- Equity Theory Of Motivation Definition
- Equity Theory Of Motivation Pdf
- Adam Equity Theory Of Motivation Pdf 2016
- Examples Of Equity Theory
- Adam's Equity Theory Of Motivation Pdf
- Equity Theory Of Motivation Articles
- Equity Theory In The Workplace
Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person.[1] Considered one of the justice theories, equity theory was first developed in the 1960s by J. Stacy Adams, a workplace and behavioral psychologist, who asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others (Adams, 1963). According to Equity Theory, in order to maximize individuals' rewards, we tend to create systems where resources can be fairly divided amongst members of a group. Inequalities in relationships will cause those within it to be unhappy to a degree proportional to the amount of inequality.[2] The belief is that people value fair treatment which causes them to be motivated to keep the fairness maintained within the relationships of their co-workers and the organization. The structure of equity in the workplace is based on the ratio of inputs to outcomes. Inputs are the contributions made by the employee for the organization.
Equity theory says that employees view a situation as equitable when employees who give similar inputs receive similar outcomes. When the rewards differ for the same degree of effort, employees view the situation as inequitable. Equity theory shows that inequities (perceived or real) harm employee motivation. According to equity theory, it is the perception of equitability and in-equitability. Equity theory focuses on two sides: the input and the outcome. An employee compares his or her job’s inputs with an outcomes ratio. If the employee perceives inequality, he or she he will act to correct the inequity. The basic equity theory assumes that upon feeling inequity, the person is motivated to reduce it. Further the greater the inequity the greater the motivation to reduce it. Thus, inequity as a motivation force will act as follows: It is not that the person feeling inequity alone gets motivated to restore equity. The equity theory of motivation states that a person’s motivation is directly related to their perception of equity, also known as level of fairness. This theory by John Stacey Adams shows that you become more motivated when perceived equity is higher, and vice versa. Motivation theory: equity theory Equity theory is known as one of the general theory, which is very efficient in predicting employee behavior. Equity also defined as justice, inequity-injustice.
- 1Background
- 1.2Inputs and outcomes
- 2In business
- 3Criticisms and related theories
Background[edit]
Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. It proposes that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship. It focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratios of contributions and benefits of each person within the relationship. Partners do not have to receive equal benefits (such as receiving the same amount of love, care, and financial security) or make equal contributions (such as investing the same amount of effort, time, and financial resources), as long as the ratio between these benefits and contributions is similar. Much like other prevalent theories of motivation, such as Maslow’s hierarchy of needs, equity theory acknowledges that subtle and variable individual factors affect each person’s assessment and perception of their relationship with their relational partners (Guerrero et al., 2005). According to Adams (1965), anger is induced by underpayment inequity and guilt is induced with overpayment equity (Spector 2008). Payment whether hourly wage or salary, is the main concern and therefore the cause of equity or inequity in most cases.
In any position, an employee wants to feel that their contributions and work performance are being rewarded with their pay. If an employee feels underpaid then it will result in the employee feeling hostile towards the organization and perhaps their co-workers, which may result in the employee not performing well at work anymore. It is the subtle variables that also play an important role in the feeling of equity. Just the idea of recognition for the job performance and the mere act of thanking the employee will cause a feeling of satisfaction and therefore help the employee feel worthwhile and have better outcomes.
