Performance-based Reward Administration Enhancing Employees’ Feelings of Interactional Justice

Open access

Abstract

The transformation in international business landscape has changed organizational management especially reward administration. This is done in order to maintain the organization’s competitiveness in global market place. In the field of reward administration, an emerging trend can be observed whereby most organizations are moving toward the application of psychological elements in administering organizational reward system. The ultimate objective of this study is to investigate the association between performance-based reward administration and interactional justice. The proposed model was empirically tested using a sample of 113 employees from fire and rescue agency in Peninsular Malaysia. This study found an evidence that performance-based reward administration (i.e., communication, participation and performance appraisal) is positively and significantly associated with interactional justice. This findings proves that the ability of administrators to appropriately implement communication openness, inspire participative decision-making and organize fairness performance appraisal in administering performance-based reward have significantly evoked the feeling of interactional justice when employees perceived that they are being fairly treated in the reward system.

If the inline PDF is not rendering correctly, you can download the PDF file here.

  • Adams J.S. (1963). Towards an Understanding of Inequality. Journal of Abnormal and Normal Social Psychology 67: 422-436.

  • Allen R.S. & White C.S. (2002). Equity sensitivity theory: A test of responses of two types of under-reward situations. Journal of Managerial Issues 14(4): 435-152.

  • Anuar A. Ismail A & Abdin F. (2014). Administrator’s role in performance pay system as a determinant of job satisfaction. Sains Humanika 2 (2): 11–17.

  • Barclay D. Higgins C. & Thompson R. (1995). The Partial Least Squares (PLS) approach to causal modeling: Personal computer adoption and use as an illustration. Technology Stud 2(2): 285-309.

  • Belfield R. & Marsden D. (2003). Performance pay monitoring environments and establishment performance. International Journal of Manpower 24 (4): 452-471.

  • Bies R. J. & Moag J. S. (1986). Interactional justice: Communication criteria of fairness. In R. J. Lewicki B. H. Sheppard & M. Bazerman (Eds.) Research on negotiation in organizations. Greenwich CT: JAI Press.

  • Brown M. Hyatt D. & Benson J. (2010). Consequences of the performance appraisal experience. Personnel Review 39 (3): 375-396.

  • Chang E. & Hahn J. (2006). Does pay-for-performance enhance perceived distributive justice for collectivistic employees? Personnel Review 35(4): 397-412.

  • Coyle-Shapiro J.A-M. Morrow P.C. Richardson R. & Dunn S.R. (2002). Using profit sharing to enhance employee attitudes: A longitudinal examination of the effects on trust and commitment. Human Resource Management 41(4): 423-439.

  • Cresswell J.W. (1998). Qualitative Inquiry and Research Design: Choosing Among Five Traditions. London: SAGE publications.

  • Day N. E. (2011). Perceived pay communication justice and pay satisfaction. Employee Relations 33(5): 476-497.

  • Fitzgerald L. R. (2000). Culture and Compensation. The Compensationn Handbook: A State-of-the-Art Guide to Compensation Strategy and Design. New York: The McGraw-Hill.

  • Florin B. Hallock K. F. & Webber D. (2010). Executive pay and firm performance: Methodological considerations and future directions (CRI 2010-012). Retrieved [11 July 2016] from Cornell University ILR School Compensation Research Initiative site: http://digitalcommons.ilr.cornell.edu/cri/15.

  • Folger R. Konovsky M. A. & Cropanzano R. (1992). A due process metaphor for performance appraisal. Research in Organizational Behavior 14: 129-177.

  • Fornell C & Larcker D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research XVIII (Feb): 39-50.

  • Garib Singh S. K. (2009). A Study on employee participation in decision making. UNITAR e-Journal 5(1): 20-38.

  • Greenberg J. (2003). Creating unfairness by mandating fair procedures: The hidden words of a pay-for-performance plan. Human Resource Management Review 13: 41-57.

  • Hair J.F. Hult G.T.M. Ringle C.M. & Sarstedt M. (2014). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). America: SAGE Publications Inc.

  • Henderson R.I. (2006). Compensation Management in a Knowledge Based-World. New Jersey: Prentice-Hall.

  • Henseler J. & Chin W.W. (2010). A comparison of approaches for the analysis of interaction effects between latent variables using partial least squares path modeling. Structural Equation Modeling 17: 82-109

  • Ibeogu P. H. & Ozturen A. (2015). Perception of Justice in Performance Appraisal and Effect on Satisfaction: Empirical Findings from Northern Cyprus Banks. Procedia Economics and Finance 23: 964-969.

  • Ismail A. & Abd Razak M. R. (2016). Performance-based reward administration as an antecedent of job satisfaction: A case study of Malaysia’s fire and rescue agencies. Geografia - Malaysian Journal of Society and Space 9/2013: 107-118.

