Equity, or perceived fairness, of compensation from the perspective of Essay

Equity, or perceived fairness, of compensation from the perspective of the employee - test ExampleEquity or fairness, from the employees perspective is best explained with the equity theory.Equity theory rede that in the quest for fairness and justice, employees quantify their inputs and outputs and judge fairness or otherwise, by comparing these to that of a referent other (Werner and Mero, 1999 p.1291). According to Werner and Mero (1999), employee inputs include quality of job performance, length of service, education, date, amount of responsibility and pressure, productiveness on the job, effort expended on the job and organizational citizenship behavior. While outputs subsumes pay and benefits, promotions, status and intrinsic rewards (p.1291).recompense can be defined as including pay and benefits, with particular emphasis on pay i.e. issue/salary, bonuses, stock options, incentives, etc. Fairness, on the other hand, is an objective evaluation of competencies, performance and compensation (CAPS, 2003). Fairness or the perception of fairness plays a crucial role in consciousness employee behaviors/morale in whatever organizational settings (Charness and Haruvy, 2000 p.655) employees that perceive that they are being under or over compensated tend to experience feelings of anger or guilt and therefore act in a way to correct the military position or achieve fairness either by altering inputs or outputs, using a contrasting referent for comparison or creating psychological justifications (Werner and Mero, 1999 p.1292).In this regard, employee perception of fairness is bound to have a profound effect on productivity, job performance, and organizational citizenship behavior. For example, underpayment and other perceived inequities have been related to level satisfaction, lower productivity, illegal behavior, lower production quality, and increased turnover. Therefore, as concluded by Bass (1995), understanding factors that shape employee perception of f airness will greatly help in building employee trust and meliorate productivity (Bass 1995