Perception and Reactions to Inequity as a Function of Social Comparison Referents and Hierarchical Levels1

PURNIMA SINGH~ University of Allahabad

Allahabad. India

Perceptions and reactions to inequity may hinge on referents of comparison and also on employees’ rank in the organization. This study examined how three comparison referents-internal same-rank, external same-rank and external whole- organization-and respondents’ hierarchical status in the company influence perceptions of inequity. The study also examined the relationship of perceived inequity with affect, job satisfaction, job involvement, organizational commitment, and stress. Seventy-five employees randomly selected from the three hierarchical levels of a manufacturing company (managers, supervisors, and workers) were the respondents. Results suggest that when individuals made comparisons with external same-rank and external whole-organization referents they experienced more inequity than when they made internal same-rank comparisons. Managers in comparison to supervisors and workers perceived less inequity related to pay, general rules administration, promotion, company and fringe benefits, advancement opportunities, and social power. Perception of inequity was found to be negatively related to job involvement, job satisfaction, and affect, and positively related to stress. Results implicate the role of social comparison referents in the evaluation of organizational rewards and perceptions of inequity.

“Distributive justice” and “fairness” are cherished values in all democratic institutions. Issues of equity are central for organizational functioning in various sociocultural contexts and have ramifications for both the individual and the organization in which he or she works (Singh, 1985). In attempting to understand employees’ perceptions of inequity and its consequences, the fol- lowing issues were addressed in the present study: (a) whether people at different levels in the organization differ in their perceptions of inequity; (b) whether people making different comparisons perceive inequity along

‘The research was supported by a Special Assistance Scheme Grant from the University Grants Commission, New Delhi, available to the Department of Psychology, University of Allahabad, Allahabad, India. The revision of the paper was facilitated by the Commonwealth Academic Staff Fellowship to the author at University of Bristol, Bristol. The author would like to thank Professors Janak Pandey, Peter W. Robinson, and John J. Berman for their helpful suggestions and comments on an earlier draft of this paper.

*Correspondence concerning this article should be addressed to Purnima Singh, Department of Psychology, University of Allahabad, Allahabad, 21 1 002, India.

557

Journal of Applied Social Psychology, 1994, 24, 6, pp. 557-565. Copyright 0 1994 by V. H. Winston & Son, Inc. All rights reserved.

558 PURNIMA SlNGH

certain dimensions; (c) the relationship of perceived unfairness in rewards with affect, job satisfaction, job involvement, organizational commitment, and stress.

Organizations distribute a variety of rewards to their employees. Some of the most important of these are pay, promotions, advancement opportunities, fringe benefits, and status symbols. The way in which these rewards are distributed helps to determine the quality of work life (Lawler, 1977) and the perception of equity in the organizations. It is not only the actual distribution of organizational rewards that influences perception of justice, but also the perceived fairness of procedures used to decide upon these distributions (Greenburg, 1987). In the present research the focus is on both aspects: actual distribution of organizational rewards and the procedures used. Much of the earlier research had focused primarily on the effects of different types of pay systems on feelings of inequity. This overemphasis on pay as a source of inequity has probably encouraged researchers to neglect other factors such as advancement and growth opportunities and social power. The present study attempts to widen equity research from its myopic focus on inequity of pay to include factors such as promotions, advancement opportunities, company and fringe benefits, power and influence, and procedures adopted in rule admini- stration.

How do individuals perceive that the rewards they are getting are unfair or inequitable? Several theories (Adams, 1965; Homans, 1974) propose that employees seek a just or equitable return for their contributions to their jobs and maintain that these perceptions of equityhnequity arise from the subjec- tive, evaluative judgment that one makes (Dornstein, 1988; Martin, 1981) when locating oneself within some frame of reference. It is the comparison referents that determine the magnitude of inequity. However, not much re- search has been done relating to the comparison referents and their influence on perceptions of inequity. It is presumed that different comparative referents may evoke differential amounts of inequity. In the present study three types of comparisons are examined: (a) internal same-rank comparisons, that is, when individuals compare themselves with members of their rank in their own organization; (b) external same-rank comparisons, wherein individuals com- pare themselves with members of their rank in other organizations; and (c) ex- ternal whole-organization comparisons, when individuals compare members of their own organization generally with members of other similar organizations. All three comparisons could evoke feelings of inequity; however, the amount of inequity evoked by various comparison referents may be different. Re- searchers have considered social proximity as a central determinant of comparisons with others (Merton, 1954; Weick, 1966). It has been hypothe- sized that internal comparisons will result in more inequity than external and

COMPARISON REFERENTS AND INEQUITY 559

organizational comparisons because they are closer to the social reality that the individual encounters in day-to-day life and have more pronounced effects in terms of the individual’s satisfaction, commitment, and involvement than do external and organizational comparisons.

Further, the study also examines the effect of organizational hierarchy on perceptions of inequity. Specifically, how members from different hierarchical levels differentially perceive the three comparison referents (internal same- rank, external same-rank, external whole-organization) as determinants of inequity was considered.

