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Central Manufacturing Inc. fabricates medium$-$ and large$-$scale watercraft, primarily for commercial use. They also manufacture accessories for a variety of boats and marine service vessels. Central Manufacturing struggles to keep costs down while maintaining profitability in a highly competitive market. Military and commercial

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main source of business.

Employees at Central Manufacturing appear to be dedicated individuals who, through their combined efforts, were able to save the company $$1\mathrm{.}5$ million in energy costs by means of simple efficiency. For this initiative, they did not receive much recognition other than some encouragement and T$-$shirts recognizing their contribution to the company. Robert West, operations supervisor, believed that individuals had to earn respect, and that if other savings could be realized they would certainly be welcomed by the company. Although supportive of employee efforts, Robert didn't seem to acknowledge the impact on the company's bottom line.

Dan White, vice president of operations, recognized that Central Manufacturing needed to change its operations in order to shake its bureaucratic and authoritarian image. Although Robert praised employees and talked about performance, there was little in the way of resources to move the reward process any further. Dan undertook the initiative to attempt to change things, which meant creating a new process for both managers like Robert West and his employees.

The employees had assumed that they were fairly secure in their jobs, since the company had a monopoly on specialized watercraft manufacturing. As with most manufacturing concerns in Canada, however, when a recession occurred $200$ employees, representing about one third of the workforce, were suddenly laid off. Although this was a major blow to Central Manufacturing, Dan White and George North, director of human resources, launched a new program to track, monitor, measure, recognize and reward employees for their efforts. Accountability and performance were to be a major focus in these programs.

As the program commenced, some employees and their supervisors started to display progress charts. More ideas for operations improvement began to flow once it became evident what was actually going on$.$ Positive feedback was forthcoming from customers and Dan realized that his initiative was starting to pay off.

Referring to SCENARIO $4-9,$ in the long term, White decides that equity theory will provide the best guidance for him regarding motivating and providing recognition to the employees. He is also aware that the unions may be constantly battling his new initiatives. Equity theory demonstrates that, for most employees, motivation is influenced

Select one:

significantly by relative rewards as well as by absolute rewards

by union influence over their welfare

significantly by goal setting as well as by ability to be productive

solely by monetary rewards

significantly by goal setting as well as by absolute rewards