Procedural and interpersonal fairness moderate the relationship between outcome fairness and acceptance of merit pay

Abstract

An organizational field study (N = 257) investigated employees' acceptance of a new merit pay system as involving an assessment of whether merit pay can make their earnings more fair, compared to their earnings in the current, seniority-based pay system. We expected that improvement of unfair earnings, and consequently acceptance of merit pay, is considered likely when existing procedures that produce these earnings are unfair, because merit pay improves such procedures. We also expected improvement of unfair earnings, and increased merit pay acceptance, to be likely when employees anticipate fair performance evaluation in a new system, as indicated by fair interpersonal treatment by their supervisor. Results showed that procedural and interpersonal fairness in the existing pay system indeed moderated the relationship between fairness of current outcomes and merit pay acceptance as predicted. Implications for the introduction of merit pay in organizations and for our understanding of the different roles of procedural and interpersonal fairness in outcome evaluations are discussed.

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