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How can managers optimally distribute rewards among individuals in a job group? While the management literature on compensation has established the need for equitable reimbursements for individuals holding similar positions in a function or group, an objective grounding of rewards allocation has certainly escaped scrutiny. This paper aims to address this issue.

Using an optimization model based on a financial rubric, the portfolio approach allows organizations to envision human capital assets as a set (i.e. a team, group, function), rather than independent contractors. The portfolio can be organized and managed for meeting various organizational objectives (e.g. optimizing returns and instrumental benefits, assessing resource allocations).

This research introduces an innovative portfolio management scheme for employee rewards distribution. Akin to investing in capital assets, organizations invest considerable resources in their human capital. In doing so, organizations, over time, create a portfolio of human capital assets. The findings reduce large variances in rewards distribution yet serving employee and management considerations.

The research has tremendous implications for managers who can mitigate serious equitable rewards distribution issues by creating a process that exemplifies rewards distribution using four different rewards allocation scenarios based on varying managerial prerogatives.

This research is a unique model that addresses a pressing human resource issue by solution based on a usable and feasible optimization mechanism from financial portfolio theory.

This review article focuses on the factors that affect the selection and implementation of three principles of distributive justice (i.e., equity, equality, and need) to reward systems in group and organizational settings. After presenting an overview of the assumptions, goals, and possible consequences associated with each of the three perspectives, the article then describes the moderating factors influencing distribution rule preferences across four levels of analysis: (1) the interorganizational, (2) the intraorganizational, (3) the work group, and (4) the individual. Some of the variables discussed include cross‐cultural differences, reward system implementation, task interdependency, work group climate, and individual characteristics. This material is then summarized through the use of a new conceptual model for describing allocation rule preferences. The article concludes with suggestions for future research.

It is the general purpose of this chapter to introduce assumptions, postulates and hypotheses concerning the social nature of human emotions. I will propose some universal social causes of emotion categories by integrating Kemper’s (1978) power and status dimensions in dyadic relations to universal structures of human groups. These structures, of Self and Other meeting or not meeting expectations and receiving rewards or not, predict specific emotion categories. Power and status dimensions are added to the model and defined in terms of expectation/sanction (E/S) states, and are proposed to be universal as well. Furthermore, changing E/S conditions produce corresponding changes in power/status relations, and changes in emotion categories. These changing social structural conditions cause individual anxieties to emerge. Extending Kemper’s theoretical conceptualizations, gaining or losing power-advantage or status-advantage predicts syndromes of universal anxiety emotions.

This study examines how the structure of referent networks, or the social network defined by knowing others’ reward levels, affects perceptions of distributive justice. The homogeneity of rewards in the referent network, the amount of inequality in the referent network, and an individual’s reward level are all associated with distributive justice perceptions. Several moderating relationships are also examined.

We relied on data from a controlled laboratory experiment to test a series of theoretically derived hypotheses.

The study shows that several aspects about the structure of the referent network are important for shaping perceptions of distributive justice. Specifically, the reward heterogeneity and amount of inequality in the network are found to be negatively associated with distributive justice, while reward levels are found to be positively associated with distributive justice. Furthermore, the effect of reward levels on distributive justice is moderated by both (i) the presence of a referential standard for rewards and (ii) the amount of inequality in the network.

While being among the first studies to demonstrate effects of referent networks on perceptions of fairness, it is unclear how group memberships combine with referent network effects and which factors may blur these relationships in uncontrolled environments. Subsequent scholarship on the effect of referent networks on justice perceptions should leverage multiple data sources.

Research on the effects of referents on justice perceptions has focused on particular referent individuals. We recast this issue in terms of referent networks, which highlights the empirical reality that individuals have a variety of sources or alters which could operate as referents.

To determine the role of status information conveyance in a negative reward allocation setting.

Using previously published experimental data, we test the relative effects of status information conveyed by expressive and indicative status cues on the allocation of a negative reward. Further, we construct an alternative graph theoretic model of expectation advantage which is also tested to determine its model fit relative to the classic model of Reward Expectations Theory.

Results provide strong support for the conclusion that status information conveyed by expressive status cues influences reward allocations more than information conveyed by indicative cues. We also find evidence that our alternative graph theoretic model of expectation advantage improves model fit.

This research is the first to test the relative impact of expressive versus indicative status cues on the allocation of negative rewards and shows that status characteristics can have differential impacts on these allocations contingent on how characteristics are conveyed. Furthermore, the research suggests a graph theoretic model that allows for this differentiation based on information conveyance and provides empirical support for its structure in a negative reward allocation environment.

Future research is required to validate the results in positive reward situations.

The results show that an individual’s expectations are altered by varying the manner in which status information is presented, thereby influencing the construction and maintenance of status hierarchies and the inequalities those structures generate. Thus, this research has implications for any group or evaluative task where status processes are relevant.

The purpose of this paper is to compare effects of different monetary team‐based reward strategies on performance, pay satisfaction, and communication behavior in computer‐mediated groups.

In a laboratory experiment, 32 groups of undergraduate students, each consisting of three individuals, interacted electronically and performed a consensus‐reaching task. Team‐based incentives were distributed either equally (each team member received an equal share) or equitably (each team member's share depended on her/his individual contribution). A control group received no team‐based (or other) incentives.