Another question raised in the study relates to reactions in inequity. Percep- tions of inequity produces a variety of diffused cognitive and affective reac- tions (Austin, 1977). Equity research (Walster, Walster, & Berscheid, 1978) has demonstrated that when one feels that one is being unfairly or inequitably rewarded, one feels distressed. Inequity thus results in a negative emotional state and stress. However, the bulk of this research has been limited to Iabora- tory settings, hence the need for field research. Moreover, research related to reactions to inequity has contended that inequity is distressing; how this distress manifests itself in other forms of affective and behavioral reactions has not been systematically studied. This study is an attempt in that direction. The relationship of perceived inequity and affect, feelings of stress, job satisfaction, job involvement, and organizational commitment is examined. The specific hypotheses guiding the study are:

Hypothesis 1 : Internal same-rank comparisons evoke more inequity than external same-rank and external whole-organization comparisons.

Hypothesis 2: Managers perceive less inequity in comparison to supervi- sors and workers.

Hypothesis 3 : Perception of inequity is negatively related to organizational commitment, job involvement, job satisfaction, and affect, and positively related to stress.

Method

Respondents and Design

The respondents were 75 male employees of a private manufacturing com- pany, located in a city in northern India. The age range of employees was 29.6-49.7 years and all had a minimum of 5 years of service. A 3 x 3 factorial design was used with three levels of organizational hierarchy (managers, supervisors, and workers) and three bases of comparison referents: (a) com- parison of self with same-rank persons within one’s own company (internal same-rank referents); (b) comparison of self with same-rank persons in other

560 PURNIMA SINGH

similar (similar in technology) company (external same-rank referent); and (c) comparison of members in one’s own company with members in another similar (similar in technology) company (external whole-organization refer- ent). Equal numbers of subjects were randomly selected from the three hierar- chical levels. All respondents were required to compare themselves with each of the three comparison referents. The respondents were presented with the following scales.

Perceived organizational fairness questionnaire (POFQ). A perceived or- ganizational fairness questionnaire (POFQ) was developed (Singh, 1985), based on the Organizational Fairness Questionnaire (OFQ) designed by Dit- trich and Carrel1 (1979). The following six dimensions formed the question- naire (Cronbach’s alpha (Cronbach, 1970) of each dimension is presented in parentheses): pay (.go), general rules administration (.65), promotion (.72), opportunities for advancement and growth (.64), company and other fringe benefits (.65), and social power (.57).

Organizational commitment. From Mowday, Streers, and Porter’s ( 1979) Organizational Commitment Questionnaire eight items were selected to pro- vide a short version of the questionnaire for the present study. Cronbach’s alpha for the eight items was .69.

Job involvement. In the study, eight items from the Job Involvement Ques- tionnaire (JIQ) (Kanungo, 1982) were selected. Cronbach’s alpha for the eight items was .67.

Job satisfaction. This scale consisted of five items from Taylor and Bowers’s (1971) Survey of Organizations Questionnaire, each with a 5-point rating scale ranging from very much satisfied to very much dissatisfied. Re- sponses on these five items were summed up to give a “total job satisfaction score.” Cronbach’s alpha for the five items was found to be .7 1.

Affect and feeling of stress. To measure the general affective state, six items were developed. Cronbach’s alpha for the six items was .72. Three items were used to measure feeling of stress. Cronbach’s alpha was .68.

Results

Respondents’ ratings for the six dimensions-pay, general rules admini- stration, promotion, company and fringe benefits, advancement opportunities, and social power-were separately analyzed using a 3 x 3 repeated-measure ANOVA. Means are reported in Table 1.

I. Perception of Inequity as a Function of the Three Comparative Referents

Main effects of comparison referents reached significance for pay,

Tabl

e 1

Mea

ns of E

quity

Dim

ensi

ons

as a

Fun

ctio

n of

Com

pari

son

Ref

eren

ts a

nd H

iera

rchi

cal L

evel

s

Com

paris

on re

fere

nts

Hie

rarc

hica

l lev

els

Dim

ensi

ons

Inte

rnal

Ex

tern

al

Exte

rnal

sa

me-

sa

me-

w

hole

- M

anag

ers

Supe

rvis

ors

Wor

kers

ra

nk

rank

or

gani

zatio

n

Pay

13.1

31,

16.8

1,

16.4

1,

10.9

3,

16.1

21,

19.2

9,

Gen

eral

rule

s ad

min

istra

tion

13.0

0b

16.1

6,

15.7

9,

10.8

0,

15.6

8b

18.4

7,

Prom

otio

n 12

.63b

16

.20,

16

.32,

11

.23,

15

.53b

18

.39,

C

ompa

ny a

nd fr

inge

Adv

ance

men

t be

nefit

s 11

.601,

16.2

7,

16.0

0,

11.2

1,

15.1

1b

17.5

5,

oppo

rtuni

ties

12.2

8b

15.6

8,

15.7

3,

11.1

3,

15.0

7b

17.4

9,

Soci

al p

ower

11

.69,

14

.52b

15

.64,

10

.73,

15

.09b

16

.03,

~

-

~

Not

e. M

eans

with

com

mon

sub

scrip

ts d

o no

t diff

er s

igni

fican

tly.

