Practice Quiz

MTEL Business Practice Exam

Category - Business Operations

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The equity theory of employee motivation states that employees are motivated in proportion to their perceptions of the:
  1. Fairness of their compensation compared with that of others who put forth similar effort in performing similar work.
  2. Gap between the compensation given to upper management and the average pay of non-management workers in the company.
  3. Extent to which they are treated as social equals by higher-ranking members of the company's workforce.
  4. Willingness of company managers to listen to their opinions and allow them to play a meaningful role in company decision making.
Explanation
Correct Response: A. The equity theory is based on the idea that compensation should be based on what employees feel they contribute to the organization and should be equivalent to that of others who contribute in the same way. The equity theory is based on equal pay for equal work, and is not applicable across different levels of positions (B), or social equality (C). Managers listening to employees' thoughts and opinions in the decision-making process is an example of a participative theory (D), which is separate from and unrelated to equity theory.
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