One of the key things to note about this theory is that it is largely based on an employee’s perception. Equity theory states that such an employee works to produce more and can feel guilty that they are getting more than they give. Over Reward Inequity/Positive Inequity-A person feels overcompensated when their input/output ratio is greater than that of the person they are comparing themselves to.Under Rewarded Inequity/negative Inequity-When the outcome/input ratio is less than the person an employee compares themselves to they feel underpaid and are likely to be angry and try to seek justice.Here an individual feels fairly treated and motivation to do their best is sustained. Equity-This is when an employee’s output/input ratio is equal to his referents outcome/input ratio.They are Three Likely Equity Theory Scenarios.
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