Organizational Justice as a Key Metrics of Ethical Culture

By Vera Cherepanova
vera.cherepanova@studioetica.com

What are the right measures to determine whether ethics and compliance (‘E&C’) initiatives really work? This task may still be daunting for many organizations. In fact, the lack of effective measurement tools may be one of the reasons why companies keep investing more and more in compliance and yet do not get the expected results.

Ethical culture is clearly one of the most challenging components of a C&E program in terms of reliable measurement. Defined as a subset of a broader organizational culture, it will inevitably vary across companies. In this case, how can we develop a comprehensive measurement solution yet versatile enough to accommodate the uniqueness of every organization? Instead of simply surfacing common patterns of behavior, it needs to assess the key underlying elements of culture.

One of the crucial ingredients to consider is the concept of ‘organizational justice’, and how it is perceived by the employees. A recent study suggests it has been found to successfully predict unethical behavior. If not taken good care of, it can turn into a major ‘disqualifier’ of ethical culture undermining the emergence of a genuine focus on ethics. This makes it uniquely relevant for the measurement purposes.

What is organizational justice

Alas, some of us may have observed or experienced the ‘double standards’ practices: punishing lower-level employees or those with less potential while protecting senior executives and HIPOs. Clearly, these situations take a toll on employee ethics. Let’s see how it works.

The concept of fair treatment is central to the organizational justice definition and has three distinct, though overlapping dimensions:

• distributive justice: the fairness of the outcomes being distributed proportionally to inputs;
• procedural justice: fairness of the actual procedures used to arrive at a decision; and
• interactional justice: the employee’s perception of interpersonal treatment (respect, fairness) by management as a part of formal procedures follow-through.

Although organizational justice is commonly associated with personnel-related decisions (pay, rewards, evaluations, promotions, assignments, and dismissals), whether employees are treated fairly tends to be a high marker of ethical culture as well. Just as the perception of organizational justice promotes positive attitudes to job satisfaction and performance improvements, it fosters the atmosphere of trust and greater willingness to ‘do the right thing’. An empirical study of four large corporations confirms there is a strong relationship between perceived general fair treatment of employees and ethics-related outcomes.

How to measure organizational justice

What is the best way to incorporate organizational justice assessment into compliance metrics? Whether you are running a standalone culture survey, or include ethics and compliance as part of a broader annual survey administrated by HR or another department, you should generally aim to incorporate the following statements that cover the three dimensions discussed earlier:

Distributive justice:

• People here are paid fairly for the work they do.
• I feel I receive a fair share of the profits made by this organization.
• Promotions go to those who best deserve them.

Procedural justice:

• Managers avoid playing favorites.
• Management clarifies decisions and provides additional information when requested by employees.
• To make decisions, management collects accurate and complete information.

Interactional justice:

• People here are treated fairly regardless of their age, race, ethnic origin, sexual orientation, etc.
• Management involves people in decisions that affect their jobs or work environment.
• Management keeps me informed about important issues and changes.

Apparently, when applying double standards is a regular practice, employees are likely to experience some level of hypocrisy and disconnectedness of the C&E program from everyday business activities. This could cause cynic attitudes and lead to unethical conduct. On the contrary, management walk the talk and consistent follow through on ethical violations in a fair manner will send a strong signal – your justice expectations are taken seriously. This is an impactful motivational factor to respect the agreed-upon rules and procedures. In this way, organizational justice proves to be one of the crucial metrics to measure C&E program efficacy. It is an acid test of a company’s ethical focus, that’s why it should be monitored closely and consistently.

In conclusion, I would like to share a short video of a clever behavioral experiment on inequality aversion. In their study, Sarah Brosnan and Frans de Waal has shown that even non-human primates display a strong sense of fairness. Two capuchin monkeys were required to provide the experimenter with a token in order to receive a food reward. Upon receipt of the token, the experimenter provided one of the monkeys with some cucumber and the other with a grape, the latter being more highly desired by capuchin monkeys. Now look at what happened when the monkey with a cucumber witnessed a conspecific obtain a more attractive reward for equal or no effort – it’s worth a thousand words!