Posted by: Wilson Wong

Tagged in: Corporate Strategy

 

(Un)fairness is a necessary evil at the workplace

 

This article considers how (un)fairness impacts our lives at political, socio-economic, organisational and personal levels.

The Level Playing Field Institute and the Center for Survey Research’s study estimated that unfairness in the workplace costs U.S. employers an estimated $64 billion each year. 

That eye-watering figure was computed by estimating the number of Fortune 500 staff who left their employer because of unfair treatment (estimation based on a review of studies on discrimination, harassment and bullying) and the cost of replacing them. It also estimates the disengagement and fall in productivity of those who choose to ignore the unfair treatment or to deal with it themselves.

The study sampled 400 employers and 2435 employees across the U.S. exploring a broad spectrum of issues including workplace fairness (e.g. pay, internal procedures), fitting in (e.g. respect, managerial behaviours), stereotyping (e.g. exploring race, gender and sexual orientation) and job advancement (e.g. quality of assignments, access to opportunities/ promotions). To my knowledge, there is no equivalent study in the UK.

When surveyed employees were asked what, in their personal experience, was the greatest barrier to fairness, 7 out of 10 specified a particular obstacle that impeded fairness in their workplaces. In the survey, the three most cited obstacles to fairness within organisations were:
a. Only certain people are part of the important social groups at work
b. Unclear rules and expectations
c. Rewarding those not based on work or merit
But fairness in organisations is not discrete from the standards and values applied in everyday life. Islington Borough Council, in response cuts in central government funding, initiated the first local authority Fairness Commission. It has spawned others in Sheffield, Newcastle , Liverpool, York and Blackpool. The Commissioners sought to make decisions on resource allocations to local people so as to minimise the effects of socio-economic inequalities. They believed that in attempting to narrow the gap between the richest and the poorest in each authority, society would benefit. In the Islington fairness project, income, work, family, community, safety, housing and health outcomes were all factored into the decisions on resourcing and an astute way of building a broader consensus.

Underpinning those decisions are deeply-held beliefs.   Aristotle’s principle of proportionality is used to describe distributive fairness, that is, that individual outcomes will match their inputs.  This is reflected in the classic theory of justice constructed to inform and reflect a society where effort is rewarded and wrongdoers punished, proportionately; now widely applied in jurisprudence.

Take the furore about banker’s bonuses. In 2010, the top 25 Hedge fund managers  in the United States made $22 billion, equivalent to the annual gross income of 215,000 Registered Nurses in New York City. The bonuses of Hedge Fund managers is based on a formula, the rules for which are very clear to all who work in that sector. Whether or not these managers are worth that amount of money is arguable but when these windfall numbers appear to breach the rule of proportionality, accusations of unfairness soon follow, regardless of the clarity of the rules and the transparency of the process.

Fairness is an integral part of national discourse.  The protests against the UK Coalition’s austerity policies, and also in Spain, Italy, and Greece, register popular disagreement with the manner the pain from cuts have been distributed.  The perception is that the investment banks whose drew on public funding to survive continue to be undeservedly rewarded (see (c)). The severe cuts to pay and pensions create insecurity because long-held employment terms are being unilaterally re-drawn. The introduction of new (stealth) taxes mean that citizens are no longer certain of the rules and expectations of their compact with the State.
In the UK, the pain is perceived as unevenly distributed. Examining the ONS Labour Force Survey data, over the last two years, there are about 55,000 fewer people in employment than two summers ago. Male unemployment has fallen from 8.4 to 8.3%, whereas female unemployment has risen. Until the Youth Contract, the 18-24 year olds have suffered the worst in the employment market. That same period, against a national employment rate of over 70 per cent, ethnic Chinese have experienced a fall from 56 to 48 percent.

But, BBC Economics Editor Stephanie Flanders thinks that Britain’s recession has been harsh but fair. She has a point. The most widely used measure of income inequality – the Gini coefficient – fell from 0.36 to 0.34 in 2010-11 (see IFS report, 2012). The lower the Gini coefficient, the more equal the income distribution. That figure takes the level of inequality back to where it was in the late 1990s with income levels equivalent to the 2004-5 period.  Unfortunately, although the sharing of the pain at a macro level seems fairer, there is ample pain to spread around.

These are all examples of how (un)fairness impacts our lives at political, socio-economic, organisational and personal levels. (Un)fairness seems to stem from one’s perspective. But that perception of (un)fairness has a direct bearing on our health and well-being, how engaged we feel towards our job, employer and colleagues and shapes the choices and decisions we make.

In trying to understand how fairness is framed, enacted and understood, the CIPD in collaboration with the Centre for Performance-led HR at Lancaster University and the Work Foundation are starting a research programme to map out the contours of fairness, principally within organisations. Initially, we’ll be reviewing the literature broadly to identify patterns in the way fairness is defined and understood across disciplines, contexts and cultures.  Following that we hope to test these out in ‘social labs’ within organisations to see how these frames operate within an organisational context and which ones are most salient in UK workplaces.

We hope with greater clarity and evidence on where and how we apply fairness to everyday work situations, managers and staff can use the resulting frame to better focus on the issues rather than on subjective reactions. Organisational tensions around ‘fairness’ can then be aired confidently and constructively. Issues are resolved or acknowledged rather than avoided.

If you would like to join the pioneer cohort next year, drop me a note at w.wong@cipd.co.uk  Meanwhile, I welcome your responses to (un)fairness at work.

Wilson Wong, Senior Researcher (OD Insight & Practice) at CIPD  
 

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