Money not the only way to reward workers — try listening to them

THE current bitching about the outrageous salary levels enjoyed by top bankers is an aspect of equity theory, the idea proposed in the mid-1960s by psychologist J Stacy Adams.

Equity theory starts with the fact that human beings are involved, directly or indirectly, in relationships with others, and instinctively check the fairness or equity of those relationships. If one person gives a present to another, for example, and gets nothing in return, whether that be an acknowledgement or a bigger response, they feel hard done by.

During the boom years, the salaries enjoyed by top bankers did not amount to a major perceived inequity, because the basic relationship was positive. Since the biggest transaction in which most people engage is the purchase of a house, and since banks and bankers, at the time, were effusively eager to lend for that purpose, the fact that the top guy in the bank was paid multiples of what the house purchaser was earning wasn’t experienced as a personal inequity.