The Equity-Equality Conflict: Dilemmas in the Management of Reward Systems

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    Abstract

    This article investigatesthe factors that determine workplace actors’ appeal to social norms of fairness in some situations and what ‘fairness’ is perceived as consisting of. When is a pay level considered as relativity fair, and when is it not? When are contingent pay systems (i.e. pay-for-performance systems) perceived as fair and when are they not? When can differences in contribution (equity) overrule the social norm of equality? Which contingent reward structure should be applied for teamwork members, if any? Which structure to motivate employees to a continuous search for smarter working procedures and solutions? These are central concerns of motivation theory, where rational choice decisions are counterbalanced by endowment effectsor other fairness concerns. Management is placed in a dilemma between what is, e.g., an economically rational structure of incentives, on the one hand, and what is considered as equitable by employees, on the other. Since equality in reward counts for more among employees, while equity in contribution counts more for employers, this is an inherent dilemma, constantly having to be negotiated and solved, but never reaching any ‘final solution’ in any company. On the basis of this dilemma, implications for management are spelt out, and recommendations for the
    utilization of and limitations for pay variance among peers are given.
    Translated title of the contributionKonflikten mellem retfærdighed og lighed: Ledelsesdilemmaer ved anvendelsen af belønningssystemer
    Original languageEnglish
    JournalJournal of Management and Sustainability
    Volume3
    Issue number3
    Pages (from-to)158-166
    ISSN1925-4725
    DOIs
    Publication statusPublished - 2013

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