The need to explain the rationale for compensation choices to employees is consistent with ____________ theory.
A) equity
B) tournament
C) institutional
D) marginal productivity

Question

Quizplus · Accepted Answer

Equity theory suggests that employees compare their inputs (such as effort, skills, and experience) to their outcomes (such as pay and benefits) with those of others, and perceive fairness based on this comparison. Therefore, explaining the rationale for compensation choices can help ensure that employees perceive the rewards as fair and equitable.

Answer: C) institutional 
 Institutional theory suggests that organizations are influenced by social norms, expectations, and practices. Therefore, explaining the rationale for compensation choices can help ensure that the organization's compensation practices align with social norms and expectations, and that they are seen as legitimate and appropriate.

The Need to Explain the Rationale for Compensation Choices to Employees