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Equity Theory

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The Theory Of Equity
The theory of equity is to motivate people to seek social equity in the rewards they receive for their performance. This relates to The Parlor in several different ways. The Parlor was developed as a restaurant aimed at providing service and atmosphere from the roaring twenties. The service aspect of the restaurant consisted of accents from the twenties like an old time piano mechanically driven to play music. They specialized in old time fountain sodas and ice cream sundaes. Overall they had a high quality of food and service.
Owned and managed by Richard Purvis in San Francisco, The Parlor has grown steadily during the last seven years. With such an incline in business, Purvis decided to hire a manager. Purvis also wanted to try to devote more time to developing additional business ideas.
With new business ideas in mind, Purvis went through a month of recruitment and interviewing. After careful selection he chose Paul McCarthy, an experienced supervisor at a local establishment. A downfall to the hiring process was that Purvis decided to complete this function without any of the employees knowing. On McCarthy’s first day, Purvis was out of town. McCarthy entered the establishment and introduced himself to the employees as their new boss.
The arrangement between Purvis and McCarthy consisted of being paid a straight salary along with a percentage of the amount he saves the business per month. This percentage of savings is based off of the previous month’s operating expenses. McCarthy was the only employee of The Parlor that was paid in addition to the hourly rate.
The first few weeks that McCarthy was on the job he became very efficient and showed sincere evidence of supervision. After a month this had all changed. McCarthy decided to initiate a cost savings program with hopes of decreasing the...

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