1 Later in this chapter equity theory of motivation is discussed. Use equity theory to evaluate the potential motivational effects of a cafeteria reward system. Trapp (2004) reported a significant increase in companies implementing flexible reward packages. Poplar Herca, for example, a London-

based housing association, was finding it difficult to recruit and retain employees in a tight labour market. It wanted to differentiate itself from other public sector employers and so introduced a cafeteria reward scheme, allowing its 240 employees to choose from a range of benefits including private medical and dental insurance, annual health checks, subsidised home computers and the option to

‘buy’ or ‘sell’ holiday entitlement. Poplar Herca put considerable effort into communicating the scheme and found it helpful in changing company culture and the perceptions of employees.