History Of Fairness And Ethics Business Essay


Fairness is a very broad concept which requires scholars to define the term "fairness" comprehensively and clearly because the term "fairness" is a dimension, meaning it is conceptual and we cannot use our senses to know what does the term actually means or set the boundary of the term. Therefore, we need to scholars to define the term and as more scholars define the term, the clearer or precise the definition will be. Taylor (1975, p. 109) defined fairness as "inquisition into the character and area of morality which included rules of conduct, moral judgments and standards." Rawls (1971, p. 194) define fairness as the understanding of other people's need. Aristotle (1968, p. 140) defines as "equals should be treated equally and unequally." Plato (1974, p. 181) defines as "… the requirement we laid down at the beginning as of universal application when we founded our state, or else some form of it. We lay down; if you remember and have often repeated that in our state, one man was to do one job, he was naturally most suited for." Cooke (2011, p. 84) defined fairness as people's position in society which able to determine by factors within their control.

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From the definitions above, we can conclude that fairness is derived from several variables. Therefore, fairness consists of variables where the single variable is unable to define the term as a whole. Therefore, when the variables add up, it forms or creates the term. We can observe that the dimensions of fairness consist of needs, equal and morality. Hence, we can conclude that fairness requires the equality in the way peoples are treated and the difference in treatment are based on morally justifiable reasons such as need, effort or merit (Velasquez, Andre, Shanks & Meyer, 1996). There are several types of fairness from the concept of fairness which are distributive fairness, procedural fairness and interactional fairness and Hornibrook, Fearne and Lazzarin (2009) suggested that if these three aspects of fairness are perceived positively, it will reflect to the organizational outcomes.

Types of fairness

1.1 Distributive fairness

Distributive fairness, a theory based on writings of John Rawls, has a major focus of distributing assets fairly among a dynamic and diverse group of members from a community. Rawls argues that everything must be done in an act of achieving fairness throughout and he did not want anything to be done that may hurt or damage another person. For example, Rawls (1971) felt that throughout a society, every demographic should be allowed the same treatment and goods as any other. Issues of distribution are pervasive in society, existing in any situation where there is an exchange type of relationship (Deutsch, 1985).

Velasquez et al. (1996) refers distributive justice as the extent to which society's institutions ensure that benefits and burdens are distributed among society's members in ways that are fair and just. When the institutions of a society distribute benefits or burdens in unjust ways, there is a strong presumption that those institutions should be changed. For example, the American institution of slavery in the pre-civil war South was condemned as unjust because it was a glaring case of treating people differently on the basis of race.

There are four specific principles of distributive fairness that can be considered in situations involving the distribution of material goods and resources, especially those that are scarce (Munson, 2004). The principle of equality requires that all benefits and burdens be distributed equally. The advantage to this concept of fairness is that everyone is entitled to an equal share of resources. However the principle becomes problematic when not everyone is perceived as equally deserving of an equal share.

The second principle is the principle of need, which suggests that resources should be distributed based on need so that those with greater need will receive a greater share. In theory, this supports the principle of equality in that everyone will end up with the same share of goods. A problem occurs from this principles is the question of exactly what material goods and resources we are entitled to. Definitive agreement has not been reached in this society as to whether health care is such a good although Lamont (2002) argued that the poor should receive the same health care as the rich.

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The third principle is the principle of contribution which maintains that persons should benefit in proportion to their individual contribution. Those who contribute proportionately more to the production of goods should receive proportionately more goods in return. Finally, the principle of effort similarly recognizes the degree of effort made by an individual as the determining factor in the proportion of goods to be received. Obvious difficulties with these principles lie in defining the exact nature and impact of a contribution and accounting for the inherent differences in the outcomes of individual efforts regardless of the amount of effort spent.

In organizations, distributive fairness affects performance when efficiency and productivity are involved (Charash & Spector, 2001). According to Honans (1961) fairness in organizations concerns with distributive fairness that is, the manner in which organizational resources are distributed among personnel (Freedman & Montanari, 1980; Leventhal, 1980) and on employees' reactions to those resource distributions (Greenberg, 1982). Furthermore, performance appraisal and salary are some of the important determinants of employees' perceived fairness (Lawler, 1971). Similarity, Chang and Hahn (2006) define distributive fairness as the perceived fairness of the quantity of compensation that employees get.