  • Ismail A. & Zakaria N. (2009). Relationship between Interactional Justice and Pay for Performance as an Antecedent of Job Satisfaction:an Empirical Study in Malaysia. International Journal of Business and Management 4(3): 190-199.

  • Ismail A. Mohamed H. A. Sahol Hamid N. Sulaiman A. Z. Girardi A. Abdullah M. M. (2011). Relationship between Performance Based Pay Interactional Justice and Job Satisfaction: A Mediating Model Approach. International Journal of Business and Management 6(11): 170-180.

  • Ismail A. Anuar A. Haron M. S. & Muhamat Kawangit R. (2015). Reward Administration System Enhancing Organizational Commitment: An Islamic Viewpoint. International Letters of Social and Humanistic Sciences 49: 155-167.

  • Ismail A. Kithuru Mohamed N. A. & Rayee M. R. (2016). Relationship between performance appraisal communication procedural justice and job satisfaction. Geografia - Malaysian Journal of Society and Space 12(9): 15-26.

  • Ismail A. Mashkuri A.H. Sulaiman A.Z. & Hock W.K. (2011b). Interactional justice as a mediator of the relationship between pay for performance and job satisfaction. Intangible Capital 7(2): 213-235.

  • Ismail A. Mohamed H.A. Sahol Hamid N. Sulaiman A.Z. Girardi A. & Abdullah M.M. (2011a). Relationship between performance based pay interactional justice and job satisfaction: A mediating model approach. International Journal of Business and Management 6(11): 170-180.

  • Ismail A. Zaidi M. & Anuar. A. (2014). Administrator’s role in performance based reward as a determinant of employee outcomes. Management and Marketing Journal XIII (1): 92-110.

  • Lau W. (2014). Employee’s Participation: A Critical Success Factor for Justice Perception under Different Leadership Styles. Journal of Management Policies and Practices 2(4): 53-76.

  • Lind E. A & Tyler T. R. (1988). The social psychology of procedural justice. New York: Plenum Press.

  • Lira M. Da Silva V. P. G. & Viseu C. (2016). Performance Appraisal as a Motivational Tool in the Portuguese Public Administration. Portuguese Journal of Finance Management and Accounting 2(3): 91-118.

  • Mani B.G. (2002). Performance appraisal systems productivity and motivation: A case study. Public Personnel Management 1(2): 141-160.

  • Martocchio J.J. (2014). Strategic Compensation: A Human Resource Management Approach. Boston US: Pearson Education Limited.

  • McCausland W.D. Pouliakas K. & Theodossiou I. (2005). Some are punished and some are rewarded. A study of the impact of performance pay on job satisfaction. International Journal of Manpower 26 (7/8): 636-659.

  • McShane S.L. & Von Glinow M.A. (2015). Organizational Behavior. Irwin: McGraw-Hill.

  • Milkovich G.T. Newman J.M. & Gerhart B. (2014). Compensation. New York: McGraw-Hill-Irwin.

  • Niehoff B.P. & Moorman R.H. (1993). The role of justice in mediating the relationship between monitoring and fairness in performance monitoring: Organizational citizenship behaviors. Academy of Management Journal 36: 527-556.

  • Noe R.A. Hollenbeck J.R. Gerhart B. & Wright P.M. (2014). Fundamentals of Human Resource Management. Singapore: McGraw-Hill.

  • Nunally J.C. & Bernstein I.H. (1994). Psychometric Theory. New York: McGraw-Hill.

  • Okotoh M.A. (2015). The Perceived Effect of Reward Management Practices on Factors Influencing Employee Retention at Communications Authority Of Kenya. Master. Thesis. University of Nairobi Kenya.

  • Phin L. W. (2015). The Effectiveness of Performance Appraisal in the Private Education Industry in Malaysia. International Journal of Business and Information 10(1): 95-124.

  • Rahim M. A. Magner N. R. & Shapiro D. L. (2000). Do justice perceptions influence styles of handling conflict with supervisor? What justice perceptions precisely? International Journal of Conflict Management 11:5–26.

  • Ringle C.M. Wende S. & Will A. (2005). SmartPLS 2.0 (Beta). Hamburg: SmartPLS.

  • Sabeen Z. & Mehboob A. A. (2008). Perceived fairness of and satisfaction with employee performance appraisal and its impact on overall job satisfaction. The Business Review Cambridge 10(2): 185-192.

  • Sekaran U. & Bougie R. (2010). Research Methods for Business: A Skill Building Approach. New York: John Wiley & Sons Inc.

  • Sogra K. J Shahid A. I. & Najibullah S. (2009). Organizational outcomes of the employees’ perceptions of performance appraisal politics: a study on executive MBA students in Bangladesh. South Asia Journal of Management 16(3): 43-61.

  • Susanj Z. & Jakopec A. (2012). Fairness Perceptions and Job Satisfaction as Mediators of the Relationship between Leadership Style and Organizational Commitment. Psychological Topics 21(3): 509-526.

Search