Equity theory (Adam, 1965)
John
Stacey Adams, workplace and behavior psychologist put forward his equity theory
on job motivation in 1965.he states we each seek a fair balance between what we
put into our job and what we get out of it. Adam calls these inputs and
outputs. We form perceptions of what constitutes a fair balance or trade of
inputs and outputs by comparing our own situation with other referents (reference points of
examples) in the market place. We also influenced by colleagues, friends,
partners, in establishing these benchmarks and our own responses to them in
relation to our own ratio of input to output. People need to feel that there is
a fair balance between inputs and outputs.
Inputs are typically;
Effort, loyalty, hard work, commitment,
skills, ability, adaptability, flexibility, tolerance, determination, heart and
soul, enthusiasm, trust in our boss and superiors, support of colleagues and
subordinates and person surface.
Outputs are typically all financial
rewards;
Pay salaries, expenses, perks,
benefits, pensions, arrangements, bonus and commission plus intangibles
recognition, reputation, praise and the risks, interest, responsibility,
stimulus travel, training, development, advancement and promotion.
Equity theory suggests that
employees’ perceptions of a working situation in terms of how fairly they are
treated compared with others influence their levels of motivation; motivation
is a consequence of perceived inequity (Adams, 1965). According to equity
theory, employees make comparisons. Employees determine their own work outcomes
versus the effort or inputs required to achieve the outcomes, and compare these
with outcomes and efforts of other employees. If they recognize that their
compensation is equal to what others receive for similar inputs, they will
believe that their treatment is fair and equitable. Education, experience,
effort and ability are the inputs to the job by the employees. Outcomes that
employees receive from a job are pay, benefits, promotions and rewards etc. A
state of equity refers to the ratio of one person’s outcomes to inputs being
equal to the ratio of another’s outcomes to inputs. Inequity takes place when
the situation is reverse. For example, when an employee with a high level of
education or experience receives the same salary as a new, less educated
employee, he/she may perceive it as inequality. Or perceived inequity may occur
when an employee thinks that he/she is paid more than other people who
contribute the same inputs to the organization. According to a major criticism,
equity theory does not precisely characterize mental processes because it
assumes that humans make mental lists of outcomes and their likelihood and sum
them up systematically.
Adams
(1965) pointed out that perceived inequity creates a tension that can motivate
individuals to bring equity into balance, in four common ways:
i.
Altering effort: Individuals may change their level of input
to the organization. For example, underpaid individuals may decrease their
level of effort or increase their absenteeism. Overpaid individuals may correct
the inequity by working harder or getting more education.
ii.
Altering outcomes: An underpaid person may request a salary
increase, other forms of recognition or a bigger office. A union may try to improve
wages and working conditions in order to be consistent with a comparable union
whose members are paid higher (Samson and Daft, 2002).
iii.
Changing how people think about inputs or outcomes:
According to research, people may alter perceptions of equity if they are
unable to change efforts or outcomes (Samson and Daft, 2002). Thus, individuals
may unnaturally increase the status attached to their jobs or distort others’
perceived rewards to ensure equity.
iv.
Leaving: Individuals who feel they lack equity in the work
place may choose to quit their jobs rather than bearing the inequity of being
underpaid or overpaid. They may seek balance of equity applying for new jobs.
The implication of equity theory for organizations is that, to motivate
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