ADM 3337 Lecture Notes - Lecture 9: 360-Degree Feedback, Performance Appraisal, Equity Theory
20 Apr 2016
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According to this theory, we choose behaviors that yield the most satisfactory exchange: equity theory: a motivation theory stating that people are concerned about fairness of the reward outcomes exchanged for employee inputs. If focuses on the notion that people are highly concerned about equity, or fairness of the exchange process. Employees look at the exchange as a ratio between what is expected and what is received: agency theory. Do people join a firm because of pay: talented employees are attracted to companies that have strong links between pay and performance. Do people stay in a firm (or leave) because of pay: turnover is much higher for poor performers when pay is based on individual performance. Conversely, group incentive plans may lead to higher turnover of better performers. Do employees more readily agree to develop job skills because of pay: pay for skills will help employees perform better on current jobs and adjust more rapidly to demands on future jobs.
