7/26/2019 Greenberg Employee Theft

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Journal of

AppliedPsychology

1990,

Vol.

75,

No.5,561-568

Copyright

1990

bytheAmerican

Psychological Association,Inc.

002I-9010/90/S00.75

Employee

Theft

as a

Reaction

to

Underpayment Inequity:

TheHidden Costof Pay

Cuts

JeraldGreenberg

FacultyofManagementandHuman Resources

Ohio

State University

Employeetheft rates were measured in manufacturing plants during a period in which pay was

temporarily reduced

by

15%.

Compared withpre-

or

postreduction

pay

periods

(or

with control

groups whose

pay was

unchanged), groups whose

pay was

reduced

hadsignificantly

higher

theft

rates.When thebasisfor the pay cuts was thoroughly and sensitively explained to employees,

feelings of

inequity were lessened, and thetheftrate was reduced as well. The data

support

equity

theory's predictions regardinglikelyresponses to underpayment and extend recently accumulated

evidence

demonstratingthemitigatingeffectsofadequateexplanationsonfeelingsofinequity.

Employee

theft

constitutesone of the most

pervasive

and

serious problems

in the field of

human resource management.

Although

exact

figures aredifficult to

come

by, the

American

Management Association(1977)has estimatedthatemployee

theft

cost American

businesses

from

$5

billion

to$10

billion

in

1975,

representing

the

single most expensive

form of nonviolent

crime against businesses.

Traditionally, social scientists

have

considered several plausi-

ble

explanations

for

employee

theft.

Among

the

most popular

are theories postulating

that

theft is the result of attempts to

ease financial pressure (Merton, 1938), moral laxity among a

youngerworkforce(Merriarn,1977),available opportunities

(Astor,1972),

expressions

of job

dissatisfaction

(Mangione &

Quinn,

1975),

and the existenceofnorms tolerating

theft

(Horning,1970). Morerecently,Hollingerand Clark (1983) con-

ducted a large-scale

survey

and

interview study designed

to

explore

these

and

other explanations

ofemployeetheft.

Interest-

ingly,they

found

that

thebest

predictor

was

employee attitudes:

"When employees

felt

exploitedby thecompany. . .these

workerswere more involved in acts against the organizations as

a

mechanism

to

correct perceptions

of

inequity

or

injustice"

(Hollinger &

Clark, 1983,

p.

142).

Hollinger andClark's

(1983)

suggestion that employeetheft

isrelated tofeelingsofinjustice isconsistent with several

schools

of

sociological

and

anthropological thought.

For

exam-

ple,

in studies of hotel dining room employees (Mars,

1973)

and

maritime dockworkers(Mars,1974),Marsfoundthat employ-

eesviewedtheftnotasinappropriatebut "as amorally

justified

addition to wages; indeed, as an entitlement duefromexploit-

ing

employers" (Mars, 1974,p.224).Similarly,Kemper(1966)

A preliminary report of the research reported in thisarticlewas

presented at the annual meeting of the Academy of Management, San

Francisco, August 1990.

1

gratefullyacknowledge

thehelpful

comments

of

Robert

J.Biesand

three anonymous reviewers on an earlierdraftof this article.

Correspondence concerning this article should be addressed to Jer-

aldGreenberg, Faculty of Management and Human Resources, Ohio

State

University,

1775 College Road, Columbus,

Ohio

43210-1399.

argued that employee

theft

may be the resultof "reciprocal

deviance,"

that is, employees' perceptions

that

their employers

defaulted

on their obligations to them, thereby encouraging

them to respond with similaractsof deviance. Fisher and

Baron

(1982)

made a similar argument in presenting their eq-

uity-controlmodel of vandalism. They claimed that vandalism

isaformof inequity reduction inthatan individual vandal's

breaking the rules regarding property rightsfollows fromhis or

herfeelingsof

mistreatment

by

authorities. Recent evidence

in

support

of

this idea

is

found

in a

study

by

DeMore, Fisher,

and

Baron

(1988).

In

thatstudy,

university

students claimed

to en-

gage

in

more vandalism

the

lessfairly

they

feltthey

had

been

treatedbytheir

university

and the less control they believed

they had oversuch treatment.

Such

conceptualizations

are in

keeping with current theoreti-

cal positions in the field of organizational justice (Greenberg,

1987).

These

formulationsallow

more precise hypotheses

to be

developed regarding when employee

theftislikelyto

occur.

For

example, consider equitytheory's(Adams,

1965)

claim that

workers

who

feel

inequitably underpaid(i.e,thosewhobelieve

that the rewards they arereceivingrelative to the contributions

they aremakingareless than they shouldbe) mayrespondby

attempting

to

raise their outcomes(i.e,raise

the

levelof rewards

received).

