PMGM7002 Chap.5 Equity, Organizational Justice and Goal Setting
Equity, Organizational Justice and Goal Setting
Equity is a comparison of ratios
Equity theory says people compare the ratio of their outcomes to their inputs with the ratio of a comparison other, inside or outside the organisation. A lower ratio produces under-reward inequity and a higher one over-reward inequity. People restore equity by changing inputs, outcomes or perceptions, by leaving, or by changing whom they compare themselves with.
The course adds three international implications: cultures value inputs differently, choose different comparison others and tolerate inequity to different degrees.
Justice has four dimensions
Distributive justice asks whether rewards follow the proper norm, and that norm may be equity, equality or need. Procedural justice has six rules, including voice, correctability and consistency.
Interpersonal justice concerns respect and propriety, and informational justice concerns honest, thorough explanation.
The chapter shows how fair procedures soften reactions to a poor outcome and how an impersonal announcement of a pay cut was followed by more theft than a sincere one.
Goals, and where they travel badly
Goal setting motivates when goals are specific and challenging rather than absent, easy or a request to do your best, and when participation, a measurable outcome, a time limit and feedback are in place.
Goals direct attention, energise, encourage persistence and prompt new strategies.
Culture affects whether goals seem obtainable, whether participation is valued, whether goals are set with managers or union representatives and whether they should be individual or collective.
Why this chapter is organised around mistakes
Each topic here is easy to state and easy to misapply abroad: assuming everyone weighs inputs the same way, fixing the size of a decision when the procedure was the problem, and exporting individual stretch targets to a setting that sees goals differently.
The worked counter-example isolates the manner of a decision from its size.
What this chapter covers
- 01
Outcome to input ratios
- 02
Under-reward and over-reward inequity
- 03
Five ways people restore equity
- 04
Cultural differences in inputs, referents and tolerance
- 05
Four dimensions of organisational justice
- 06
How procedural justice interacts with outcomes
- 07
Interpersonal justice and counterproductive behaviour
- 08
Goal setting and its cultural implications
Worked example · free
Separate the size of a pay cut from its delivery
- 2Show that distributive justice does not differ between the plants.
- 2Name the dimensions that do differ and define them.
- 2Link the difference to the course's evidence and draw the management lesson.
Key terms
- Comparison Other
- The person or group whose outcome to input ratio someone uses to judge whether their own treatment is equitable.
- Under-reward Inequity
- The perception that your own outcome to input ratio is lower than that of your comparison other.
- Distributive Justice
- The perceived fairness of how rewards are allocated, judged against a norm of equity, equality or need.
- Procedural Justice
- The perceived fairness of the procedures used to make decisions, including voice, correctability and consistency.
- Interpersonal Justice
- The perceived fairness of how authorities treat people, judged by respect and propriety.
- Informational Justice
- The perceived fairness of explanations, judged by whether procedures are justified thoroughly and truthfully.
- Goal Setting
- Using performance targets to motivate staff and make clear what their role requires, most effectively when targets are precise and demanding.
Equity, Organizational Justice and Goal Setting FAQ
What can people do when they feel underpaid?
The course lists five responses. They can reduce their inputs, try to raise their outcomes, reinterpret either side of the comparison, leave the organisation, or start comparing themselves with someone else. Only one of these involves asking for more, which is why perceived unfairness often shows up as lower effort or resignations.
Why does procedural justice matter if the outcome is already decided?
Because people judge the process as well as the result. The course shows that when distributive justice is low, fair procedures do the most to improve reactions to authority. Giving people a voice, a route to appeal and consistent treatment can make a disappointing outcome acceptable in a way that adjusting the amount alone may not.
Do stretch goals work in every culture?
Specific and challenging goals are the course's general rule, but it lists four ways culture changes their effect. Goals may be seen as unobtainable, participation in setting them may or may not be valued, they may need to be agreed through union representatives, and collective goals may suit a setting better than individual ones.
Assessment move
Take one decision you have seen at work or university and rate it separately on distributive, procedural, interpersonal and informational justice. Most people find they have been judging all four at once. Then rewrite the decision's announcement so that it scores better on the last two without changing the outcome.
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