*p <

.05;

**p

< .0

1.

562 PURNIMA SINGH

F(2, 114) = 3 4 . 7 3 , ~ < .01; general rules administration, F(2, 114) = 2 2 . 4 7 , ~ < .01; promotion, F(2, 114) = 3 6 . 2 2 , ~ < .01; company and fringe benefits, F(2, 114) = 5 1 . 1 2 , ~ < .01; advancement opportunities, F(2, 114) = 2 8 . 2 6 , ~ <: .01; and social power, F(2, 114) = 38.99, p < .01. The means (Table 1) show that when respondents compared themselves with external same-rank and external whole-organization referents they perceived more inequity related to the six dimensions than when they made internal same-rank comparisons.

II. Perception of inequity as a Function of the Three Hierarchical Levels

Main effects of hierarchical levels were again found to be significant for all six dimensions: pay, F(2, 7 2 ) = 14.16, p < .01; promotion, F(2, 7 2 ) = 12.22, p < .01; company and fringe benefits, F(2, 7 2 ) = 10.21, p < .01; advancement opportunities, F(2, 7 2 ) = 1 2 1 . 1 2 , ~ < .01; and social power, F(2, 7 2 ) = 10.44, p < .O 1. Managers experienced the least inequity for all six dimensions. Work- ers reported significantly more inequity in comparison to both managers and supervisors for all six dimensions.

Two-way interaction effects were found to be significant for pay and advancement opportunities. Managers, supervisors, and workers differed sig- nificantly in their perceptions of pay inequity. Managers perceived the least amount of inequity in comparison to supervisors and workers with respect to all three comparison referents. Internal same-rank comparisons evoked less inequity for all three hierarchical levels in comparison to external same-rank and external whole-organization comparisons. Supervisors and workers experienced the same inequity when they made internal comparisons. The two-way interaction effects related to advancement opportunities suggest that managers, supervisors, and workers differed significantly in their perceptions of inequity for advancement opportunities. Further, managers did not differ significantly in their perceptions of inequity with respect to the three compari- son referents. However, both workers and supervisors perceived less inequity when they compared themselves with internal same-rank referents than when they compared themselves with external same-rank and external whole-organi- zation referents.

ZZI. Correlations of the Inequify Scores for the Three Comparison Referents with Organizational Commitment, Job involvement, Job Satisfaction, Affect, and Stress

Table 2 presents correlations of the total inequity scores for three compari- son referents with organizational commitment, job involvement, job satisfac- tion, affect, and stress for the total sample (N = 7 5 ) . For internal same-rank

COMPARISON REFERENTS AND INEQUITY 563

Table 2

Correlations of Inequity Scores for the Three Comparison Referents With Organizational Commitment, Job Involvement, Job Satisfaction, Affect and Stress

Comparison referents

Variables Internal External External whole- same-rank same-rank organization ( N = 75) (N = 75) (N = 75)

Organizatioinal commitment -.02 .08 .04 Job involvement -.I3 -.25* -.3 1 ** Job satisfaction -.I5 -.20-* -.15 Affect -.21* -.29* -.34* Stress .37** .43** .46**

*p < .05; **p < .01.

comparison referents, perception of inequity and stress were positively corre- lated and affect was negatively correlated with inequity. In the case of the external, same-rank comparison referent, a significant positive correlation of stress and perceived inequity was obtained. Affect, job satisfaction, and job involvement were negatively correlated with inequity. For the external whole- organization comparison referent negative correlations of affect and job in- volvement with inequity scores were obtained. As predicted, stress was positively correlated with perceived inequity.

Discussion

These results highlight the importance of the comparison referents that people use to determine perception of inequity: The three comparative refer- ents evoke differential amounts of perceived inequity. The hypothesis that internal same-rank comparisons would evoke perceptions of more inequity than external same-rank and external whole-organization comparisons was not supported. Both types of external comparisons, that is, external same-rank and external whole-organization comparisons, evoked more inequity than internal same-rank comparisons. Results show that managers in comparison to supervi- sors and workers perceived less inequity. Further, the two-way interaction effects obtained for pay and advancement opportunities suggest that workers

564 PURNIMA SINGH

and supervisors tend to perceive more inequity when they compare with external same-rank and external whole-organization referents. It is possible that they perceive that there are no hopes and feel that they are “trapped in their current positions”; this would be consistent with Merton’s (1 957) proposition that a negative attitude toward the existing system is related to the tendency to compare with remote groups.

In addition, results suggest that the perception of inequity is determined not only by consideration of pay (as was the focus in earlier studies: Adams & Freedman, 1976; Greenberg, 1982) but that higher-order need factors such as advancement and growth opportunities and feeling of power are also relevant.

Several earlier studies conducted in the area of equity and supported the notion that perception of inequity is distressing for the individual (Adams, 1965; Austin & Hatfield, 1980). The results of the present study lend field or real-life validity to those earlier studies.

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