Promoting Organization Fairness in Small Business: An Analysis of Grievance Procedures (1998)

ABSTRACT Employee and supervisor concerns about rules and procedures and how they are administered is an important area for business. These concerns may be particularly important for small businesses. Business entrepreneurs would like to make fair employee selection decisions, settle disputes justly and negotiate equitable wage and other settlements. To assist in such decisions, theorists have distinguished between two conceptualizations of justice: distributive and procedural justice. This paper provides a brief theoretical review of the three different conceptual perspectives on procedural justice as they relate to dispute resolution. We then discuss a survey of organizations, specifically analyzing their grievance procedures and drawing some conclusions about the structure and perception of fairness of the procedures based on the theoretical models. Finally, we recommend a grievance procedure that will allow employees not only more process and decision control, but will address the interactional elements of procedural justice. The inclusion of a grievance mechanism that incorporates the elements of procedural justice may reduce the likelihood that an employment dispute will become lawsuits. PROMOTING ORGANIZATIONAL FAIRNESS IN SMALL BUSINESS: AN ANALYSIS OF GRIEVANCE PROCEDURES Researchers and practitioners in the personnel field want to be just. Managers would like to make fair employee selection decisions (Arvey, 1979), settle disputes justly (Diaz, Minton & Saunders, 1987; Walton & McKersie, 1965) and negotiate equitable wage and other settlements (Mahoney, 1975). To help them make just decisions, theorists have distinguished between two conceptualizations of justice (Greenberg, 1990): distributive and procedural justice. Distributive justice deals with the way in which organizational resources are distributed among personnel. The emphasis is on the outcome of an organizational decision. Was the pay raise that I received fair? (for a review, see Freedman & Montanari, 1980; also Roemer, 1996). Procedural justice, on the other hand, focuses on the rules and processes through which organizational decisions are made (Greenburg, 1990; Schappe, 1998; Thibaut & Walker, 1975). Regardless of the outcome, is the process used a fair one? The focus shifts from what was decided (distributive justice) to how the decision was made (procedural justice). Was the merit system used to generate my pay raise a fair one? Though theories of distributive justice have traditionally received the most attention in the field of human resource management, researchers have recently begun to discuss the issues involved in procedural justice and their implications for organizational behavior (Fryxell & Gordon, 1989; Greenberg, 1990; Lissack, 1983; Schappe, 1996; Skarlicki & Folger, 1997; Sheppard, 1983; Sweeny, & McFarlin, 1993). Numerous studies, conducted in a variety of settings, have shown that the perceived satisfaction with an outcome is significantly affected by the process by which it was resolved (Folger, 1977; Lowe & Vodanovich, 1995; McFarlin & Sweeny, 1992; Schappe, 1998; Skarlicki & Folger, 1997; Tang & Sarsfield-Baldwin, 1996; Tyler & Caine, 1981; van den Bos, Vermunt & Wilke, 1997). Some studies have shown that outcome satisfaction is independent of whether the outcome was perceived as positive or negative. In cases of dispute resolution, grievants can feel satisfied with the outcome, regardless of what it may be, if they feel they have been treated fairly during the process. Other studies have shown that procedural fairness can affect attitudes toward an organization and its managers (McFarlin & Sweeny, 1992). Specifically, employees' assessments of procedural justice were positively related to organizational commitment, turnover, trust in management, evaluation of their supervisor, and job satisfaction (Alexander & Ruderman, 1987). …