A situation that clearly reflects how compensation can motivate behavior involves a close colleague who eventually left her job after several years of feeling under-rewarded in the hospital admiration setting. She consistently ranked among the top performers on her team, often taking on additional responsibilities, training new employees, and stepping in during staffing shortages. Despite her contributions, her annual raises were minimal—typically around 2–3 percent—mirroring the increases given to employees who barely met expectations. Over time, she began to feel that her compensation did not match the level of effort, skill, and dedication she brought to the organization.
Equity Theory helps explain her reaction. According to the theory, people evaluate fairness by comparing the ratio of their inputs (effort, experience, commitment) to their outcomes (pay, recognition, advancement) and then mentally compare that ratio to others’. When employees perceive inequity—especially when they believe they are putting in more effort but receiving the same rewards as lower-performing peers—they experience dissatisfaction. That sense of unfairness often leads to predictable behavioral responses, such as reduced effort, withdrawal, or eventually leaving the organization altogether. In my colleague’s case, she initially tried to maintain her motivation, but the persistent inequity slowly reduced her engagement. She stopped volunteering for extra tasks and stopped striving for exceptional performance because she no longer believed it would be acknowledged or rewarded.
Ultimately, she accepted a new job offer with significantly higher pay and clearer performance-based incentives. What motivated her behavior wasn’t money alone—it was the desire for fairness, recognition, and a compensation system that reflected her true value. The new organization offered a structure where effort and outcome were aligned, restoring her sense of control and professional worth. Her experience illustrates how deeply compensation—especially equitable compensation—shapes engagement, performance, and career decisions.