Question

Equity Theory:

Company A is increasing the size of the sales department employees from 3 to 4. Newest member is Conny with 9 years working for the companies closet competitor Company B. In order to leave the company B , company A has to make an lucrative offer (salary). One worker leaked Conny's salary and now everyone knows how much she is making. Employees know only Conny's salary and not each others.

Name	Years of knowledge	Salary
Lisa	10	120,000
Mary	4	49,000
Angel	8	71,000
Conny	9	100,000

a) what will Lisa think about her situation as compared to Conny?

b) Will Lisa experience negative emotions?

c) How do you think will Lisa react?

d) What will Mary think compared to Conny?

e) Will Mary have negative emotions (which)

f) how might Mary react

Answer 1

Adam's equity theory means striking a fair balance between an employee's inputs(years of knowledge, hard work, enthusiasm, etc) and an employee's outputs(salary, perks, benefits, etc)

Finding this balance helps a company ensure a productive and efficient relationship is achieved with the employees, and having motivated employees.

a) Lisa should be unaffected by knowing Conny's salary as she is already earning more than Conny, given the fact that she has more years of knowledge than Conny as well. Since this balance has been struck between the efforts and compensation, Lisa would not be much concerned about it. Hence she would think that company has rightfully decided compensation. This would even motivate her to work hard as her company believes in distributive justice

b)No Lisa will not experience negative emotions, as she is earning more than Conny and that compensation is rightly distributed. As with 9yrs of knowledge Conny's salary is 100,000 while with 10 yrs, Lisa's salary is 120,000. So there should be no negative emotions from her side.

c)Lisa would remain unaffected and may not react with negative emotions. She, although, may react positively knowing that company has done justice to inputs/efforts given by the employees.

d)Mary would also think in the same way as Lisa. Since her salary is almost half that of Conny, but her years of knowledge is also less than half of Conny's knowledge. It would give her job motivation

e)No Mary should not have negative emotions as she has paid rightly by the company. In other terms, she would be motivated to work hard, as now she understands that her company values Equity theory

f)Mary would react normally, unaffected, and would get motivated to work as the company rightfully compensates for the work done. Her reaction would be the same as Lisa.

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