Question Detail

IRP 321 Compensation Management policies Objective Question
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Question

What is the central concept of the Equity Theory of Compensation?
Options
A Pay satisfaction is a function of actual vs. expected pay.
B Workers should be paid wages/salaries equal to their contribution, based on comparisons with others.
Correct Answer
C Increased pay is tied to increased job performance.
D Rewards should be tied directly to performance.
Correct Answer

Option B is the correct answer.

Detailed Explanation

Page 14 explains Equity Theory: 'Equity theory is concerned with the perceptions people have about how they are treated in comparison with significant others. It is concerned with inputs and outputs comparisons of significant others. The theory states that workers should be paid wages/salaries equal to their contribution.'

Hint

Think about fairness and comparison with others when considering the term 'equity'.

Question Info

Course: IRP 321
Topic: Compensation Management policies
Type: Objective
Difficulty: Not specified
Question 13 of 59
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