Definition of equity[edit]
Individuals compare their job inputs and outcomes with those of others and then respond to eliminate any perceived inequities.Referent Comparisons:
Inputs and outcomes[edit]
Inputs[edit]
Inputs are defined as each participant’s contributions to the relational exchange and are viewed as entitling him/her to rewards or costs. The inputs that a participant contributes to a relationship can be either assets – entitling him/her to rewards – or liabilities - entitling him/her to costs. The entitlement to rewards or costs ascribed to each input vary depending on the relational setting. In industrial settings, assets such as capital and manual labor are seen as 'relevant inputs' – inputs that legitimately entitle the contributor to rewards. In social settings, assets such as physical beauty and kindness are generally seen as assets entitling the possessor to social rewards. Individual traits such as boorishness and cruelty are seen as liabilities entitling the possessor to costs (Walster, Traupmann & Walster, 1978). Inputs typically include any of the following:
- education
- experience
- Effort
- Hard Work
- Commitment
- Ability
- Adaptability
- Determination
- Personal sacrifice
- Trust in superiors
- Support from co-workers and colleagues
- Skill
Outcomes[edit]
Outputs are defined as the positive and negative consequences that an individual perceives a participant has incurred as a consequence of his/her relationship with another. When the ratio of inputs to outputs is close, then the employee should have much satisfaction with their job. Outputs can be both tangible and intangible.[3] Typical outputs include any of the following:
![Equity Equity](/uploads/1/2/4/9/124911310/930752270.jpg)
- Expenses
- Recognition
- Sense of achievement
- Praise
- Thanks
- Stimuli
Propositions[edit]
Equity theory consists of four propositions:
- self-inside
- Individuals seek to maximize their outcomes (where outcomes are defined as rewards minus costs).[4]
- self-outside
- Groups can maximize collective rewards by developing accepted systems for equitably apportioning rewards and costs among members. Systems of equity will evolve within groups, and members will attempt to induce other members to accept and adhere to these systems. The only way groups can induce members to equitably behave is by making it more profitable to behave equitably than inequitably. Thus, groups will generally reward members who treat others equitably and generally punish (increase the cost for) members who treat others inequitably.
- others-inside
- When individuals find themselves participating in inequitable relationships, they become distressed. The more inequitable the relationship, the more distress individuals feel. According to equity theory, both the person who gets 'too much' and the person who gets 'too little' feel distressed. The person who gets too much may feel guilt or shame. The person who gets too little may feel angry or humiliated.
- other-outside
- Individuals who perceive that they are in an inequitable relationship attempt to eliminate their distress by restoring equity. The greater the inequity, the more distress people feel and the more they try to restore equity. (Walster, Traupmann and Walster, 1978)
In business[edit]
Equity theory has been widely applied to business settings by industrial psychologists to describe the relationship between an employee's motivation and his or her perception of equitable or inequitable treatment. In a business setting, the relevant dyadic relationship is that between employee and employer. As in marriage and other contractual dyadic relationships, equity theory assumes that employees seek to maintain an equitable ratio between the inputs they bring to the relationship and the outcomes they receive from it (Adams, 1965). Equity theory in business, however, introduces the concept of social comparison, whereby employees evaluate their own input/output ratios based on their comparison with the input/outcome ratios of other employees (Carrell and Dittrich, 1978). Inputs in this context include the employee’s time, expertise, qualifications, experience, intangible personal qualities such as drive and ambition, and interpersonal skills. Outcomes include monetary compensation, perquisites ('perks'), benefits, and flexible work arrangements. Employees who perceive inequity will seek to reduce it, either by distorting inputs and/or outcomes in their own minds ('cognitive distortion'), directly altering inputs and/or outcomes, or leaving the organization (Carrell and Dittrich, 1978). These perceptions of inequity are perceptions of organizational justice, or more specifically, injustice. Subsequently, the theory has wide-reaching implications for employee morale, efficiency, productivity, and turnover.
Assumptions of equity theory applied to business[edit]
The three primary assumptions applied to most business applications of equity theory can be summarized as follows:
- Employees expect a fair return for what they contribute to their jobs, a concept referred to as the 'equity norm'.
- Employees determine what their equitable return should be after comparing their inputs and outcomes with those of their coworkers. This concept is referred to as 'social comparison'.
- Employees who perceive themselves as being in an inequitable situation will seek to reduce the inequity either by distorting inputs and/or outcomes in their own minds ('cognitive distortion'), by directly altering inputs and/or outputs, or by leaving the organization. (Carrell and Dittrich, 1978)
Implications for managers[edit]
Equity theory has several implications for business managers:
- People measure the totals of their inputs and outcomes. This means a working mother may accept lower monetary compensation in return for more flexible working hours.
