explain the following Theories related to compensation 1) Equity theory 2) expectancy theory
Expert Answer
Equity theory: This theory describes the relationship between the employee’s perceptions of how fairly is he being treated and how hard he is motivated to work. Equity theory states that what employee can get from the job with their given inputs and then compare their inputs – outcomes ration with the inputs- outcomes ratios of others.
There are four referent groups of people compare themselves with:
· Self-inside: The individual’s experience within their current organization.
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