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CHRP Knowledge Exam · Question

What is 'equity theory' primarily concerned with in compensation?

Equity theory proposes that employees compare their input-to-outcome ratio with that of others, seeking fairness in compensation.

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Question: What is 'equity theory' primarily concerned with in compensation?

Answer options:

  • Paying employees based on their level of education ✅ Ensuring fair compensation relative to what others receive for similar contributions
  • Compensating employees based on organizational profitability
  • Providing equal pay for all employees regardless of role

Correct answer: Ensuring fair compensation relative to what others receive for similar contributions

Explanation: Equity theory proposes that employees compare their input-to-outcome ratio with that of others, seeking fairness in compensation.

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