Equity theory holds that employees who feel underpaid will decrease their level of effort and performance in response to feelings of inequity.

Question

Quizplus · Accepted Answer

Equity theory suggests that individuals compare their input-to-outcome ratio (effort and performance put in to the rewards received) with the input-to-outcome ratio of others. If they perceive inequity (such as feeling underpaid compared to their colleagues), they may decrease their level of effort and performance.

Equity Theory Holds That Employees Who Feel Underpaid Will Decrease