To prove to followers that “equity” exists leader/managers must openly share the reward decision-making process. If it is not an acceptable option, then at least an open sharing on how decisions where made must be offered. The process must also be seen as being consistent and in line with unbiased practices. The object of this approach is to prove:
Procedural Justice, i.e. a decision process that is perceived as fair and…
Distributive Justice, i.e. there is a fair allocation of available rewards.
Experience shows that employees will devise any manner of measurements to test the justice of relative staff situations. For example I once had a colleague who was displeased with a $4,600.00 salary increase because staff in more junior positions where given a $ 2,100.00 increase which represented 12% over their previous pay levels. The cause of the discomfort was that the colleague had only received an 8% increase hence the gap between the two positions had narrowed causing a perception of an inequitable margin between the two jobs or a perceived diminution in his relative importance, which he saw as unjust.
The validity of this theory really becomes obvious and proven when we are engaged in something as mundane as allocating new company car parks or redesigning office layouts. The tension, bickering and office politics that grows from this type of activity can be truly amazing.