Equity Theory - Balancing Employee Inputs and Outputs

Hello group4 Presentation
Equity Theory
1 Balancing Employee Inputs and Outputs
2 Exchange Scenarios
3
Equity Theory Applications
4 Strategies for
Resolution of Inequity
5 Conclusion
Balancing Employee Inputs and Outputs
Inputs Outputs
 Effort  Financial rewards (salary,
 Loyalty benefits, perks, etc.)
 Hard Work  Intangibles that include:
 Personal sacrifice Recognition, Reputation,
Responsibility, Sense of
 Skill Achievement, Praise, Job
 Ability security, Stimulus, Sense
 Adaptability of achievement/growth.
 Flexibility
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Exchange Scenarios
Equity
Equity Theory –
Inequity -- Underpayment Various
circumstances
Inequity - Overpayment
Equity Theory – various circumstances
 Case 1: Equity -- pay allocation is
perceived to be fair - motivation is
sustained
 Case 2: Inequity -- Underpayment.
Employee is motivated to seek justice.
Work motivation is disrupted.
 Case 3: Inequity - Overpayment. Could
be problem. Inefficient. In other cultures
employees lose face.
Causes of inequality
 The labor market
 Innate ability
 Education
 Race, and culture
Consequences and effects of Inequity
 Social cohesion
 Economic incentives
 Economic growth
Strategies for
Resolution of Inequity
 Alter the person’s outcomes
 Alter the person’s inputs
 Alter the comparison other’s outputs
 Alter the comparison other’s inputs
 Change who is used as a comparison
other
 Rationalize the inequity
 Leave the organizational situation
Equity Theory Applications
 Develop tools to pay people in proportion
to their contributions
 Let employees know who their pay
referents are in the pay system: identify
pay competitors and internal pay
comparators.
 Strive for consistent pay allocations
 Monitor internal pay structure and position
in the labor market for consistency.
LOGO
Key Points
 Much like the five levels of needs determined by Maslow
and the two factors of motivation as classified by
Herzberg (intrinsic and extrinsic), the Adams Equity
Theory of motivation states that positive outcomes and
high levels of motivation can be expected only when
employees perceive their treatment to be fair. An
employee’s perception of this may include many factors.
Key Points
 The idea behind Adams’ Equity Theory is to strike a
healthy balance here, with outputs on one side of the
scale; inputs on the other - both weighing in a way that
seems reasonably equal.
 If the balance lies too far in favor of the employer, some
employees may work to bring balance between inputs
and outputs on their own, by asking for more
compensation or recognition. Others will be demotivated,
and still others will seek alternative employment
Conclusion
 If the balance lies too far in favor of the employer, some employees
may work to bring balance between inputs and outputs on their own,
by asking for more compensation or recognition. Others will be
demotivated, and still others will seek alternative employment
LOGO
 THANKS FOR LISTENING
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Equity Theory - Balancing Employee Inputs and Outputs

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Hello group4 Presentation

1 Balancing Employee Inputs and Outputs

 THANKS FOR LISTENING

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