Leon, the production manager at a furniture manufacturing company, decides to underperform at work by not meeting his monthly targets. This is because he feels that no matter how well he performs, his incentives are only half of what the marketing manager receives. Which of the following theories of motivation does this scenario illustrate?A) Expectancy theory
B) Equity theory
C) Alderfer's ERG Theory
D) McClelland's Learned Needs Theory

Equity Theory is based on the idea that individuals are motivated by fairness. In simple terms, equity theory states that if an individual identifies an inequity between themselves and a peer, they will adjust the work they do to make the situation fair in their eyes.

Equity Theory calls for a fair balance to be struck between an employee's inputs (hard work, skill level, acceptance, enthusiasm, and so on) and an employee's outputs (salary, benefits, intangibles such as recognition, and so on).

The theory is built-on the belief that employees become de-motivated, both in relation to their job and their employer, if they feel as though their inputs are greater than the outputs and if they are not treated fairly compared to their peers.