Opportunity Knocks: Perceptions of Fairness in Employee Benefits

Abstract

This article considers potential conflicts between the principles of equity, equality and need in perceptions of fairness regarding employee benefits, based on self-interest bias, and makes specific predictions regarding perceptions of distributive justice in specific benefit plans. It includes predictions regarding perceptions of procedural justice. A survey of 497 employees in seven Canadian organizations tested the predictions. Findings indicate that need is still an important criterion for assessing distributive justice in employee benefits, although the survey also found evidence of self-interest bias. Perceptions of procedural justice were found to be significantly higher in plans with extensive communication and employee participation in plan design. Organizations that take a proactive approach to understanding how employees determine their perceptions of procedural and distributive justice in employee benefits, and design a benefit plan accordingly, can potentially increase employees’ perceptions of justice regarding employee benefits and reap associated benefits including improved employee retention, enhanced ability to hire and increased benefit satisfaction.