A Fair Day's Pay for a Fair Day's Work? The Mediating Role of Justice Perceptions in Compensation and Exchange Relationships

Abstract

This study explores the dynamic between compensation and employee-organization relationships amongst hairdressing professionals. We investigate the relationships between the pay administration (fixed or variable) and the exchange relationship between organization and employee (social or economic) and whether justice perceptions mediate them. We approach both procedural and distributive justice perceptions, as the distinction between them is well established by the literature. Through regression analysis, we found that both procedural and distributive justice partially mediate the relationship between fixed pay and social exchange relationships. However, we could not find any support for a significant relationship between variable pay and economic exchange. The study, to some extent, enforces previous research on compensation and organizational justice theory and adds to existing literature. Theoretical and practical implications of the findings are discussed. Keywords: compensation, variable pay, justice, exchange relationships, hairdressing industry.