For this chapter, I’m willing to bet you’ll be asked questions about expectancy theory and equity theory. These two theories are arguably the most robust of those presented in the chapter. Here are a few questions that are sure to test your comprehension, and which students often get wrong.

According to equity theory, employees feel inequity when other people receive higher salaries than they do. Is this statement true or false?

For true or false question one you need to have a deep understanding of equity theory. Remember the elements of the theory? That is the key to answering correctly. First, the theory relies on the perception of the person making the evaluation. Second, the equity evaluation is made on the basis of two outcome/input ratios. Third, it involves another person called a comparison other. Just because someone makes more money doesn’t mean it leads to feelings of inequity for the person who is paid less. That’s because we are dealing with a ratio. For example, if one person’s outcome/input ratio is 4:4 and the comparison other’s outcome/input ratio is 7:7; the ratios are equal, even though efforts and outcomes vary. The answer to question one is false.

According to expectancy theory, accurately measuring employee performance mainly increases motivation by:

Five choices are given and one is the most likely answer. Can you eliminate at least one response? Here’s a hint: The company is obviously trying to manage its knowledge. Here’s another hint: What do we call the knowledge that employees possess? This is knowledge that resides with the employee and not the organization. When the employee leaves the organization, that kind of knowledge goes with the person

Question two confuses many students, because they have difficulty differentiating between E-to-P and P-to-O expectancies. Both expectancies represent a probability of achieving a certain goal, but each goal is different. In the case of E-to-P, it’s the probability of performing successfully. This has nothing to do with the reward, even though it ultimately contributes to getting rewarded. As for the P-to-O expectancy, it’s the likelihood (probability), assuming you have performed successfully, that you will be rewarded. That’s quite a different matter. An accurate system to measure performance will increase the probability of being rewarded, because it will be noticed. That’s why the correct answer is ‘E’.