Hierarchical multilevel analyses revealed that both types of team‐based rewards increased team members' motivation and pay satisfaction compared to the control condition. Moreover, the effects of team‐based rewards on performance were moderated by group members' assertiveness. In addition, team‐based rewards lead to more cooperative and task‐oriented communication in the computer‐mediated groups. Finally, equally divided rewards led to higher pay satisfaction on average than equitably divided incentives.

On a research level, this study shows that team‐based rewards have positive effects not only on performance but also on communication behavior in computer‐mediated groups. As a practical implication, reward effects should be considered cautiously as they might be influenced by team members’ personality. Moreover, whereas no major differences were found between equity and equality principles in terms of performance, the latter seems to be preferable when satisfaction is a major issue in virtual teams.

Purpose – Responding negatively to inequity is not a uniquely human trait. Some of our closest evolutionary ancestors respond negatively when treated less well than a conspecific. Comparative work between humans and other primates can help elucidate the evolutionary underpinnings of humans’ social preferences.

Methodology/approach – Results from studies of nonhuman primates, in particular chimpanzees and capuchin monkeys, are presented in comparison to human results that have been collected during economic game studies in humans, such as in the Ultimatum Game or Impunity Game.

Findings – Among nonhuman primates, a frequent behavioral reaction to inequity is to refuse to continue the interaction. While in some cases this response appears to be caused by the inequitable distribution, in others, it seems to be caused by another individual's inequitable behavior. While these reactions are similar to those of humans, this reaction does not appear to be a sense of fairness in the way that we think of it in humans. Neither nonhuman primate species alters their behavior when they are the benefited individual, and in an experimental situation, chimpanzees do not alter their behavior to obtain food for their partner as well as for themselves.

Originality/value of the chapter – Although there are differences between human and nonhuman primate responses, such studies allow us to better understand the evolution of our own responses to inequity. Given the strong behavioral reactions that even monkeys show to inequitable treatment, it is not surprising that humans are concerned with equity. Such comparisons increase understanding of issues such as healthcare disparities in humans.

Ratees' reactions to performance appraisal (PA) system suggest how effective the system is. However, there is less clarity about those different reactions that good versus poor performing ratees show vis-à-vis their performance appraisals. This paper seeks to examine the possible PA responses (PA fairness and PA satisfaction) of the ratees for the cases where they receive equitable versus equal performance-based rewards and punishments.

Two studies were designed. Study 1 was a scenario-based experiment in Pakistan (N = 100 students) and Study 2 was based on surveys in Japan (N = 123 employed students) and Pakistan (N = 111 full-time working professionals). Data were analyzed using one-way repeated measures (Study 1) and structural equation modeling (Study 2).

Overall, good performers considered PA fairer and more satisfying under equity than under equality. However, poor performers considered PA fairer under equity than under equality.

The study has value for PA theorists and managers, as it offers: (a) an understanding on the differential effect of equity versus equality, on employees' perceptions of fairness and satisfaction in a PA setting; (b) clarity about the likely disparity between good and poor performers' reactions toward perceived fairness and satisfaction; and, (c) ratee reactions from both organizational and social perspectives contributing to the philosophical debate questioning whether both distributive fairness and retributive fairness should operate under similar or different normative principles.

We suggest that, in some specific settings, individuals may distinguish and be sensitive not only to the distributive, procedural, social, and informational dimensions of justice, but also subdivide the distributive justice dimension into two facets‐reward and task distributive justice. Results of three studies with Portuguese public university teachers reveal that a five‐factor model of justice (distribution of tasks, distribution of rewards, procedural, interpersonal, informational) is adequate, although factor analyses are not categorical in distinguishing interpersonal and informational justice. Results also show that individuals who work with high autonomy and outside close supervisory control in performing their jobs may be very sensitive to the way they feel treated by their superiors, even accepting as normal that the superiors make decisions with no participation, a finding that may be due to the feminine, affiliative, and high power distance cultural context.

Purpose – Drawing from social psychology and economics, I propose several mechanisms that may affect ownership stakes among entrepreneurs, including norms of distributive justice, negotiation constraints, and network constraints. The processes are explored empirically for a representative dataset of entrepreneurial teams.

Methodology/Approach – Between 1998 and 2000, entrepreneurial teams were sampled from the U.S. population for the Panel Study of Entrepreneurial Dynamics. I analyze the distribution of ownership stakes at both the individual and group levels.

Findings – The results suggest that principles of macrojustice, affecting the distribution of resources in teams as a whole, deviate considerably from principles of microjustice, affecting the resources received by individual entrepreneurs. While aggregate inequality increases in teams that have a diverse set of members, the effect is not reducible to discrimination on the basis of individual status characteristics. Instead, the relational demography of teams – characterized in terms of the degree of closeness in network ties and homogeneity in demographic attributes – serves as a uniquely social predictor of between-group variation in economic inequality.

Originality/Value of the paper – Empirical research on inequality has paid little attention to the process of group exchange in organizational start-ups, where entrepreneurs pool resources and skills in return for uncertain or indirect payoffs. This paper offers both theoretical frameworks and empirical analyses to shed light on economic inequality among entrepreneurs.