Why it’s so hard to be fair. Harvard Business Review, 84, 122-129.
• Kim, W., & Mauborgne, R. (1997). Fair process. Harvard Business Review, 65-75.

Video

• Researchers at the Norwegian School of Economics’ Choice Lab explore risk and fairness: 
• A panel of experts at the Institute for Enterprise Ethics, Daniels College of Business, Denver University discusses fairness and executive compensation:                                                                                                      
• Aston Business School lecturer, Jonathan Crawshaw, discusses the confluence of research in organizational justice and behavioral ethics:
  
• Professor Frans de Waal gives a TED talk presenting the idea of an innate sense of fairness in animals and it’s applicability to humans:
  
• Leadership researcher and ES Advisory Committee member Ron Carucci speaks to the exertion of our will on others in a TEDx talk. Where does power come from? Who gets to have it? How do we relate to it or misuse it?

• Watch further discussions of issues concerning fairness, organizational justice, and more at our Fairness playlist at the Ethical Systems YouTube channel.

This page is overseen by Steven Blader, although other contributors may have added content.
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Miscellaneous Links & References
(This is where other contributors might list relevant links/references they come across)

• Why cheating sometimes feels good. (Ruedy, Moore, Gino, & Schwiezer, 2013, described in NYT).

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