Inequity Aversion, Incentives and Promotions

Abstract

This paper delves into the critical examination of equality and fairness within incentive programs and promotions. The study places a spotlight on the concept of inequity aversion, underscoring its pivotal role in evaluating the effectiveness of such initiatives. The core focus is on individuals' responses to perceived unfairness in reward distribution. The research explores diverse strategies for constructing incentive programs that judiciously account for people's aversion to inequity. Additionally, the study scrutinizes the potential influence of promotions on employees' attitudes towards equity and fairness within organizational frameworks. It underscores the imperative of aligning promotion rules with overarching equity objectives. In essence, the paper underscores the paramount importance of integrating equity and fairness considerations into the development of incentive programs and promotions, offering actionable recommendations for businesses aspiring to cultivate reward systems that are both equitable and efficacious.