Learning Outcomes
Show In contrast to the need-based theories we have covered so far, process-based theories view motivation as a rational process. Individuals analyze their environment, develop reactions and feelings, and respond in certain predictable ways. Equity theory attempts to explain relational satisfaction in terms of perceived fairness: that is, people evaluate the extent to which there is a fair or unfair distribution of resources within their interpersonal relationships. Regarded as one of many theories of justice, equity theory was first developed in 1963 by John Stacey Adams. Adams, a workplace and behavioral psychologist, asserted that employees seek to maintain equity between what they put into a job and what they receive from it against the perceived inputs and outcomes of others. Equity theory proposes that people value fair treatment, which motivates them to maintain a similar standard of fairness with their coworkers and the organization. Accordingly, equity structure in the workplace is based on the ratio of inputs to outcomes. Inputs are the employee’s contribution to the workplace. Inputs include time spent working and level of effort but can also include less tangible contributions such as loyalty, commitment, and enthusiasm. Outputs are what the employee receives from the employer and can also be tangible or intangible. Tangible outcomes include salary and job security. Intangible outcomes might be recognition, praise, or a sense of achievement.
Let’s look at Ross and Monica, two employees who work for a large magazine-publishing company doing very similar jobs. If Ross received a raise in pay but saw that Monica was given a larger raise for the same amount of work, Ross would evaluate this change, perceive an inequality, and be distressed. However, if Ross perceived that Monica were being given more responsibility and therefore relatively more work along with the salary increase, then he would see no loss in equality status and not object to the change. An employee will feel that he is treated fairly if he perceives the ratio of his inputs to his outcomes to be equivalent to those around him. Equity theory includes the following primary propositions:
The focus of equity theory is on determining whether the distribution of resources is fair to both relational partners. 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. In other words, Ross perceives equity if Monica makes more money but also has more job responsibilities, because the ratio of inputs (job responsibilities) to outcomes (salary) is about the same. On the other hand, Ross would perceive inequity if the ratio were different—say if Monica made more money for the same job or if Monica made a salary equal to Ross’s but had fewer job responsibilities. When an employee is comparing his input/outcome ratio to his fellow workers’, he will look for other employees with similar jobs or skill sets. For example, Ross would not compare his salary and responsibilities to those of the magazine company’s CEO. However, he might look outside the organization for comparison—for instance, he might visit glassdoor.com to check salaries for positions like his at other publishing houses. Much like other prevalent theories of motivation, such as Maslow’s hierarchy of needs, equity theory acknowledges that subtle and variable factors affect people’s assessment and perception of their standing relative to others. According to Adams, underpayment inequity induces anger, while overpayment induces guilt. Compensation, whether hourly or salaried, is a central concern for employees and is therefore the cause of equity or inequity in most, but not all, cases. In any position, employees want to feel that their contributions and work performance are being rewarded with fair pay. An employee who feels underpaid may experience feelings of hostility toward the organization and perhaps coworkers. This hostility may cause the employee to underperform and breed job dissatisfaction among others. Subtle or intangible compensation also plays an important role in feelings about equity. Receiving recognition and being thanked for strong job performance can help employees feel valued and satisfied with their jobs, resulting in better outcomes for both the individual and the organization. Equity theory has several implications for business managers, as follow:
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© iStockphoto If you pay peanuts, you may get monkeys: find the right balance. Adams' Equity Theory calls for a fair balance to be struck between an employee's "inputs" (hard work, skill level, acceptance, enthusiasm, and so on) and their "outputs" (salary, benefits, intangibles such as recognition, and more). According to the theory, finding this fair balance helps to achieve a strong and productive relationship with the employee, with the overall result being contented, motivated employees. Understanding Adams' Equity TheoryAdams' Equity Theory is named for John Stacey Adams, a workplace and behavioral psychologist, who developed his job motivation theory in 1963. Much like many of the more prevalent theories of motivation (such as Maslow's Hierarchy of Needs and Herzberg's Two-Factor Theory), Adams' Equity Theory acknowledges that subtle and variable factors affect an employee's perception of their relationship with their work and their employer. The theory is built on the belief that employees become de-motivated, both in relation to their job and their employer, if they feel that their inputs are greater than the outputs they receive. Employees can be expected to respond to this in different ways, and may exhibit de-motivation, reduced effort, annoyance, or, in extreme cases, perhaps even disruption. How to Apply the Adams' Equity TheoryAdams' Equity Theory can help you spot ways to improve an employee's job satisfaction and their level of motivation. To do this, consider the balance or imbalance that currently exists between your employee's inputs and outputs, as follows: Inputs typically include:
Outputs typically include:
While many of these points can't be quantified or perfectly compared, the theory argues that managers should aim for a fair balance between the inputs that an employee gives, and the outputs they receive. And according to the theory, employees should be content where they perceive these to be in balance.
For a similar approach to supporting your people's success and sense of satisfaction, see Frederick Herzberg's Motivation/Hygiene Theory.
Much like the five levels of needs determined by Maslow, and the two factors of motivation classified by Herzberg (intrinsic and extrinsic), Adams' Equity Theory states that positive outcomes and high levels of motivation can be expected only when employees perceive their treatment to be fair. This perception of fairness is based on a number of different inputs – what they put into their work – and outputs – what they get back as a result. Adams' Equity Theory is about striking a healthy balance between the two. If the balance lies too far in favor of the employer, some employees may ask for more compensation or recognition. Others will be demotivated. Some may even decide to work elsewhere. |