The Roles of Organizational Justice and Trust in a Gain-sharing Control System

Abstract

This study examines the roles of organizational justice and trust in a specific type of management control system (MCS), gain-sharing. According to the proposed theory, employee perceptions involving the procedural and distributive justice of the gain-sharing plan influence employee trust in managers. Positive perceptions of fairness lead to high trust, which, in turn has positive consequences for the organization such as lower employee turnover. To investigate these issues, a survey was administered to employees of a large manufacturing company. Results of structural equation modeling indicate that employee perceptions regarding the fairness of the gain-sharing plan are positively related to employee trust in managers. Further, trust is linked to employee turnover intentions. The results imply that the organizational justice of an MCS has consequences for the attitudes and behaviors of employees and thus the success or failure of the MCS.