Pay Fairness Is a Ratio
Use equity theory to diagnose perceived pay fairness before changing compensation.
The comparison is the compensation problem. The ratio behind fairness Equity theory says people judge fairness by comparing their input-to-outcome ratio with a relevant comparison point. Inputs include tenure, skills, scope, performance, scarcity, location, and effort. Outcomes include base pay, bonus, equity, flexibility, status, and development access. Why market-correct can still feel wrong A salary can sit inside a market range and still trigger an equity problem if employees compare against a peer whose inputs look similar. The strategic move is not to promise identical pay. It is to make the comparison logic visible: what differences are legitimate, what gaps…
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