Perceptions of Justice in Connection with Individualized Pay Setting

Abstract

Individualized pay is typically assumed to enhance employee work motivation, but a precondition for such beneficial effects is that employees perceive the pay-setting process to be fair. The aim of this study is to contribute to the understanding of the nature, determinants and consequences of pay justice. Questionnaire data, obtained from a Swedish nationally representative sample of nurses, provided support for distinguishing between distributive, procedural, interpersonal and informational justice. The results also showed that perceptions of pay justice were predicted by both work climate variables and factors related to the pay-setting procedure, even after controlling for demographic characteristics. Although pay justice had only marginal effects on employee work attitudes and behaviour when demographics, work climate and pay-related factors had been taken into account, justice was found to be an important goal in itself, given that a prerequisite for the success of any pay system is that it is perceived as fair.