Hence, in a business relationship, distributive fairness is based on the evaluation of the outcomes or results (Ferrell, 2010). The outcomes or results in distributive fairness may be tangible such as salary as well as intangible such as praise. Perceptions of distributive fairness can be fostered when outcomes are perceived to be equally applied (Adams, 1965). According Adams (1965) people compare the ratio of their own outcomes such as salary or promotion and inputs such as effort or qualification and make compare with others (Greenberg, 1982).

On the other hand, when people perceive or expect fairness to occur, they may react positively towards the organization and recommend the organization to others, thus building on the positive image of the organization as a potential employer as well as an organization as a whole (Hülsheger & Anderson, 2009). When an organization is perceived to be distributively just, employees tend to support of the organization by doing tasks outside the scope of their job description (Charash & Spector, 2001; Karriker & Williams, 2009) or in other word, improving perceptions of fairness increases performance (Karriker & Williams, 2009). On the other hand, perceptions of distributive fairness are also strongly related also to the withdrawal of employees from the organization (Charash & Spector, 2001) and the relationship between effort invested and outcome received often results in legal issues which can damage an organization's image (Anderson, 2004; Anderson, 2011; Anseel, 2011).

If employee found out that he or she is being treated unfairly, he or she will be unmotivated to do the work. Suliman (2007) once said that, organizations that distributed the resources unfairly will create argument, disrespect and mistrust among them. It is because employees' perceptions on distributive fairness are mainly based on comparisons with colleagues. If the comparison comes out with positive result, they will feel positive toward the organization management. Hence, the organization performance will be improved. However, if the comparison is negative, the outcome will become negative too. Therefore, managers must notice employees' perceptions on distributive fairness as well as procedural fairness since these two dimensions play a main role related to intentions to quit and job dissatisfaction (Dailey & Kirk, 1992). It is very important to make employees feel in part of the decision making when amending appraisal and reward systems. Organization can seek for employees' opinion when making the changes to show respect to employees.

1.2 Procedural fairness

According to Leventhal (1980, p. 156) procedural fairness is define as "one's perception of the fairness of procedure components of the system that coordinate allocation process." Rawls (1971) argues that the procedure used is pivotal to the outcome reached and if fair procedure is utilized, principles of justice based on fairness and equality will be an inevitable result. The procedure is referring to the "means" whereby various "ends" are attained. Whether the outcomes are pay raises to be distributed to employees, labor disputes to be settled, or performance evaluations to be recorded, a key determinant of these decisions involves how they are made (Folger & Greenberg, 1985). In short, procedural fairness concerns about the processes through which decisions are made from (Thibaut & Walker, 1975). Thus, this concept is opposite of distributive fairness, which is concerned with the perceived fairness of the content and consequences of those decisions (Walker, Lind & Thibaut, 1979).

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Forret and Love (2007) define procedural fairness as the perceived fairness of an organization's procedures and policies used to determine an individual's outcomes. It influences a wide range of human behaviors, perceptions, emotions, and across diverse social settings. Leventhal (1980, p. 160) define procedural fairness as "one's perception of the fairness of procedure components of the system that coordinate allocation process."

Leventhal (1980) and Forret and Love (2007) have identified several similar criteria and perception of procedural fairness. Viewpoints of procedural fairness are related to employees' morale and trust and they are characterized by solidity in the procedures, accuracy of the information, and free of bias (Forret & Love, 2007). Leventhal (1980) classify six criteria of perception of procedural fairness which are procedures are fair when they are consistency, bias minimization, accurate information, consist of technology gadget for wrong decisions correction, maintain usual concept of morality and the last is it is representative.

Procedural fairness has been found that it able to increase the feelings of being appreciated. Hence, it is very important that procedural fairness is perceived positively in order to an organization to achieve maximum productivity and its strategic goals (Prooijen, 2009). If there is unfair procedures occurred, trust between the employees and company will be low, and therefore employees will have low commitment and motivation (Cremer, 2005).

An organization who wants to have positive outcomes should have a good perception of procedural fairness. Research has showed that there are few benefits of procedural fairness for organizations. A good perception of procedural fairness creates positive attitudes toward management control and hence produces a number of good behavioral reactions (Collett, 2008). It is important for an organization especially in performance appraisal to create harmony among employees in order to increase organization performance.