- Different employees ascribe personal values to inputs and outcomes. Thus, two employees of equal experience and qualification performing the same work for the same pay may have quite different perceptions of the fairness of the deal.
- Employees are able to adjust for purchasing power and local market conditions. Thus a teacher from Alberta may accept lower compensation than his colleague in Toronto if his cost of living is different, while a teacher in a remote African village may accept a totally different pay structure.
- Although it may be acceptable for more senior staff to receive higher compensation, there are limits to the balance of the scales of equity and employees can find excessive executive pay demotivating.
- Staff perceptions of inputs and outcomes of themselves and others may be incorrect, and perceptions need to be managed effectively.
- An employee who believes he is overcompensated may increase his effort. However he may also adjust the values that he ascribes to his own personal inputs. It may be that he or she internalizes a sense of superiority and actually decrease his efforts.
Criticisms and related theories[edit]
Criticism has been directed toward both the assumptions and practical application of equity theory. Scholars have questioned the simplicity of the model, arguing that a number of demographic and psychological variables affect people's perceptions of fairness and interactions with others. Furthermore, much of the research supporting the basic propositions of equity theory has been conducted in laboratory settings, and thus has questionable applicability to real-world situations (Huseman, Hatfield & Miles, 1987). Critics have also argued that people might perceive equity/inequity not only in terms of the specific inputs and outcomes of a relationship, but also in terms of the overarching system that determines those inputs and outputs. Thus, in a business setting, one might feel that his or her compensation is equitable to other employees', but one might view the entire compensation system as unfair (Carrell and Dittrich, 1978).
Researchers have offered numerous magnifying and competing perspectives:
Equity sensitivity construct[edit]
The Equity Sensitivity Construct proposes that individuals have different preferences for equity and thus react in different ways to perceived equity and inequity. Preferences can be expressed on a continuum from preferences for extreme under-benefit to preferences for extreme over-benefit. Three archetypal classes are as follows:
- Benevolents, those who prefer their own input/outcome ratios to be less than those of their relational partner. In other words, the benevolent prefers to be under-benefitted.
- Equity Sensitives, those who prefer their own input/outcome ratios to be equal to those of their relational partner.
- Entitleds, those who prefer their own input/outcome ratios to exceed those of their relational partner. In other words, the entitled prefers to be over-benefitted. (Huseman, Hatfield & Miles, 1987)
Fairness model[edit]
The Fairness Model proposes an alternative measure of equity/inequity to the relational partner or 'comparison person' of standard equity theory. According to the Fairness Model, an individual judges the overall 'fairness' of a relationship by comparing their inputs and outcomes with an internally derived standard. The Fairness Model thus allows for the perceived equity/inequity of the overarching system to be incorporated into individuals' evaluations of their relationships (Carrell and Dittrich, 1978).
Game theory[edit]
Behavioral economics has recently started to apply game theory to the study of equity theory. For instance, Gill and Stone (2010) analyze how considerations of equity influence behavior in strategic settings in which people compete and develop the implications for optimal labor contracts.
See also[edit]
References[edit]
- ^Guerrero, Laura K; Peter A. Andersen & Walid A. Afifi. (2014). Close Encounters: Communication in Relationships, 4th Edition. Los Angeles, CA: Sage Publications Inc. p. 263. ISBN978-1-4522-1710-9.
- ^Adams, J.S. (1965). 'Inequality in social exchange'. Advanced Experimental Psychology. 62: 335–343.
