Equity Theorysuggests employees evaluate fairness by comparing theirinputs (effort)to theiroutputs (pay, recognition)relative to others. If they perceive inequity, it can lead to disengagement or turnover.
Extract from HRCI-aligned HR knowledge (Total Rewards):
SPHR-level compensation design includes psychological models like “Adams’ Equity Theory,” which explains that perceived fairness in effort-reward balance is essential tomotivation and retention.
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