Skill-based pay in practice : An interactional justice perspective

Purpose – The purpose of this study is to explore how the employees and managers experienced skill-based pay (SBP) plans through the lens of the organizational justice perspective. The article investigates SBP plans and highlights the difficulties encountered in implementing them. SBP plans take a number of different forms that may diverge from the declared model. Design/methodology/approach – This study investigates the SBP plan implementation in situ. Following Yin’s case study design method, documents were collected, semi-structured interviews were conducted and observations were recorded in two different companies in France. Findings – The organizational justice concepts allow the authors to shed light on the mechanisms through which SBP implementation may lead to negative outcomes. First, the authors argue that injustice perceptions are a critical element in the SBP implementation. Second, they argue that the way SBP plans are implemented by front-line managers influence employee attitudes and behaviours. When employees consider that the decisions are established on the basis of criteria that lack legitimacy, they adopt withdrawal behaviour. Research limitations/implications – The majority of studies on SBP are largely atheoretical in nature. It is suggested that the organizational justice framework should be utilized to improve the authors’ understanding of what shapes the reaction of workers towards such plans. The authors consider that justice and trust are a particularly useful duo of lenses through which to examine the motivation of workers to be engaged in such plans. Practical implications – The implications for the practice of management surround the issue of unanticipated results of actions. It is not simply a question of designing the most appropriate SBP plans. The key issue is how they are actually implemented by front-line managers. Specifically, the findings highlight the pivotal role front-line managers play in building trust towards employees. Training in procedural justice should accompany SBP implementation. Originality/value – This paper highlights the complexity of implementation of SBP. By examining SBP implementation through the lenses of the organizational justice concepts, it sheds light on the under-theorized reactions to SBP implementation, and advances understanding of the mechanisms through which it affects employee attitudes and behaviours.