- ^Cook, ed. by Mark; Wilson, Glenn (1979). Love and attraction : an internat. conference(PDF) (1. ed.). Oxford [u. a.]: Pergamon Pr. pp. 309–323. ISBN008022234X. Retrieved 3 June 2012.CS1 maint: extra text: authors list (link)
- ^E.g. ultimatum games show, that the maximation of outcomes is only one of several objectives for an individual. In order to foster rules desired by an individual, the individual may be willing to sacrifice maximum outcomes. (Bala)
Literature[edit]
![Equity Theory Of Motivation Pdf Equity Theory Of Motivation Pdf](/uploads/1/2/4/9/124911310/417616872.jpg)
- Adams, J. S. (1963) Toward an understanding of inequity. Journal of Abnormal and Social Psychology, 67, 422-436
- Gill, D, and Stone, R. (2010). Fairness and desert in tournaments. Games and Economic Behavior. 69: 346–364.
- Guerrero, Andersen, and Afifi. (2007). Close Encounters: Communication in Relationships, 2nd edition. Sage Publications, Inc.
- Huseman, R.C., Hatfield, J.D. & Miles, E.W. (1987). A New Perspective on Equity Theory: The Equity Sensitivity Construct. The Academy of Management Review. 12;2: 222-234.
- Messick, D. & Cook, K. (1983). Equity theory: psychological and sociological perspectives. Praeger.
- Sankey, C.D., (1999). Assessing the employment exchanges of Business Educators in Arizona. Unpublished doctoral dissertation, Arizona State University.
- Spector, P.E. (2008). Industrial and Organizational Behavior (5th ed.). Wiley: Hoboken, NJ.
- Traupmann, J. (1978). A longitudinal study of equity in intimate relationships. Unpublished doctoral dissertation, University of Wisconsin.
- Walster, E., Walster G.W. & Bershcheid, E. (1978). Equity: Theory and Research. Allyn and Bacon, Inc.
- Walster, E., Traupmann, J. & Walster, G.W. (1978). Equity and Extramarital Sexuality. Archives of Sexual Behavior. 7;2: 127-142.
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Everyone in the workplace is motivated by something. This motivation could be external in nature, such a money, and status, or internal, such as a desire to do a good job. Leaders and managers have sought to understand theories of motivation and then test them in the workplace to increase the productivity and effectiveness of their workforce.
Adam’s Equity Theory, also known as the Equity Theory of Motivation, was developed in 1963 by John Stacey Adams, a workplace behavioral psychologist.
Equity Theory is based on the idea that individuals are motivated by fairness. In simple terms, equity theory states that if an individual identifies an inequity between themselves and a peer, they will adjust the work they do to make the situation fair in their eyes. As an example of equity theory, if an employee learns that a peer doing exactly the same job as them is earning more money, then they may choose to do less work, thus creating fairness in their eyes.
Extrapolating from this, Adam’s Equity Theory tells us that the higher an individual’s perception of equity (fairness), then the more motivated they will be. Conversely, an individual will be demotivated if they perceive unfairness.
Understanding Equity
To understand Adam’s Equity Theory in full, we need to first define inputs and outputs. Inputs are defined as those things that an individual does in order to receive an output. They are the contribution the individual makes to the organization.
Common inputs include:
- The number of hours worked (effort).
- The commitment shown.
- The enthusiasm shown.
- The experience brought to the role.
- Any personal sacrifices made.
- The responsibilities and duties of the individual in the role.
- The loyalty the individual has demonstrated to superiors or the organization.
- The flexibility shown by the individual, for example, by accepting assignments at very short notice or with very tight deadlines.
Outputs (sometimes referred to as outcomes) are the result an individual receives as a result of their inputs to the organization. Some of these benefits will be tangible, such as salary, but others will be intangible, such as recognition.
Common outputs include:
- Salary
- Bonus
- Pension
- Annual holiday allowance
- Company car
- Stock options
- Recognition
- Promotion
- Flexibility of work arrangements
- Sense of achievement
- Learning
Now that we understand inputs and outputs, we’re in a position to define equity. Equity is defined as an individual’s outputs divided by that same person’s inputs.
Adam’s Equity Theory goes a step further and states that individuals don’t just understand equity in isolation, instead they look around and compare themselves to others. If they perceive an inequity then they will adjust their inputs to restore balance. This is illustrated in the following equity theory equation.
