Equity theory focuses on perceived fairness of inputs vs. outcomes; how should managers address inequities?

• A. Only adjust inputs.
• B. Reassess workload to equalize inputs.
• C. Provide fair treatment, transparent processes, and adjust outcomes if needed.
• D. Ignore perceived inequities.

Answer: (C)

Equity theory says people evaluate fairness by comparing their inputs (effort, skills, time) to their outcomes (pay, rewards, recognition) relative to others. When this perceived balance is off, motivation drops. To address inequities, a manager should aim for fair treatment, transparent decision processes, and adjustments to outcomes when needed. Fair treatment means applying policies consistently and avoiding favoritism. Transparent processes involve clearly communicating how pay, rewards, and workloads are determined so employees understand the basis for decisions. Adjusting outcomes means granting appropriate pay, bonuses, promotions, or recognition to restore balance between inputs and outcomes. Merely changing inputs can worsen perceived fairness if rewards don’t change accordingly, and ignoring inequities undermines motivation and trust.