Studies have demonstrated that, when individuals perceive that compensation and reward systems are equitable, they have greater levels of job satisfaction and are willing to commit to organisational objectives. Discuss ‘Equity theory’ and its importance to get high level of satisfaction of employees

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Studies have demonstrated that, when individuals perceive that compensation and reward
systems are equitable, they have greater levels of job satisfaction and are willing to commit to
organisational objectives.
Discuss ‘Equity theory’ and its importance to get high level of satisfaction of employees

Expert Solution
Step 1: Introduce the concept of Equity theory:

In the present serious and dynamic business scene, associations are persistently looking for systems to improve representative fulfillment and responsibility. A basic part of this task is understanding the way that representatives see the decency of remuneration and prize frameworks inside their working environment. This carries us to the domain of 'Equity Theory,' a psychological concept that digs into the many-sided connection between saw decency in the dispersion of remuneration and a singular degree of occupation fulfillment.

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