Which of the following is a likely consequence of external equity perception?
A. Job rotation
B. Transfer
C. Retention
D. Promotion
E. Cooperation among employees
The correct answer and explanation is :
The correct answer is C. Retention.
Explanation:
External equity perception refers to the view employees have about the fairness of their compensation compared to others working in similar roles or industries outside their organization. This perception is crucial because it impacts employee attitudes and behavior, including their decision to stay with or leave an organization.
When employees perceive that their compensation is fair compared to external benchmarks (such as industry standards or the compensation offered by competitors), they are more likely to remain with the organization. This is because they feel valued and adequately compensated for their work, reducing the likelihood of them seeking better-paying opportunities elsewhere. Therefore, retention is a likely consequence of positive external equity perception.
On the other hand:
- A. Job rotation refers to moving employees through different roles to enhance skills and reduce monotony. It is unrelated to external equity perception, as it’s more about career development within the organization.
- B. Transfer typically involves moving an employee from one department or location to another. While it could be driven by various factors (e.g., business needs, career development), it’s not directly tied to external equity perceptions.
- D. Promotion is a recognition of employee performance and growth within the company. Though promotions can impact compensation, they are not a direct result of external equity perception. Promotions are more related to internal equity (fairness within the organization).
- E. Cooperation among employees refers to how well employees work together. While external equity perception may indirectly affect teamwork (since a fair compensation system can boost morale), it’s not the direct outcome of external equity perception.
In summary, a positive external equity perception tends to increase employee satisfaction and commitment, leading to higher retention rates. Employees are more likely to stay with an organization if they feel their compensation is competitive with what they could earn elsewhere.