Now suppose instead that you and Fred are both auditors with ten years’
experience working in a Fortune 200 company. If you discover that similarly experienced auditors at other Fortune 200 firms are
making double your salaries,
both you and Fred will experience a largely irreversible motivation dip. The company has violated the ethic of external fairness. (One important addendum:
Paying people the Type I way doesn’t mean paying everyone the same amount.
If Fred has a harder job or contributes more
to the organization than you, he deserves a richer deal. And,
as it turns out, several studies have shown that most people don’t have a beef with that. Why It’s fair) Getting the internal and external equity right isn’t itself a motivator. But it is away to avoid putting the issue of money back
on the table and making it a de-motivator.
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