Procedural and Distributive Fairness of Gainsharing

Abstract

The Procedural and Distributive Fairness of Gainsharing measure, developed by Welbourne, Balkin, and Gomez-Mejia in 1995, is designed to assess employee perceptions of fairness within organizational gainsharing programs. The scale is bifurcated into two primary components of organizational justice: Distributive Justice and Procedural Justice.

Distributive Justice specifically evaluates the perceived fairness regarding the amount and allocation of the gainsharing bonuses. Procedural Justice, conversely, assesses the fairness of the processes and rules governing the program, including decision consistency, bias limitation, accuracy of information, explanation of decisions, feedback mechanisms, and consideration of employee viewpoints. The procedural component is further divided into two subscales: fairness derived from general rules and administration, and fairness based on the actions of the suggestion committee.

Keywords

Organizational Justice, Gainsharing, Fairness, Procedural Justice, Distributive Justice, Employee Compensation, Incentive Programs, Organizational Behavior.

Authors

Theresa M. Welbourne, David B. Balkin, Luis R. Gomez-Mejia

Purpose

The primary purpose of this scale is to systematically measure employee perceptions of fairness regarding the implementation and outcomes of organizational gainsharing systems. By isolating both procedural and distributive components of justice, the instrument allows researchers and practitioners to diagnose specific areas of perceived inequity within performance-based incentive structures.

Understanding these fairness perceptions is critical for determining the success and acceptance of performance-based reward systems, as employee commitment and willingness to participate are often contingent upon the perceived justice of the system being administered. The scale provides a fine-grained assessment of whether employees feel the rules are fair (procedural) and whether the payouts are equitable (distributive).

Construct

The scale measures Organizational Justice within the specific context of financial incentive programs, focusing on two distinct but related dimensions: Procedural Justice and Distributive Justice. These constructs are fundamental in organizational psychology for predicting employee attitudes, job satisfaction, and organizational behaviors.

The measure operationalizes Distributive Justice as the perceived fairness of the results, specifically the size and allocation of bonus amounts. Procedural Justice is operationalized through mechanisms such as consistency, accuracy, rule clarity, bias control, and the perceived fairness of the decision-making bodies, such as the suggestion committee.

Validity

The validity of the measure was supported by its ability to demonstrate empirical distinctions among its core factors. Confirmatory factor analysis (CFA) confirmed that the three hypothesized factors—procedural justice based on rules, procedural justice based on suggestion committee processes, and distributive justice—were empirically distinct from each other and from measures related to employee monitoring and willingness to act based on the behavior of others (Welbourne et al., 1995).

In terms of nomological validity, Distributive Justice showed positive correlations with both types of Procedural Justice and with employees’ willingness to act according to expectations within the gainsharing program. Both procedural subscales and distributive fairness also correlated positively with key outcome variables, including satisfaction with the gainsharing program, employee income level, and overall pay satisfaction (Welbourne, 1998).

Reliability

Internal consistency reliability was assessed using Coefficient alpha for each subscale. The procedural justice subscale focusing on rules and administration demonstrated strong reliability, with alpha coefficients ranging broadly from .71 to .90.

The Distributive Justice subscale also exhibited acceptable to strong reliability, with alpha values falling between .73 and .86. However, the procedural justice subscale focusing specifically on the actions of the suggestion committee showed a lower alpha coefficient of .60 (Welbourne, 1998; Welbourne et al., 1995).

Factor Analysis

The scale structure was validated using Confirmatory factor analysis (CFA). This analysis confirmed a robust three-factor structure, supporting the theoretical separation of the constructs. The three distinct factors identified were:

• Procedural Justice based on general rules and administration.

• Procedural Justice based on the fair processes and actions of the suggestion committee.

• Distributive Justice (fairness of outcomes, specifically bonus size).

The CFA successfully demonstrated that these factors represented unique empirical domains, providing evidence that the measure effectively captures the nuances of organizational justice within incentive systems, separate from constructs like mutual monitoring behaviors.

Instrument

Test Type: Self-report Psychometric Scale

Format: 15 items utilizing a 5-point Likert-type scale, where 1 = strongly disagree and 5 = strongly agree.

Language Available: English (Original research)

Population Group: Employees/Workers participating in gainsharing programs.

Age Group: Adult (Working population)

Population Details: Employees within organizations that utilize performance-based incentive systems, specifically gainsharing programs.

Test Methodology: Survey administration, requiring participants to rate their agreement with statements regarding the fairness of the gainsharing process and outcomes.

Keywords

Organizational Justice, Procedural Justice, Distributive Justice, Employee Attitudes, Pay Satisfaction, Survey Instrument, Organizational Psychology.

Authors

Author ORCID Identifier: N/A

Affiliation Email addresses: N/A

Correspondence Address: N/A

Permissions & Fee and Test Year

Test Year: 1995 (Primary publication)

Permissions: The original items were reproduced with permission of the Academy of Management for use in subsequent scholarly works, indicating that commercial use or reproduction requires permission from the copyright holder (Academy of Management).

Fee: Not specified; standard academic use typically requires permission but may not incur direct fees unless for profit-making commercial application.

Reference’s

Welbourne, T. M., Balkin, D. B., & Gomez-Mejia, L. R. (1995). Gainsharing and mutual monitoring: A combined agency-organizational justice interpretation. Academy of Management Journal, 38(3), 881-899. © 1995 by Academy of Management. Items were taken from Table 1, pp. 892-893.

Welbourne, T. M. (1998). Gainsharing: The role of employee involvement and perceived fairness. Journal of Management Inquiry, 7(4), 314-323.

Items of the Procedural and Distributive Fairness of Gainsharing

Responses are obtained on a 5-point Likert-type scale where 1 = strongly disagree and 5 = strongly agree.

Procedural justice based on rules and administration:

1. The design of the gainsharing plan seems fair.
2. The gainsharing formula is the same for all employees.
3. The gainsharing plan is administered fairly.
4. The rules used for sharing the gainsharing bonus with all employees are fair.
5. The gainsharing plan developed by the company to reward employees for their performance is fair and impartial
6. When determining whether a gainsharing bonus will be paid, the company uses accurate information about the department’s performance
7. The performance level required to receive a gainsharing bonus is clear to me

Procedural justice based on suggestion committee actions:

8. Suggestion committees provide an opportunity for me to express “my opinion”
9. People who provide suggestions are treated fairly
10. The suggestion committees and gainsharing program provide an opportunity for us to receive feedback and learn how well we are doing

Distributive justice:

11. The size of our bonus is fair
12. The bonus we receive is fair
13. All in all, the bonus payment is what it ought to be
14. Our bonus is fair compared to what others are getting
15. The extent to which the bonus gives us the full amount we deserve is fair