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Employee resilience during organizational integration: (non)financial rewards and the mediating role of organizational justice

This research aimed to empirically test Khan et al.’s (2020) conceptual model which proposes that various aspects of organizational justice mediate the relationship between (non)financial rewards and employee resilience and thereby deepen the understanding of the relationship between these constructs during the post-integration phase of the organizational restructuring process. Since this is a significant organizational change, which in itself is extremely dynamic and challenging, the additional contribution is in respecting the dynamics of its development - by capturing the complex relationships of these constructs not only in the post-integration but also pre-integration phase of the organizational restructuring (M&A) process, within a methodological approach to data collection at two points in time. The latter allows us to observe the dynamics of the development of a complex relationship between (non)material rewards, organizational justice, and employee resilience when adapting to one of the most demanding types of organizational change - organizational restructuring. Theoretical background During such organizational changes in which the organization faces growing uncertainty and strong challenges that require flexibility and adaptation in dealing with them, it is crucial to provide an environment that will strengthen employee resilience. Khan et al (2020) claim that the success of the post-integration phase of the M&A process depends on employee resilience, which in turn depends on the effectiveness of the reward system, but also perceptions of various aspects of fairness that underlie the reward system. The conceptual model of Khan et al. (2020) emphasizes the key role of financial and non-financial rewards and the perceptions of various aspects of the fairness of their distribution in developing employee resilience during the post-integration phase of the M&A process. Organizations can use different types of (non)financial rewards to develop employee resilience during the post- integration phase of M&A. In addition to formal regulations related to the reward system, employees will assess any changes in the reward system in terms of fairness. At a time when employees are facing growing uncertainty and strong challenges during M&A, the highly standardized and inflexible structure of the reward system, which is not the result of joint negotiation, will not greatly facilitate the acceptance of such changes. The organization's willingness to provide employees with room for negotiation or to influence the rewards they receive will lead to employees perceiving the reward system as fair, which could consequently increase their level of resilience (Khan et al, 2020). Methodology Within a strong methodological approach to data collection, at two points in time, on a sample of N=991 employees, this research aimed to capture the complex interplay between (non)financial rewards, organizational justice and employee resilience – not only in the post-integration, but also in the (pre)integration phase of the acquisition process – and thus enable the observation of the dynamics of the development of the interrelationships of the observed constructs, while adapting to one of the most demanding types of organizational change – organizational restructuring. Results obtained The results have shown that the dynamic of the development of the acquisition process is reflected by significantly different interrelations of the observed constructs in the post-integration, as opposed to the (pre)integration phase. In line with the conceptual model, non-financial rewards (as compared to the financial ones) during the post- integration phase of the organizational integration process proved to be a stronger and more significant positive predictor of employee resilience, while in the (pre)integration phase, the two types of rewards had the same importance in explaining employee resilience. In the (pre)integration phase, distributive, procedural, and interactional justice are equally strong mediators of the relationship between (non)material rewards and employee resilience, while in the post-integration phase, distributive justice is by far the strongest positive mediator of the relationship between (non)material rewards and employee resilience. Limitations This research does not capture the reasons underlying the changing role of the reward system nor certain aspects of fairness, depending on the stage of the acquisition process. Research/Practical Implications Precisely because a large number of organizational integrations often fail, understanding the role and interrelationships of the reward system, justice, and employee resilience, and the way in which these constructs function at different stages of organizational integration can make the adaptation to this process less destructive. Therefore, the findings of this research have important practical implications: when implementing a particular phase of organizational integration, it is first necessary to take into account the availability of (non)financial rewards and respect their relative importance, but also to shape the norms of fairness, in order to strengthen employee resilience. Originality/Value This research is one of the first empirical tests of the Khan's et al (2020) conceptual model. In line with the findings of Ellis, Reus & Lamont (2009), this study highlights the change in the importance of certain aspects of organizational justice depending on the stage of the organizational restructuring process and adds the additional value by observing it in the light of (non)financial rewards and employee resilience.

Employee resilience during M&A, Non-financial rewards, Organizational justice

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