Essentially, what we are saying is that individuals will always adjust their inputs so that the equation is always in balance. So, if an individual believes their outputs are lower than their inputs relative to others around them they will become demotivated. Likewise, an individual may need to increase their inputs if their outputs are greater than those doing exactly the same job. Essentially, an individual within an organization will always try to keep fairness (equity) in balance:
Equity Theory Of Motivation Definition
How We Compare: Referent Groups
A referent group is simply a collection of people a person uses for the purposes of comparison. For Adam’s Equity Theory of Motivation, there are four referent groups people compare themselves with:
- Self-inside: the individual’s experience within their current organization.
- Self-outside: the individual’s experience with other organizations.
- Others-inside: others within the individual’s current organization.
- Others-outside: others outside of the individual organization.
For example, if a programmer compares what they earn to other programmers within the same organization then the referent group is the others-inside. If they compare themselves to programmers they know socially then the referent group is others-outside. If they were to compare themselves to what they earnt in their previous job then the referent group is self-outside.
Adam’s Equity Theory still holds even when people compare themselves to others doing very different roles and earning very different compensation. Take our example of a programmer again. They may compare themselves to the CEO of their company who earns 100 times more than the programmer. How can this seem fair?
Well, the answer is that they will perceive the inputs to be vastly different. They will see that they have a great work-life balance whereas the CEO is traveling a lot of the time. They may perceive that the CEO has vastly more experience, alongside working much longer hours and having to deal with more stress. In this way, fairness is established in the mind of the individual.
It is always worth remembering that Equity Theory applies in a very broad sense. Each person will respond to perceived inequality in their own individual and unique way.
Equity Theory Examples
You can identify Equity Theory in the workplace by listening to the phrases that people use in conversation. Most commonly an individual will compare the role that they do to someone who is getting paid more than they are. Equity theory is in play when individuals say things like:
- “Andy earns more than I do, but doesn’t do nearly as much work!”
- “I get paid a lot less than Andy, but this place would fall apart without me!”
- “Did you hear that the new guy earns $500 more and works fewer hours! How is that fair?”
As you can see, in each of these examples someone is comparing their own compensation and effort against someone else’s. Although comparing compensation is the most common comparator, other typical forms of comparison include comparing learning opportunities or comparing opportunities to work from home.
Equity Theory Of Motivation Pdf
Key Points for Managers
If you’re responsible for a team, then the key points you’ll need to keep in mind are:
- People measure the total of all inputs against the total of all outputs. This could mean that a person with children may accept flexible working hours in return for lower pay.
- Unfortunately, an individual’s values will be used when they measure fairness. So two identical employees on identical pay may each see the fairness of their situation differently. Perceptions may also be different from one person to another. The art of being a good manager is to manage these expectations and influence values.
- Although it is understandable that more senior staff earn significantly more, there are limits, and excessive pay for senior people can be demotivating.
- An employee who believes they are overcompensated may increase their effort.
Adam Equity Theory Of Motivation Pdf 2016
Another thing for managers to be aware of is the options available to them for reducing inequality:
Examples Of Equity Theory
- Change an individual’s inputs or outputs.
- Change the inputs or outputs of others
- Change the perceptions of inputs and outputs
Adam's Equity Theory Of Motivation Pdf
Equity Theory Summary
Equity Theory Of Motivation Articles
In essence, the Equity Theory of Motivation proposes that high levels of employee motivation in the workplace can only be achieved when each employee perceives their treatment to be fair relative to others. Employees will compare themselves to other groups both inside and outside of the organization. In doing so, they will compare the total of all inputs against the total of all outputs. If they perceive unfairness they will adjust their inputs to compensate, working more or working less, depending on if their situation is positive or negative relative to the group or person being compared.
Equity Theory In The Workplace
Recognising the phrases employees use when equity theory is in play in the workplace can be a key step in creating a high-performance team.