Organizational researchers found that procedures are perceived to be 'more fair' when affected individuals have an opportunity to either influence the decision process or offer input (Thibaut & Walker, 1975; Gilliland, 1993; Muhammad, 2004). The decision making can be included in salary determination or promotion of employees. If procedural fairness is used in salary determination, it will eventually improve the ability of organization to manage the salary determination process effectively (Cloutier &Volhuber, 2007). Bagdadli, Roberson and Paoletti (2006) said that fair promotion decisions influence feelings of organizational commitment of employees. By other words, organizations are able to keep employee commitment when promotion decision making involve procedures fairness and employees will perceive it to be fair.

For example, Wainwright Bank and Trust Corporation in Boston have made a commitment to promoting fairness to all stakeholders by providing a "sense of inclusion and diversity that extends from the boardroom to the mail room". In other words, the bank uses method of procedural fairness to establish positive stakeholder relationships by promoting understanding and inclusion in the decision making process.

Furthermore, Gilliland (1993) states that perceptions of procedural fairness are influenced by the extent to which procedural rules are satisfied or violated. Procedural rules, listed by Leventhal (1980) suggest that in order to be fair decisions should be made consistently; without personal biases, with as much accurate information as possible, with interest of affected individuals represented in a way that is compatible with their ethical values, and with an outcome that can be modified. Other researchers have suggested additional rules such as the importance of two-way communication (Greenberg, 1986).


1.3 Interactional fairness

Interactional fairness is defined by sociologist John R. Schermerhorn (2006, p. 140) as the degree to which the people affected by decision are treated by dignity and respect when executing procedures and determining outcomes. Therefore, the quality of interpersonal treatment that people receive from authorities during the decision-making procedures is very important (Bies & Moag, 1986; Greenberg, 1993). In other word, interpersonal fairness reflects the degree to which people are treated with politeness, dignity, and respect by authorities and third parties involved in executing procedures or determining outcomes (Colquitt, 2001; Kickul & Troth, 2003; Janssens, Sels & Brande, 2003).This concept focuses on explanations provided to the people that convey information about why procedures were used in a certain way or why outcomes were distributed in a certain fashion (Greenberg, 1993).

The assessment of organizational practices and behavior of authority in terms of fairness does not usually depend on how fairly the employee was actually treated, but rather on how fairly the employee perceives that he or she was treated (Greenberg, 1990). Perceptions of interactional fairness play a role in the determination of employees' work attitudes and behavior (Cohen & Spector, 2001; Colquitt, Conlon, Wesson, Porter & Yee, 2001).

According to Greenberg (1993) interactional fairness can be broken down into two fairness which are interpersonal fairness and informational fairness. Interpersonal focuses on treating people with dignity and respect while informational fairness deal with the justifications provided to people. There are four factors that affect perception of employees on fairness of the interpersonal treatment get from the organization (Narcisse & Harcourt, 2008). These factors are the organization is unreliable, interfere employee privacy, make offensive judgments and disrespectful to employees (Narcisse & Harcourt, 2008).

The explanation for interactional fairness in the workplace is grounded in social exchange theory and norm of reciprocity (Cropanzano & Mitchell, 2005). From the social exchange perspective, employees expect fair, honest, and truthful treatments from the organization or its agents. Based on the norm of reciprocity, employees who perceive fair treatments by authorities are more likely to evidence positive actions through greater commitments to the values and goals of the organizations, exhibit increased job satisfaction, organizational citizenship behaviors, improved job performances and reduced withdrawal behaviors (Cohen& Spector, 2001; Colquitt et. al., 2001).

Research on psychological contract indicated that employees expect their employers to provide pleasant work environment that supports harmonious working relationships (Kickul & Troth, 2003). Because of the importance of good quality social exchange relationships in workplaces, organizations strive to encourage supervisors and employees to willingly interact with each other. However, regular supervisor-subordinate social exchange relations are important in influencing desirable individual and organizational outcomes (Becker, Billings, Eveleth & Gilbert, 1996; Zdaniuk & Levine, 2001; Raabe & Beehr, 2003).

Muzumdar (2011) found that the organizational commitment (loyalty) and work satisfaction are the most affected variables of the interactional fairness system. This showcases that the treatment by a supervisor directly influences the variables of loyalty and work satisfaction of an individual employee. Reward satisfaction is the least affected variable by the treatment by a supervisor. As such, being rewarded could be a reduction in the influence of the treatment given by the supervisor on the employee.

