Investigating the Determinants of Perceived Procedural Fairness in ...

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JAMAR Vol. 11 · No. 1 2013opportunity to engage in setting goals. It istherefore reasonable to propose thatparticipation is positively associated withprocedural fairness. Additionally, Lind andTyler (1988, p. 236) argue that “theopportunity to exercise voice (participation)constitutes a visible marker of groupmembership … mute procedures are seen as… unjust because they appear to deny fullmembership rights to those denied voice”(parentheses added) and “…one of the mostpotent determinants of the procedural fairnessof a social decision-making procedure is theextent to which those affected by the decisionare allowed to participate in the decisionmakingprocess through the exercise ofprocess control or voice” (p. 176). Similarly,Early and Kanfer (1985) argue that sinceparticipation gives opportunity for input, itprovides the individual with perceived masteryor control over a situation; thus participationmay enhance perceived fairness.In a budgeting context, Wentzel (2002) studied88 cost centre managers of a downsizedhospital in the US and found that budgetparticipation is positively associated withprocedural fairness. Similar results were foundby Lau and Tan (2006) among managers ofmanufacturing companies in Singapore. Thisstudy therefore argues that a positiveassociation holds between participation insetting targets and procedural fairness.Ha1: Participation in target setting ispositively associated with procedural fairness.Goal-Attainment-Reward Link andProcedural FairnessThe management control systems literaturesuggests that the performance evaluation andreward system is an important component ofthe management control system designed tomotivate organisational members to performbetter and in accordance with theorganisation’s objectives (Otley, 1999;Merchant and Van der Stede, 2003).According to Emmanuel et al. (1990) andMerchant and Van der Stede (2003), one of theprincipal means of motivating subordinatestowards effective performance is to linkorganisational rewards to the level ofperformance achieved. This implies that thelink between the achievement of goals orperformance targets set and rewards should betransparent. A recent empirical study byKominis and Emmanuel (2007), using asample of middle managers in a large UKbasedfinancial institution, found that theeffect of transparency in the performancerewardlink on motivation is indirect via thevalue of extrinsic rewards. In other words,Kominis and Emmanuel’s (2007) studysuggests that the effect of transparency of theperformance-reward link on motivation maybe mediated by other variables, and in theirstudy this was the value of extrinsic rewards.Drawing on Emmanuel et al.’s (1990) andMerchant and Van der Stede’s (2003)contentions and extending Kominis andEmmanuel’s (2007) findings, this study arguesthat the transparency of the goal-attainmentrewardlink is likely to enhance motivation viaperceived procedural fairness. This is becausea transparent rewards system should beconsistent, unbiased, and accurate, all of whichare characteristics of procedural fairness(Leventhal, 1980). Therefore, this studyhypothesises that transparency of the goalattainment-rewardlink will be positivelyassociated with procedural fairness.Ha2: Transparency of the goal-attainmentrewardlink will be positively associated withprocedural fairness.Goal Specificity and Procedural FairnessGoal specificity refers to “the extent to whichthe goals are clearly defined by a supervisor”(Fang et al., 2005). In the context ofperformance measurement, evaluation andreward systems the goals can be financial ornonfinancial. Organisations which develop andadopt specific performance measures, whetherfinancial or nonfinancial, for performanceevaluation are more likely to develop specificgoals and targets for employees to pursue,than are organisations which have no specificperformance measures for performanceevaluation. Further, the existence of prespecifiedgoals is likely to provide clearerunderstanding (goal clarity) for organisationalmembers and indicate how they will beevaluated. In addition, goal specificity andclarity informs employees of theirresponsibilities and performance targets. Inother words, the existence of specific goalswill guide employees in deciding where theyshould direct their attention and effort.32
JAMAR Vol. 11 · No. 1 2013In relation to procedural justice, the existenceof goal specificity/clarity is in line with theconsistency and bias-suppression rules, as aspecific goal is likely to facilitate theapplication of procedures consistently acrosstime and persons and be less biased and lesssubjective. In addition, the existence ofspecific goals indicates that there is a standardto follow which provides opportunity formanagers to challenge/rebut evaluation. Anempirical study by Greenberg (1986) withsamples of middle managers in the US foundthat the ability to rebut/challenge evaluationand consistent application of standards areimportant determinants of perceivedprocedural fairness. Hence this studyhypothesises that goal specificity is positivelyassociated with procedural fairness.Ha3: Goal specificity is positively associatedwith procedural fairness.Research MethodData and SampleData used in this study were gathered bymeans of questionnaire survey in three majororganisations, followed by interviews withselected respondents. The organisations wereapproached to participate in the study becausethey were leading companies in their sectorthat had been operating PMERS for some timewith varying degrees of satisfaction.CO1 is part of a highly centralised globalorganisation operating in a specialist, researchdrivensector whose headquarter is inSwitzerland. Much of its recent performancegrowth is through reducing complexity, usingfewer suppliers and closing smaller plants.CO2 and CO3 are financial servicesorganisations, providing specialist mortgageand savings products through a large numberof branches. Their corporate offices are both inthe UK.For the purpose of filling in the questionnaire,purposive sampling was employed. Theprinciple in this type of sampling is to get allpossible cases that fit particular criteria(Neuman, 2003). The criteria to be included asthe samples are: 1) managers have beenworking for the organisations for more thanone year; 2) they have been evaluated by theirsuperiors; and 3) they have received theperformance evaluation feedback. Thesecriteria are to ensure that the samples are valid.The survey was administered as follows.Working closely with managers from the threeorganisations, a preliminary notification wascirculated encouraging managers to participatein the survey. After obtaining seniormanagement permission to conduct theindependent research study the surveyinstrument was distributed to potentialrespondents, together with assurance ofconfidentiality. Reminders were sent one,three and seven weeks after the originalmailing. The survey package and reminderletters were sent via e-mail. Respondents couldreturn the completed questionnaireselectronically by e-mail or send a hard copyversion by post.The distribution of the survey instruments is asfollows: 102 to CO1, 99 to the CO2, and 95 toCO3. Of 296 questionnaires distributed, 174were returned (55 from CO1, 52 from CO2,and 67 from CO3) yielding a total responserate of 59 per cent. Careful examinationrevealed that 9 responses (1 from CO1, 2 fromCO2, and 6 from CO3) were not usable,yielding a total of 165 usable responses (56%).Respondents were invited to take part infollow-up interviews or group discussions.These interviews sought to better understandthe results of the quantitative results and gaininsight into the context in which the PMERSoperated.Variables and Their MeasurementThe dependent variable in this study isperceived procedural fairness and theindependent variables are participation intarget setting, the transparency of the goalattainment-rewardlink, and goal specificity. Inaddition to these variables, the study includedthe type of performance measures in the modelas the controlling variable. To increase thevalidity of the measures and to be morecomparable with previous studies, allmeasures were taken from previous literature. 11 All of the instruments were pilot-tested prior tothe distribution to the respondents, on executiveMBA students of an UK university.33
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