Consequences of Unfair Job Promotions in Companies
| Authors | |
|---|---|
| Year of publication | 2020 |
| Type | Article in Proceedings |
| Conference | 2nd Scientific Conference on Economics of Digital Transformation - Smart Governments, Regions and Cities |
| MU Faculty or unit | |
| Citation | |
| Web | https://www.edt-conference.com/images/Smart%20Governments_Regions_and_Cities_.pdf |
| Keywords | Job promotion; reciprocity; experiment; gift exchange; fairness |
| Description | Companies, particularly large organizations with several hierarchical levels, often need to fill a vacant managerial position to maintain efficient operations. When the decision is to use internal resources rather than hire a candidate from the outside, companies usually fill the position by promoting a lower-ranking employee. The promotion to the managerial level comes with an increase in salary, a change in professional duties, and a shift in the career path and in the company hierarchy. Since all of these are usually perceived as desirable, a promotion can cause strong emotional reactions both from the employee who was promoted and from employees who were not. If the promotion of an employee to a managerial position is perceived by the non-promoted employees as undeserved or unfair, the non-promoted ones might become demotivated and might decrease their productive effort. A decrease in productive efforts and other unethical behaviors are often difficult to measure in the workplace. Experimental economics provides a suitable tool for studying (i) the behavior of individuals under controlled conditions when promotions perceived as unfair happen in companies; (ii) the reactions of promoted and non-promoted individuals; and (iii) the changes in productivity. The analysis of the information gathered via conducted laboratory experiment shows that when remuneration of employees is perceived as unfair their productivity decreases. Moreover, experimental design studying the reaction of promoted versus non-promoted employees was proposed to be able to deepen the knowledge of unfair job promotions in companies. |
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