Things just aren’t fair for business managers when it comes to creating perceptions of justice in the workplace. Every time they allocate resources or recognize one employee above another, they risk the ill will of those left behind or disappointed. Yet promotions must be given. Salaries must be allocated. In some cases layoffs must be made.

All of these managerial tasks create workplace winners and losers. Even something as simple as assigning covered parking spaces can stir feelings of injustice. Fortunately, there is good news. Organizational justice includes three components, and business leaders reap rewards even if they get only one of these parts right. This means well-intending managers have three bites at the apple when it comes to workplace justice.

Justice in three parts

The first component of organizational justice is called distributive because it deals with the allocations that some get and others do not. In most cases, members of an organization feel justly treated as long as they receive rewards in accordance with how much they contribute. An individual who earns less than another may feel justly treated, as long as that individual also contributes less to the organization. Likewise, a person who is paid equally to another may feel unjustly treated if he or she contributes substantially more.

The second component of justice is called procedural because it deals with the processes by which allocations are determined. A just procedure is one that is applied consistently to all, free of bias, accurate, representative of relevant stakeholders, correctable and consistent with ethical norms. Though surprising to some, research has shown that just procedures can mitigate the ill effects of unjust allocations. Researchers have named this the “fair process effect.”

When personnel decisions are made, for example, employees passed over for promotion tend to show greater company loyalty if they perceive the process as just. However, if the same promotion goes to the boss’s unqualified niece in a closed process that blocks anyone else from applying, then disappointed employees may feel twice jilted. The final component of organizational justice is called interactional. This deals with how one person treats another. Even if an organization falls short in the areas of distributional and procedural justice, many of the ill effects of injustice can be mitigated if managers simply treat their employees with dignity and provide adequate information when things go badly.

Softening the blow

Managers who understand the way these three components of organizational justice interact can find many opportunities to salvage perceptions of justice from difficult situations such as pay cuts, layoffs and negative performance appraisals. University of Texas at Arlington researcher Jerald Greenberg, Ph.D., found in 1993 that differences in how pay cuts were managed at two manufacturing plants produced dramatically different outcomes.

The key was interactional justice. An executive at one plant politely, but quickly in about 15 minutes, announced a 15 percent pay cut. An executive at the other plant spent about an hour and a half speaking, taking questions and expressing regrets about making an identical pay cut. During the 10 weeks that followed, employee theft was about 80 percent lower in the second case, and employees in that plant were 15 times less likely to resign. No one wanted to have his or her pay cut. But workers understood why it happened, appreciated the supportive interpersonal treatment and did not vent their ire on the organization.

Justice amid layoffs

The same principles can produce positive perceptions even during layoffs, an event so negative that a sense of distributive injustice is virtually a given. However, when a layoff is handled with procedural and interactional justice, victims are less likely to turn against their former employers.

Researchers E.A. Lind, Jerald Greenberg, Brent Scott and Tom Welchans interviewed a large number of layoff victims and reported their findings in 2000. Many of these workers considered legal action following their downsizing, and almost a quarter of these people went so far as to speak to an attorney. The best predictor of willingness to take legal action was the justice of the treatment these workers received at the time of their discharge. Among those who felt unjustly treated, Lind and his colleagues found that 66 percent contemplated litigation. Among those who felt justly treated, this dropped to just 16 percent.

Justice does not guarantee all parties what they want. But it does hold out the possibility that power will be used in accordance with principles that respect the dignity of all involved. This is sound business advice. It is also the right thing to do.

A longer version of this article, “The Management of Organizational Justice,” appeared in the Academy of Management Perspectives, November 2007 edition. Co-authors include Russell Cropanzano, Ph.D., a professor of management at the Eller College of Management, the University of Arizona, and Stephen W. Gilliland, Ph.D., the Arnold Lesk Chair in Leadership and professor and head of the Department of Management and Organizations at the Eller College of Management.

David E. Bowen, Ph.D., is the former G. Robert & Katherine Herberger Chair in Global Management at Thunderbird School of Global Management near Phoenix, Arizona.