Effective leaders must know how to exercise fairness and justice by taking actions to create perceptions of fairness and justice throughout the workplace. With this knowledge, leaders can manage procedures not only so they are fair, but also so that people see the outcomes of those procedures (such as promotions, bonuses, or awards) as fair. This is important because when people sense that procedures are unfair, their performance is affected negatively.
One study in particular provides an interesting metaphor: “Anyone who has watched children negotiate how to share a piece of cake knows that humans are exquisitely sensitive to fairness. Although economic models of decision making have traditionally assumed that individuals are motivated solely by material utility (e.g., financial payouts) and are not directly affected by social factors such as fairness, there is increasing empirical evidence that fairness does play a role in economic decision making because fair outcomes tend to be more materially desirable for the recipient than unfair outcomes in everyday life, it is difficult to distinguish the desire for fairness from the desire for material gain.”
In this research, individuals participated in a design manipulating fairness (fair vs. unfair) and material outcome/offer amount (high vs. low). Results showed that fairness and happiness were positively related. Participants reported greater happiness for fair offers than unfair offers.
My observation is that leaders can potentially drive and enable stronger satisfaction within the organization by working to strengthen fairness throughout the entire workplace as it relates to everything–from pay to workload to work-life balance.