In the business relationship, interactional fairness is based on evaluating the communication processes used. Because interaction fairness is linked to fairness in communication, it often involves the individual's relationship with the business organization through the accuracy of the information the organization provides. Employees can also be guilty in interactional fairness disputes. For example, many employees admit that they stay at home when they are not really stick if they feel they can get away from it. Such workplace absenteeism costs businesses millions of dollars each ear. Being untruthful about the reasons for missing work is an example of an interactional fairness issue.

Part B:


According to Dr. Angie Hobbs (2010) fairness started to "appear" in the ancient Greece where Plato raised the debate on justice, but a lot of issues that were raised are the same issue with fairness. In the dialogue, Plato challenged the Athens democrats by saying that it is fair or just by having the same equal voices in the democratic Athens and also goods and power should also be shared equally. However, against Plato's concept is the oligarchy thinkers who debated that equal voices, goods, or power should be shared proportionally, whether proportional to marriage or statuses in the society. Thus, there should be no equal shares exist in the oligarchy's concept.

There are several scientific researches on fairness to date. Dr Waal found that the sense of fairness might be developed in our genes naturally. Primatologist Frans de Waal and his team found that our closes mammal, chimpanzees do have the same human senses of fairness. This is because there are concrete evidences in evolution that argues chimpanzees are sensitive to unequal distribution of outcomes. Teamwork is shown during hunting, defending territory and distributing foods (Boesch, 1994; Muller & Mitani, 2005). A clear illustration of sensitivity of chimpanzees in fairness is when the chimps refused to participate in an experiment where their partner received more rewards for the same accomplishment and also refused to accept better rewards when partner receive less (Brosnan, Schiff & Waal, 2005).

The advantage of using chimpanzees is humans cannot ask questions to them, thus by observing their behavior, we can know their decision. In animal kingdom, fairness and reciprocity elements are also found, not just in human societies. There are many animals such as zebras, deer, and wolves survive in groups by unity or reciprocity where empathy and teamwork is essential survival mechanism, just like humans as humans are highly cooperative species. (Waal, 2012)

The second scientific research on fairness is done by archaeologist Brian Hayden who excavated an ancient settlement in British Columbia near Keatley Creek and uncovered evidence indicating that two distinct classes lived within large pit houses that sheltered several families under one roof. Hayden supports Waal's research by showing that inequality grew out of the natural variability in human personality traits, among which are inclinations to be greedy or to share. He found that self-serving individuals were presented with new opportunity with the availability of surpluses of resources in Keatley Creek. They exploited the extra resources to their favor, raising the survival odds of themselves and their successors and simultaneously accumulate wealth and power in societies. Thus, phenomenon enables the rich to redefine the meaning of fairness in the society economically and politically and this process is the repeating itself around the globe, explaining how power has been distributed (Hayden, 2012).

The importance of fairness and ethics to organization and its effects on the organization performance

Fairness is important in organizations because there are a lot of benefits by practicing the concept in the organizations.

The first benefit is the practices of fairness are proven to be able to increase profitability. This is because the connection between fairness and profitability is proven to have positive correlation with each other (Donaldson, 2003). Research found that fairness in organization responsibility is able to increase corporate financial performance (Allouche & Laroche, 2005). Thus, it can be considered as one of the manipulative variable on profitability because fairness and profitability can be the source of major competitive advantage (McMurrian & Matulich, 2011). The competitive advantage is referred to higher levels of efficiency in operations, having firm relationship with the stakeholders and higher levels of customer loyalty and retention (Ferrell 2004).

Another importance and effects of fairness in organization is able to produce high quality of employees as the role of fairness in the workplace can impact heavily on the employee's attitude and behavior (Greenberg, 1990; Cropanzano & Greenberg, 1997; Colquitt, Conlon, Wesson, Porter, & Ng, 2001). Hence, organizations that practice high value of fairness and justice are able to produce better individual work performance (Cohen & Spector, 2001; Colquitt et al., 2001). Furthermore, these individuals tends to have greater job satisfaction which is very important to increase revenue growth and profitability (Heskett, James, Earl & Leonard, 1997) as high level of job satisfactions are able to generate higher levels of loyalty and subsequently showed by the customers' behavior such as repeat purchases and referrals of additional customers (Robert & Erika, 2006).

