Describe how expectancy and equity theories apply to compensation.
What will be an ideal response?
Expectancy theory proposes that employees are motivated when they believe they can accomplish a task and that the rewards for doing so are worth the effort. It uses the formula Motivation = Expectancy ? Instrumentality ? Valence. Expectancy is an employee’s perception of their ability to accomplish an objective. Instrumentality is the perception that a particular level of performance is likely to provide the employee with a desired reward. Valence refers to the value the employee places on the outcome or reward, because not all people value the same reward. According to equity theory, people compare their inputs (the things they do in the organization) and outcomes (the things that they receive from the organization) to those of relevant others. But it’s the perceived inputs and outcomes that employees compare, not necessarily actual inputs and outcomes. If employees believe that there is inequity, they will change their work behavior to create equity. Employees must perceive that they are being treated fairly, relative to others. Compensation is obviously a large part of the perceived outcomes.
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Fill in the blank(s) with correct word
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