Extra Credit – Voluntary Home Assignment

Maximum Points Available – 15 points

Pay Raises for Employees

The Case Study:

Because of a poor economy, your company has not been able to offer pay raises to its
employee for the past three (3) years. However, this year has been a good year and the
salary budget has increased by 5%. Your initial thought is to give every employee a 5%
raise. Is this a good idea as seen through the lens of equity theory and expectancy theory?
How should you allocate salary increases in this situation?

Your assignment:

1. Re-read the chapter on Motivation.

2. Write an essay that clearly reflects your understanding of Equity Theory and
Expectancy Theory. Apply that understanding by answering the questions posed
above.
3. Include the Evaluation Sheet with your Name and Matriculation Number as the cover
sheet for your assignment. Maintain as always the structural and formatting rules as
they will be considered when grading.
4. The word count limit is between 500 and 600 words.
5. Your answers will be judged on academic content and your understanding of the
literature.
6. The information in the case study and the bibliography should not be included in
your word count. State the word count on the Evaluation Sheet!

Please follow these instructions to the letter!

 HWR Berlin, Summer Semester 2021

LV 200191-Human Resources and Organization

Dozent: John Calvin Davis

Feedback on Research Article Submission from:

Student Name / Matriculation Number: Guillermina Simari / 77211903164

Theme / Topic: Extra Credit – Voluntary Home Assignment

Total Wordcount: 599

1. Formal Evaluation of Written Work (max. 5 Points)

Partial Grading ++ + 0 - --
(Basically No (≤ 1 Error (1-2 Errors (> 2 Errors (> 3 Errors
Errors) per Page) per Page) per Page) per Page)
Spelling/Grammar

(including punctuation, syntax)

Linguistic expression

(scientific style; comprehensibility, clarity)

Citation method (uniformity and correctness)

2. Content Assessment (max. 10 Points)

Partial Grading 1,0 2,0 3,0 4,0 5,0

Structure

(logic/stringency and balance)

Thematic reference

Literature evaluation (quality and use)

Theoretical reference

Practical transfer / Examples

Problem Penetration

Critical examination

Conclusión

Remarks:

The work will be evaluated with a total possible score of: 15 point

Berlin, John Calvin Davis

A company can make a 5% salary raise to its employees. After three years in a bad economic
situation, increasing the amount of money give it to each of them was not possible. To make the
best decision for motivating and fulfilling the needs of its employees and making the best out of the
company, some aspects need to be evaluated.

On one hand, if the city or country economy is in a bad situation, in which inflation is involved, and
the employees did not get a raise in three years, the company must get into action. Inflation is “a
general continuous increase in prices”1. This type of situation obliges the company to give each
employee a better salary, because people need a bigger income to keep its living. If that is not the
scenario, but the problem is the market situation the circumstances change, and the company has
not obligation to give a salary raises.

On the other hand, we have different theories of motivation to engage employees, and the company
needs to evaluate if taking that action will be the best option. One of those, is increasing raises even
though, this action is not always the best one. Considering the equity that “is based on the idea that
we all want to be treated fairly in comparison to others”2, the problem with this begins with the
concept of perception. As each person sees the world with his/her own “glasses”, what he/she
considers what is fair or not, will not be the same as others believe. This theory establishes a ratio
between the outcomes and inputs each person made, and divides inequity in two types. The Over-
reward inequity, where “an individual perceives those rewards received are more than what is fair
for work inputs”3. And the Under-reward inequity, where “an individual perceives that rewards
received are less than what is fair for work inputs”4. The expectancy theory combines the
expectancy, the valance, and the instrumentality of each person. Considering “If I try hard will I
succeed?”, “What does the possible reward for this hard work and performance achievement mean
to me?”, and “If I succeed will I received a reward?”5.

In my opinion, giving every employee a salary raise is not the best option. With personal reports for
each employee, they can give better rewards to employees that made a big effort when everything
was not good for the market, not only because they deserved it, but also to remark what they have
done in the worst moment which it is more appreciated. Otherwise, employees not always made
their best when they know that bad financial situations do not secure a reward for them. Regarding
that, setting a precedent of rewards when the circumstances are not the best ones, have good
impact in the expectancy and instrumentality of people, because they know they will be rewarded.

In conclusion, giving everyone the same rises, knowing that probably not everyone did the same
effort, can cause an under-reward inequity for the employees that give an extra effort to make the
company work in hard times. I will offer bigger raises to the people that try harder to do their job
better. This avoid under-reward inequity and give the employees the correct idea of what to expect
and that it will be possible.

1
Cambridge dictionary: https://dictionary.cambridge.org/dictionary/english/inflation
2
Page 410, Schermerhorn, J. (2015). Introduction to Management, (13th) Edition
3
Page 410, Schermerhorn, J. (2015). Introduction to Management, (13th) Edition
4
Page 411, Schermerhorn, J. (2015). Introduction to Management, (13th) Edition
5
Page 413, Schermerhorn, J. (2015). Introduction to Management, (13th) Edition