Although research

has

supported this claim (for

a

review,

see Greenberg,1982),studieshavebeen limited to situa-

tions in which persons paid on a piece-work basis produce

more goods of poorer quality to raise their outcomes without

effectivelyraising their inputs. Given earlier conceptual claims

and

supporting evidence associating student vandalism

with

inequitable

treatment (DeMore etal,

1988),

it may be reasoned

analogously

that employeetheftis aspecificreactiontounder-

paymentinequity and constitutes an attempt to bring outcomes

into linewithprevailing standards

of

fairpay.

Recent researchin theareaofprocedural justice (Lind&

Tyler,

1988)

has

shown that perceptions

of

fairtreatment

and

outcomes dependnot

only

on the relative levelof

one^

out-

comes but also on the explanations

given

for those outcomes

(forareview,see

Folger

&

Bies,1989).

For

example, researchers

havefound

that decision outcomes and procedures

werebetter

561

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562

JERALD

GREENBERG

acceptedwhen(a) people were assuredthathigher authorities

were sensitive to their viewpoints

(Tyler,

1988), (b) the decision

was made without

bias

(Lind & Lissak, 1985), (c) the decision

was

applied consistently (Greenberg,

1986),

(d) thedecisionwas

carefully

justified

on thebasisofadequate information (Sha-

piro&Buttner,1988), (e) thedecisionmakers communicated

their

ideas honestly(Hies,1986),and(f)personsinfluencedby

the decision were treated in a

courteous

and civil manner (Bies

&

Moag, 1986). Such findings suggest that interpersonal treat-

ment is an important determinant of reactions to potentially

unfairsituations

(Tyler

&Bies,

1990).

It

is an

interesting idea thatperceptions

of

inequity (and

corresponding attempts toredressinequities) may be reduced

whenexplanationsmeetingthecriteriapresented in the preced-

ingparagraph areofferedto accountforinequitablestates.This

notion was

tested

in the present study by capitalizing on a

naturalistic manipulationa temporary

pay

reduction

for em-

ployees of selectedmanufacturingplants.Datawere available

for30

consecutive weeks:

10

weeks before

a pay

reduction

oc-

curred,10weeks during

the

pay-reductionperiod,

and

10weeks

after

normal

pay was reinstated.

Following

from

equity theory,

it

was

hypothesized that ratings

of

payment fairness would

be

lowerduringthepay-reductionperiodthanduring

periods

of

normal payment

(i.e,

before

andafterthe pay

reduction).

It was

similarly hypothesized that rates

of

employee

theft

would

be

higher

during the reduced-pay period than duringperiodsof

normal payment. Suchactionswould be consistent with equity

theory's claim that one likely way of responding to underpay-

ment

inequity

is by attempting to raise the level of rewards

received.

Although

not

previouslystudied

in

this connection,

employeetheftis a

plausible mechanism

for

redressing states

of

inequity (Hollinger Clark,1983).

Additional hypotheses were derived

from

recent research

e.g,

Cropanzano & Folger, 1989; Folger & Martin, 1986; Sha-

piro & Buttner,

1988;

Weiner, Amirkham, Folkes, &

'Varette,

1987)showingthatexplanations for negative outcomes mitigate

people's

reactions to those outcomes for a review, see Folger &

Bies, 1989;Tyler

&

Bies, 1990). Generally speaking,

in

these

studies

the

use of

adequate

explanations (i.e, ones that

relied on

complete,accurateinformationpresented in asocially sensitive

manner)

tended

to

reduce

the

negative reactions that resulted

from such outcomes and facilitated acceptanceof the out-

comes. From the perspective of Folger's (1986) referent cogni-

tions theory, adequate explanations help victimized parties

place their undercompensation in perspective by getting them

to understand that things couldhavebeen worse. As

such, ade-

quate explanationswereexpected in thepresentstudy to lessen

thefeelingsof inequity that accompanied the pay cut. Thus, it

was

reasonedthat employees'

feelingsof

paymentinequity,and

attemptsto reduce that inequity (suchasbypilfering),would be

reducedwhenadequate explanationsweregiven

to

account

for

the pay

reduction. Specifically,

it was

hypothesized that

the

magnitude of the expressed

inequityand

the rate of employee

theftwould

be lower when pay reductions were adequately

explainedthanwhenthey were inadequately explained.

Method

Participants

Participants in thestudy were nonunion employees workingfor 30

consecutive weeks

in

three manufacturing plants owned

by the

same

Table I

Distributiono fAttrition

andTurnover crossConditions

Resignations

Condition

Starting

Missing Before

During After

Final

n data

pay

cut

pay

cut payout n

Adequate

explanation

(PlantA)

Inadeaute

explanation

(PlantB)

Control

(Plant

64

53

66

6

8

5

1 1

1 12

1 0

1

2

2

55

30

58

parentcompany.

Theplantswerelocatedin

different

sectionsof the

midwestern

UnitedStates

and

manufactured smallmechanical

parts

mostly

for theaerospaceand automotive

industries.

Theemployees'

average age(M=28.5years), levelofeducation(M=11.2

years),

and

tenure with

thecompany

(M

= 3.2 years) did not significantly

differ

among

the

threeplants,

F