Collective Incentive Plans, Organizational Justice and Commitment

This study examined the relationships among characteristics of short-term collective incentive plans (i.e., incentive plans that offer performance-based bonuses to employees), organizational justice, and organizational commitment. Based on a literature review, four characteristics of collective incentive plans were identified : 1) perceived instrumentality (perception of a link between performance and pay); 2) bonus paid (the amount paid to employees in the context of the plan); 3) the intensity of organizational communication (sources of information provided to employees); and 4) communication by the supervisor concerning the incentive plan. Our central hypothesis was that these characteristics would relate to employees' affective and continuance commitment through four dimensions of organizational justice, namely distributive, procedural, informational and interpersonal justice. Based on a sample of 313 members of three professional associations, structural equations model analyses revealed that the intensity of organizational communication about the incentive plan was indirectly related to continuance commitment through procedural justice and to affective commitment through informational justice. Similarly, communication by the supervisor about the incentive plan was indirectly related to affective commitment through informational justice and to continuance commitment through procedural justice. Finally, communication by the supervisor was also indirectly related to continuance commitment through interpersonal justice. This study shows that organizational and supervisory communication about the rules and workings of incentive plans plays a critical role in shaping employees' perceptions of justice (namely procedural, informational and interpersonal justice), which indirectly influences affective and continuance commitment.