Does Fairness Matter? Part 2

Previously, I discussed the ten dimensions of fairness, Trust, Consistency, Truthfulness, Integrity, Expectations, Equity, Influence, Justice, Respect, and Procedures.  The following is the study from which these were determined.

The Research

After Dr. Sashkin and I explored the meaning of perceived fairness in the workplace, we tested whether fairness in management made any actual difference in the retail industry. We identified 20 retail stores (all part of a large chain), ten each in two different regions of the United States.  We selected ten stores (five in each region) because of their exceptionally high employee sickness/accident compensation costs (compared with the company average) and ten of the stores because of their unusually low costs.  We then looked more closely at the ten high-cost and the ten low-cost in order to identify two sets of five that were roughly matched in terms of size, sales volume, urban or rural location, and workforce composition.  These ten stores, five high on our bottom-line cost measure and five low, then became the test sample.

All ten store managers filled out a questionnaire base on the ten dimensions in reference to themselves and their own practices.  About 60 percent of the department managers completed the questionnaire about themselves and also the employee version, describing their store managers.  Hourly employees were asked to complete the questionnaire in reference to their department managers.  The proportion of hourly employees mailing back questionnaires averaged twenty-five percent.

Does Fairness Make a Difference?

First we compared of self-reports of the five high-cost store managers with the self-reports of the five low-cost managers.  There were no differences whatsoever.  All of the store managers saw their own behavior in a positive light.  Next we examine the self-reports from the department managers.  Again, the outcome was exactly the same. All managers in the ten stores viewed themselves favorably.

When, however, we compared the way high-cost managers and low-cost managers viewed their store managers, the results were more interesting.  Scores in low-cost stores were better on all their ten dimensions of fairness.  In summary, there were differences on all ten scales favoring the low-cost stores, and on five of the ten dimensions those differences were statistically significant and sizable.

For example, the average score on the Integrity dimension for the low-cost store managers (as rated by the department managers) was 18.0: for high-cost store managers, the average score was 13.4, a difference of almost five scale points.  Scores on each scale ranged from a low of 5 points to a high of 25 points-for a possible difference of 20 points.  Thus a five-point average difference would have represented a difference of 25 percent.

When we examined the responses of the hourly employees in the high-cost and low-cost stores, the difference became truly dramatic.  There were differences on every one of the ten dimensions, all favoring the low-cost stores.  Five of the differences had high levels of statistical significance, and four of these were so high as to be expected by chance in less than a thousand cases. Clearly, hourly employees at the low-cost stores viewed the fairness climate in a dramatically different way than did their counterparts at the high-cost stores.

The hourly employees considered certain “soft” issues most in their interpretation of what is fair in the workplace. The scores were most dramatic in Trust, Truthfulness, Integrity, and Justice.  Hard-nosed managers often view these warm-fuzzy things as optional or unnecessary managerial attributes.  In reality, as the research indicates, the soft attributes have high economic relevant to organizational effectiveness and profit.

The data are strikingly clear, and every manager ought to pay close attention to what it indicates.  In the retail industry specifically, as noted by the research quoted, and in other industries most likely, fairness while managing others does indeed make a critical difference in organizational performance.  Old style, hard-nosed managers who ignore the importance of “soft” attributes such as Trust, Consistency, Truthfulness, Integrity, Communicating, Expectations, Equity, sharing Influenced, Justice, Respect, and Following Procedures will suffer for high costs associated with employee sickness and accidents.  With the staggering cost of doing business today, no manager can afford to ignore what was learned from the research