Reference no: EM131450236

Question: Fairness and Human Resources Management: What Do Your Employees Want?

The financial sector is the third largest sector in the Australian economy and the banking industry accounts for more than half of the financial sector. Financial services organizations depend on their employees to deliver superior customer service and to maintain successful customer relationships. Treating employees fairly may lead to the operational success of financial services organizations. Fair treatment also communicates that organizations are committed to their employees. Employees assess their work experiences in terms of whether or not organizations show concern for them as individuals and provide fair treatment.

When employees perceive that human resources management (HRM) decisions and procedures are fair and satisfactory, they can be expected to repay the organization by forming positive attitudes toward it. Twenty-nine senior, middle, and lower-level managers from one Australian bank in South Australia were interviewed. All interviewees had direct involvement with HRM practices in the banking organization. Interviewees were asked to name those HRM practices in which fairness would be most important. Options included HR planning, recruiting, selection, compensation, promotion/ career development, performance management, and employee relations.

The findings indicated that interviewees perceived fairness to be most important in three main HRM areas: compensation (44.8 percent), performance management (27.6 percent), and promotion/career development (27.6 percent). Compensation and performance management are areas where fairness is most important because these two are linked together. I suppose it is about what you do and how you get rewarded. I think that's where the fairness becomes important-how you actually reward your people. Performance management goes hand in hand with compensation and benefits. Interviewees claimed that compensation needed to be fair and transparent because employees perceived that if they were exerting as much effort as others but getting fewer rewards, they became de-motivated and their performance declined. Employees expect fair remuneration.

It helps them to work better if their organization compensates them according to their contributions and acknowledge them. Moreover, employees with different needs accordingly should be given different benefits. Interviewees also considered fairness in performance management important as it affected their opportunities for career development and for bonus payments. Performance management, however, has the potential to be subjective because it deals with judgments. For instance, when a superior who acts as an appraiser or reviewer does not believe or does not get along with staff, it may somehow affect employees' performance because their performance do not get on well with the superior, they are unlikely to receive a good report.

Interviewees also perceived that fairness in promotion/ career development was important so that employees have goals to work toward and equal chances for promotion. For instance, job candidates must be treated with fairness relative to every other candidate so everyone goes through the same testing procedures, interview procedures, and screening. Each employee expects equal opportunity to progress on his or her career path and to be rewarded for what he or she does. The interview illustrates how perception of fairness is important in the distribution of HRM practices such as compensation, performance evaluations, and promotion/ career development. There is clear evidence that bank employees place emphasis on the issue of fairness in these areas.

1. What is the link between fairness and HRM?

2. If you were the HR manager, could you explain why Australian bank employees chose compensation and benefits, performance management, and career development as their most important HRM practices?