Why does an employee well paid in absolute terms become demotivated on learning a colleague earns more for the same work?

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Question

Why does an employee well paid in absolute terms become demotivated on learning a colleague earns more for the same work?

Accepted Answer

Equity theory holds that reward is judged relative to others — Award 1 mark. Perceived unfairness damages motivation more than the absolute level does. It is why unexplained differentials cause disproportionate damage.

Answer

Pay becomes a motivator once it is known

Answer

Expectancy theory predicts they will stop working

Answer

Equity theory holds that reward is judged relative to others

Answer

Their physiological needs are no longer met

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