The Relationship between Perceptions of Due Process and Satisfaction with a Merit Pay System

Abstract

Organizations continuously look to improve the implementation and ultimate success of organizational change. One way to facilitate organizational change is to effectively manage employee reactions to that change. Previous research has examined the use of a due process approach, specifically in relation to the performance appraisal systems. Past results have indicated that meeting the due process criteria for adequate notice, fair hearing and judgment based on evidence positively influences employee perceptions of the performance appraisal system, organizational justice, and other key variables. The current study expands on these findings by applying the due process approach to the implementation of a merit pay system. With the main goals of a merit pay system being to retain and motivate employees, successful implementation is key. The current study measured perceptions of due process over three measurement periods during the implementation of a new merit pay system. Results demonstrated that the due process components are meaningful in the implementation of a merit pay system. Perceptions of due process predicted system satisfaction and organizational justice perceptions both within and across measurement time periods.