Scenario 13.1
John Davis, a human resource manager for a medium-size chain of hotels, is trying to motivate the company's employees with an updated compensation plan. There are two groups of operating employees. Line employees are responsible for dealing directly with customers, and their performance objectives are related to providing high-quality customer service. To do this, line personnel must undergo regular training to update their customer service skills. Operating managers are responsible for monitoring the activities of the line personnel and providing instructional/developmental support when needed. Currently, the line personnel are paid on an hourly basis, while the operating managers are paid salaries. If employees earn adequate performance appraisals, they can receive generous bonuses and pay raises. However, when performance evaluations are unacceptable, employees do not receive any rewards. John believes that his new plan to give employees shares of profit and stock on the basis of the results of performance evaluations will further motivate employees and managers.
-Refer to Scenario 13.1. The different pay structures used for line and managerial employees could create a perception of injustice on the basis of ____ theory.
A) goal
B) expectancy
C) equity
D) need
E) merit

Question

Quizplus · Accepted Answer

The different pay structures for line and managerial employees could be perceived as unfair based on equity theory, which focuses on a person's perception of fairness in comparison to others. Line employees may perceive it as unfair that they are only paid hourly while operating managers receive a salary, even though both groups are expected to meet performance objectives. Introducing a plan to give employees shares of profit and stock based on performance evaluations could help address these perceptions of inequity.

Scenario 13.1 John Davis, a Human Resource Manager for a Medium-Size Chain