Future Business Leaders of America (FBLA) Organizational Leadership Practice Test

What does Equity Theory primarily address?

1. Balancing inputs and outputs

2. Meeting basic physiological needs

3. Setting specific, difficult goals

4. Establishing clear job roles

The correct answer is: Balancing inputs and outputs

Equity Theory primarily addresses the concept of balancing inputs and outputs in the context of interpersonal relationships and motivation, particularly within organizational settings. Developed by John Stacey Adams, Equity Theory posits that individuals assess their own job satisfaction and motivation by comparing their input-output ratios to those of others. Inputs can include effort, skills, experience, and time, while outputs encompass rewards like pay, recognition, or benefits. When individuals perceive that their inputs are equitably compensated by their outputs, they experience satisfaction. Conversely, if they believe their contributions outweigh the rewards compared to others, it can lead to feelings of inequity, dissatisfaction, and potentially decreased motivation. This theory underscores the importance of fairness in the workplace, encouraging leaders to foster an environment where employees feel valued and equitably treated. The other options focus on different aspects of motivation or organizational structure. Meeting basic physiological needs relates more closely to Maslow's Hierarchy of Needs. Setting specific, difficult goals aligns with Goal-Setting Theory, which emphasizes clear objectives to drive performance. Establishing clear job roles pertains to organizational design and clarity in expectations rather than addressing equity in motivational contexts.