Managerial Consequences of the Algorithmic Determination of Incentive Decisions on Procedural Justice Perceptions in Production Line

Heribertus Yudho Warsono; Dharma  Widada; Sri  Sumarliani

doi:10.55927/ajma.v4i3.14997

Authors

Heribertus Yudho Warsono STIE Mahardhika
Dharma Widada Universitas Mulawarman
Sri Sumarliani Universitas Lumajang

DOI:

https://doi.org/10.55927/ajma.v4i3.14997

Keywords:

Algorithmic Management, Procedural Justice, Incentive System, Production Line, Industrial Organization

Abstract

This study investigates the managerial consequences of algorithm-based decision-making in incentive allocation on production line workers’ perceptions of procedural fairness. Grounded in organizational justice theory and the socio-technical systems framework, the research explores how algorithm transparency, process clarity, and perceived impartiality influence fairness judgments. Using a mixed-method approach, data were collected from 186 factory workers through surveys, complemented by in-depth interviews, and analyzed using structural equation modeling. The findings reveal that low algorithm transparency correlates negatively with perceptions of procedural fairness, while the absence of human involvement in decision-making reduces trust in managerial systems. These results emphasize the need for human-centered algorithm design and fair management practices to uphold employee trust and fairness in Industry 4.0 environments.

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