Just benefits? Employee benefits and organisational justice

Abstract

Purpose Employee reward is central to contemporary debates about work and employment relations; and in the context of ongoing wage stagnation, benefits represent a growing proportion of total reward value. Past studies have shown that when employees perceive benefits as unfair, this has a negative impact on engagement, performance and retention. Yet no previous studies have explored the components of a benefits system that influence employees’ fairness concerns. Using organisational justice as a theoretical lens, the purpose of this paper is to examine how dimensions of an employee benefits system influence the fairness perceptions of employees. Design/methodology/approach This paper reports on a qualitative, inductive case study of the benefits system in a large finance and insurance company, drawing on three data sources: interviews with the company’s benefits managers, organisational documents and open-text responses from a benefits survey. Findings Three dimensions of the benefits system strongly influenced fairness perceptions – constraints on accessing and utilising benefits; prosocial perceptions about the fairness of benefits to third parties; and the transparency of employee benefits. Practical implications The study informs organisations and benefits managers about the important role of supervisors in perceived benefits usability, and how benefits may be managed and communicated to enhance employee fairness perceptions. Originality/value This study makes a conceptual contribution to the benefits literature through a detailed exploration of the type of organisational justice judgements that employees make about benefits; and identifying for the first time prosocial fairness concerns about the impact of benefits on third parties.