The importance of the fairness and ethics and its effects on society and in general

According to Al-Hassar (2010) found that fairness is the final outcome of the process of the law, whereby fairness is distributed by the State. Based on this definition, fairness is the mechanical process of the structure of law which mean set in place and agreed to by the people of the State. Another definition is concerned with the value inherent in 'fair' behavior. One distinction between these two definitions is the difference between an individual viewpoint and the larger view of the society. Either view incorporates the concept of moral judgment: 'good' as opposed to 'bad' (Al-Hassar, 2010).

Unfairness in our society can be seen in the execution of criminals and whenever there is an execution, the morality of capital punishment usually causes heated debate (Al-Hassar, 2010) although many people believe that the death sentence discourages those who might commit horrible crimes. To these people, they feel that since life is precious, the death penalty helps to affirm this fact. However, Richard (2011) define that a majority of countries in the world has now abandoned the use of the death penalty and he state that a civilized society has no right to put another person to death especially when there is a lack of strong evidence. Most of the industrialized world has abolished the death sentence, because they consider it barbaric. Instead, barbaric or not, the law of the land must be followed even if we do not like the death penalty. Moreover, the officers of the law must always avoid errors of sentencing based on skin color, poverty, class, and political gain. If we create a society in which fairness is not tolerated and racism at play then more incidents of state killing will continue and the law of jungle will take place (Al-Hassar, 2010).

In ancient Greece, fairness was believed to be derived from the order of society-a good society fostered fairness, and fairness fostered a good society. According to Plato (2000) fairness is the bond that holds a society together. Both individualism and personal rights had little to do with the Platonic conception of fairness those appeals even today to collectivists who emphasize the social context of fairness. Fairness was seen as the supreme virtue with respect to our relations with others.

Al-Hassar (2010) also state that fairness must be distributed equally to all members of society in order to live in harmony and peace. Judicial and police officers must not use the law as a shield to insulate their racism, hatred, and political gain. In the eye of the law, fairness must not differentiate between the poor and rich, the weak and the strong. To solve the poverty problem, the state should spend more money on education, employment, and child welfare. The state must give the individual his rightful place of dignity as a free man equal to all his fellow men where he shall have the right to live under a rule of law based on a sense of obligation. In that society, respect for law must be the cohesive force holding it together and not mere obedience based on surrender to the weapons of state power.

Relevant Theories

Ethics is closely related to fairness. Ethics studies are focused on how an employee's beliefs influence their perception of fairness in the organization. Research on fairness is also concerned with how the situation will influences an employee's perception in the organization (Schminke, Ambrose & Noel, 1997).

According to Greenberg (1990) people who have experienced being treated unfairly would be more likely to taking some unethical behavior to the organization. For example, if employees perceived that they are being treated unfairly such as pay cut and they will probably taking some unethical behavior such as steal from the organization. Employees who perceive unfairness in the workplace will look for opportunities to increase their own benefit in their own ways and may shift to unethical conduct in order to balance the unfairness that have been done to them (Trevino & Weaver, 2001).

According to Gartenstein (n.d.) ethical human resource policies are also vital when creating and maintaining an ethical culture in an organization. Employees who are treated fairly are more likely to be satisfied with their works. When employees feel that they are being treated unfairly, they will prone to explicit some unethical behavior such as using company resources for personal gain. However, when they are fairly compensated for their work, they will contribute more to the organization and less taking opportunities to exploit situations for personal gain.

On the other hand, when employees perceived that they are being treated fairly such as when top management fairly distribute the resources, they have the intension to preserve well-being of their organization (Manrique, 2010) and reduce their own interest to the organization (Lind & Tyler, 1998). Furthermore, their behaviors also tend to be ethical and in line with the organization's expectations (McCain, Tsai & Bellino, 2010).

Trevino and Weaver (2001) agree that there is a strong relationship between employee perceived general fair treatment and ethics-related outcomes in an organization. Their study shows that if employees believe that their organization generally treats them fairly, those unethical behaviors will significantly decrease. According to Trevi (2001), employees' perceptions of being treated fairly not only reduce a broad range of unethical behaviors that may harm the organization, but it can also increase their positive behaviors. For example, employees are willing to cooperate with organization to achieve the organization's goals by reporting ethical problems to management.

The values that shape an organization to be ethical will influence the relationships between the organizations with its customers. An ethical organization will train employees to treat their customers with respect and to be fair with them. For example, when employees know that such ethical behaviors as an important part of customer services, they will understand the strength of the organization's obligation to those behaviors. Hence, they will more likely to perform their work accordingly because ethical behavior can inspire fairness (Gartenstein, n.d.).