An umpire: Australia v World XI, Sydney Cricket Ground, 2005 (Source: Wikimedia Commons)
Ideas for Leaders #583

How People React to the Fairness of Decisions: Trust Makes a Difference

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Key Concept

Perceived fairness, whether of the outcome or procedural fairness, impacts on how people react to decisions. New research shows that the level of trust in decision makers sets expectations that significantly influence this interaction of outcome and procedural fairness.

Idea Summary

People react differently to decisions based on what they perceive was the fairness of the outcome as well as the fairness of the process — and whether or not they trusted the decision makers in the first place.

For example, if people trust a manager, they are more likely to see both the outcome and the process of his or her decision as being fair. In their minds, the ultimate decision is consistent with their expectations. This consistency effect occurs in a negative situation as well: If people don’t trust a decision maker, and they see both the outcome and the process as being unfair, they will react minimally to the decision — it was, after all, consistent with their expectations of the untrusted decision maker.

However, if people believe a trusted decision maker has engaged in outcome and procedural unfairness, they will have a significant negative reaction to the ultimate decision. (The reaction will be less extreme if the decision was based on only outcome unfairness or only procedural unfairness; it the combination of both outcome and procedural unfairness that draws the sharp reaction.)

If, on the other hand, people realize that a mistrusted decision maker has proceeded with outcome and procedural fairness, they will have a significant positive reaction to the ultimate decision.

Three studies confirm this three-way interaction among outcome fairness, procedural fairness and trust.  The first study was a survey of 153 management/officer training participants working for a giant UK shipping company using validated measures for outcome fairness, procedural fairness and trust. The second study was larger, surveying 363 participants of a U.S. volunteer online research panel, more than half of them women.

In both surveys, the reaction to the decision was gauged in terms of organizational commitment — a positive reaction leading to increased commitment, a negative reaction leading to decreased commitment. When expectations were met (outcome and procedural unfairness from a mistrusted manager, or outcome and procedural fairness from a trusted manager), the level of organizational commitment changed little. Organizational commitment plunged, however, in reaction to outcome and procedural unfairness from a trusted decision maker. The reverse was also true: organizational commitment skyrocketed in reaction to outcome and procedural fairness from a mistrusted decision maker.

Study 1 also showed that people with a relatively short tenure in their position were more impacted by the dynamics described above than people who had been in their position longer.

One of the shortcomings of the first two studies was that while they connected the three variables, they did not clarify the sequence. The assumption was that trust led to higher expectations. However, to address any internal validity questions, the researchers conducted a third study that specifically manipulated the various factors, including deliberately establishing trust before the procedural and outcome fairness was known.

In this study, 247 volunteers for online research panel read a vignette in which they play the role of someone applying for a good job. Different vignettes were used to manipulate the different variables, such as whether the decision makers in an organization were trustworthy. The reaction to the interaction among outcome fairness, procedural fairness and trust would be gauged by organizational attractiveness (rather than organizational commitment, since the participants were not yet employees).

Study 3 replicated the results of studies 1 and 2 (although outcome favourability — what people achieve from the decision — replaces outcome fairness). In addition, study 3 revealed the mediator role of trust by measuring trust after as well as before the outcome and procedural fairness steps. Thus study 3 showed how disappointed participants lost their trust in the once-trusted manager, while happily surprised participants gained a significant amount of trust in a once-distrusted manager.

Business Application

This research emphasizes the role that trust plays and how trust alters expectations, perceptions and reactions. Specifically, mistrusted executives may not be aware of the vicious circle in which they are spinning, and in which their decisions are expected to be negative and more quickly perceived as negative.

The research shows, however, that there is a way out, thanks to the overly positive response to a mistrusted decision maker who surprises with outcome fairness or favourability and procedural fairness. The reverse is also true: trusted decision-makers who stumble with outcome and procedural unfairness can suddenly find themselves in the vicious circle. Trusted managers should thus be cautious not to let an unfair decision significantly alter their relationships with their subordinates.

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