During annual reviews at a marketing firm, Olivia feels frustrated that her colleague Ethan received a larger bonus despite handling a similar workload and working similar hours. She begins comparing her own effort, skills, and results with his to decide if her compensation is fair. Which principles is she applying?

Question

BlackTom AI · Accepted Answer

When analyzing Olivias situation, the initial step is to identify what concept best explains comparing one’s own inputs and outputs to those of a coworker. 
Option 1: Goal-Setting Theory focuses on how setting specific, challenging goals affects performance and motivation, not on evaluating fairness or social comparison. This makes it the wrong lens for Olivia’s concern. 
Option 2: McGregor’s Theory X and Theory Y describe management assumptions about employees’ motivations (extrinsic control vs. intrinsic motivation) rather than how employees judge equity or fairness between themselves and others. Thus, this choice does not fit the scenario. 
Option 3: Herzberg’s Two-Factor Theory differentiates between hygiene factors and motivators to explain satisfaction; it does not specifically address comparing compensation or perceived equity with a peer. Therefore, this option misses the central mechanism at play. 
Option 4: Equity Theory centers exactly on social comparison of inputs (effort, skill, time) and outcomes (rewards like pay or bonuses) to those of others, and it explains why Olivia might feel unfairly treated when her colleague receives a larger bonus for similar work. This makes Equity Theory the most appropriate explanation for her behavior. 
Option 5: Expectancy Theory deals with whether effort leads to performance and whether performance leads to rewards, but it does not inherently involve evaluating fairness through social comparison. Hence, it does not capture the fairness-judgment process Olivia is experiencing.

33:620:302:01 MANAGEMENT SKILLS Midterm- Fall 2025

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