What does the equity theory explain?
A) why there is a perceived imbalance between the wages that men earn and that women earn
B) how employees respond when they believe they receive less (or more) than they deserve
C) how organizations define and build their compensation systems
D) why organizations provide direct and indirection compensation to employees

Question

Quizplus · Accepted Answer

The equity theory explains how employees respond when they believe they receive less (or more) than they deserve. It suggests that employees compare their input-to-output ratio (such as effort and performance to compensation and rewards) to that of others in similar positions, and if they perceive an imbalance, they may become demotivated or change their behavior.

What Does the Equity Theory Explain