Nathan exclaimed, "Janet, I just heard that Veronica makes a salary that is three times greater than mine! But I have a house payment and child care expenses that she does not have!" Janet replied, "Nathan, your financial situation is not at all relevant to what our employer pays you. Your compensation reflects your value to the company. Veronica is the vice president of sales. Do you believe that she contributes three times more than you?" Nathan responded, "At least! We wouldn't have jobs without her! Oh, I see what you mean." Nathan came to understand why Veronica made more than he did because Janet reminded him to think in terms of

Question

Quizplus · Accepted Answer

Janet is reminding Nathan to think in terms of equity theory, which means that compensation should be based on the value an employee brings to the company, not on their personal financial situation. Veronica's higher salary may be justified because she holds a higher position and contributes more to the company.

Nathan Exclaimed, "Janet, I Just Heard That Veronica Makes a Salary