This question contains two parts; be sure to answer both. First, explain equity theory, and discuss how managers can use this model to help motivate workers. Second, imagine that you are the CEO of BuzzMarket, and online marketing agency that specializes in Web and social media marketing. Your company has 10 employees. You, the CEO, earn $1 million per year in salary, plus another $1 million in bonuses. Your account executive earns $250,000 per year and has a company car, along with other perks. The other eight staffers are junior-level programmers and sales reps, each earning $25,000 per year. How might the eight junior employees perceive the equity of the workplace, and what might they do to reduce their cognitive dissonance? How might you go about correcting the perceptions of inequity?

Question

What will be an ideal response?

Answer 1

Equity theory is a model of motivation that explains how people strive for fairness and justice in social exchanges or give-and-take relationships. Equity theory suggests that people look at the ratio of their outcomes to inputs and compare it to the ratio between a comparable other's outcomes to inputs. They make a judgment about the fairness of the situation from this analysis. Ultimately, equity theory is based on the idea that employees are motivated to see fairness in the rewards they expect for task performance and are motivated to resolve feelings of injustice.

Managers should treat employees fairly as these employees are more likely to support organizational change, more apt to cooperate in group settings, and less apt to turn to arbitration and the courts to remedy real or imagined wrongs. Managers should keep the following five practical lessons in mind:

Employee perceptions are what count. No matter how fair management thinks the organization's policies, procedures, and reward system are, each employee's perception of the equity of those factors is what counts.
Employees want a voice in decisions that affect them.
Employees should be given an appeals process.
Leader behavior matters. Employees' perceptions of justice are strongly influenced by the leadership behavior exhibited by their managers; thus, it is important for managers to consider the justice-related implications of their decisions, actions, and public communications.
A climate for justice makes a difference.

Students should give examples from their own experiences about an inequitable situation. Among the actions people take here include that they will reduce their inputs, they will try to change the outputs or rewards they receive, they will distort the inequity, they will change the object of comparison, or they will leave the situation.