Final answer:
When employees perceive their rewards as inequitable, it may lead to reduced motivation, lower productivity, and could potentially escalate to workplace disagreements or theft as a means of offsetting perceived unfairness, according to equity theory. Efficiency wage theory suggests that higher wages can improve productivity and motivation, offering a long-term benefit for employers by reducing turnover costs.
Step-by-step explanation:
Consequences of Perceived Inequitable Rewards
According to equity theory, employees strive for fairness in compensation by balancing their contributions (inputs) against received rewards (outputs), in comparison to their peers.
When employees perceive an imbalance, believing that their rewards are not equitable with others in similar roles, it can result in negative outcomes including demotivation, decreased productivity, and potentially even workplace theft or violence as a form of retribution for perceived injustices.
This aligns with efficiency wage theory, which suggests that higher wages can lead to increased productivity, as employees recognize the value of their position and are thus more motivated to retain it.
Employers tend to adapt to this by paying more than the market rate to minimize turnover and the costs associated with hiring and training new employees. The retention of motivated employees who feel fairly compensated is beneficial for the productivity and financial efficiency of a company.