CLEP Management

Answer: D - This is a great example of equity theory in practice, since equity theory states that employees are motivated based on what they perceive as fair and based on comparisons with others.

Key Takeaway: Equity theory states that employees use inputs and outputs into a situation and then determine what they deem as fair, often based on comparison with others in similar situations. This knowledge then drives them to create change in their situation. One of the watchouts with equity theory is that a perceived inequity might act as a positive reinforcement (such as Samuel working harder to earn a larger raise) or just as easily might turn into a negative reinforcement (for example, if Samuel decided that he wouldn’t earn the raise and instead needed to look for a different job).