New York, Dec 10 (Inditop.com) Here is a valuable lesson for companies to avoid ugly situations in these tough economic times.
A firm that wants to cut costs should give employees all the same time off rather than making equal pay cuts across the board that can potentially lead to disgruntlements from a sense of unfairness.
When you make cash part of the pay-off, you are in trouble because people’s sense of what’s fair for them quickly changes, says a new study.
To be published in an upcoming issue of Psychological Science, the study shows that when it comes to distributing resources, people’s ideas about what is fair for them change depending on what is being handed out to them.
If it is something that has its own intrinsic value – like food or vacation – people are more likely to see equal distribution of such items as fair.
But if it is something that is only valuable when it is exchanged – such as money or credit card reward points – people’s ideas of fairness shift to a more market-based attitude.
They quickly begin to think they should receive according to what they have contributed.
“What exactly is it about money that causes people to treat it so differently than other resources?” asks study co-author Sanford De Voe who is an assistant professor of organisational behaviour at the Rotman School of Management.
“The paper shows that it is the property of money being a medium of exchange,” he says.
“When you allocate something that only has its value in what it can be exchanged for, that is what activates a market mindset and really invokes these strong norms about input and effort leading to reward,” De Voe says.
He co-wrote the paper with Columbia University’s Sheena Iyengar.
