The purpose of this exercise is to demonstrate how compensation can be used to influence moti- vation. This exercise uses groups, so your instructor will either assign you to a group or ask you to create your own group. The exercise has the following steps:
6.1 Read the following scenario: Chris Clements and Pat Palmer are both computer programmers working for the same Fortune 500 company. One day they found out that Chris earns $60,820 per year, while Pat earns $72,890. Chris was surprised and said, “I can’t think of any reason why we should be paid so differently.” “I can think of at least 10 reasons,” Pat responded. Can you, like Pat, think of at least 10 reasons that could cause this difference in salary between two people? These reasons can be legal or illegal, wise or unwise.
6.2 Going around the group from member to member, generate a list of 10 conceivable reasons why Pat may be earning more than Chris. Remember, the reasons can be legal or illegal, wise or unwise.
6.3 Consider whether the theories discussed in the chapter—expectancy theory, goal setting theory, equity theory, and psychological empowerment—are relevant to the list of reasons you’ve generated. Maybe one of the theories supports the wisdom of a given reason. For example, maybe Pat’s job is more difficult than Chris’s job. Equity theory would support the wisdom of that reason because job difficulty is a relevant input. Maybe one of the theories questions the wisdom of a given reason. For example, maybe Chris’s boss believes that salary increases are a poor use of limited financial resources. Expectancy theory would question the wisdom of that reason because that philosophy harms instrumentality.
6.4 Elect a group member to write the group’s 10 reasons on the board. Then indicate which theories are relevant to the various reasons by writing one or more of the following abbreviations next to a given reason: EX for expectancy theory, GS for goal setting theory, EQ for equity theory, and PE for psychological empowerment.
6.5 Class discussion should center on which theories seem most relevant to the potential reasons for the pay differences between Chris and Pat. Are there some potential reasons that don’t seem relevant to any of the four theories? Do those reasons tend to be legal or illegal, wise or unwise?
