Equity theory on job motivation - j stacey adams John Stacey Adams, a workplace and behavioural psychologist, put forward

his Equity Theory on job motivation in 1963. There are similarities with Charles Handy's extension and interpretation of previous simpler theories of Maslow, Herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of their relationship with their work, and thereby their employer. However, awareness and cognizance of the wider situation - and crucially comparison - feature more strongly in Equity Theory than in many other earlier motivational models. The Adams' Equity Theory model therefore extends beyond the individual self, and incorporates influence and comparison of other people's situations - for example colleagues and friends - in forming a comparative view and awareness of Equity, which commonly manifests as a sense of what is fair. When people feel fairly or advantageously treated they are more likely to be motivated; when they feel unfairly treated they are highly prone to feelings of disaffection and demotivation. The way that people measure this sense of fairness is at the heart of Equity Theory. Equity, and thereby the motivational situation we might seek to assess using the model, is not dependent on the extent to which a person believes reward exceeds effort, nor even necessarily on the belief that reward exceeds effort at all. Rather, Equity, and the sense of fairness which commonly underpins motivation, is dependent on the comparison a person makes between his or here reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar situation. Adams' equity theory Adams called personal efforts and rewards and other similar 'give and take' issues at work respectively 'inputs' and 'outputs'. Inputs are logically what we give or put into our work. Outputs are everything we take out in return. These terms help emphasise that what people put into their work includes many factors besides working hours, and that what people receive from their work includes many things aside from money. Adams used the term 'referent' others to describe the reference points or people with whom we compare our own situation, which is the pivotal part of the theory. Adams Equity Theory goes beyond - and is quite different from merely assessing effort and reward. Equity Theory adds a crucial additional perspective of comparison with 'referent' others (people we consider in a similar situation). Equity theory thus helps explain why pay and conditions alone do not determine motivation. In terms of how the theory applies to work and management, we each seek a fair balance between what we put into our job and what we get out of it. But how do we decide what is a fair balance? The answer lies in Equity Theory. Importantly we arrive at our measure of fairness - Equity - by comparing our balance of effort and reward, and other factors of give and take - the ratio of input and output - with the balance or ratio enjoyed by other people, whom we deem to be relevant reference points or examples ('referent' others).

. who very probably earn less. hard work.Crucially this means that Equity does not depend on our input-to-output ratio alone . and yet with no change to their terms and working conditions can be made very unhappy and demotivated. Note also. and if the part-timer is perceived to enjoy a more advantageous ratio. in establishing their own personal sense of fairness or equity in their work situations. their personal motivation. and with it. In practice this helps to explain why people are so strongly affected by the situations (and views and gossip) of colleagues..which counts. People need to feel that Outputs are typically all financial loyalty. invests. sacrifices.reward-to-effort . however it is the ratio of input-to-output . if they learn for example that a colleague (or worse an entire group) is enjoying a better reward-to-effort ratio. not the amount of effort or reward per se. We form perceptions of what constitutes a fair ratio (a balance or trade) of inputs and outputs by comparing our own situation with other 'referents' (reference points or examples) in the market place as we see it. The actual sense of equity or fairness (or inequity or unfairness) within Equity Theory is arrived at only after incorporating a comparison between our own input and output ratio with the input and output ratios that we see or believe to be experienced or enjoyed by others in similar situations. there is a fair balance rewards . and all aspects of what a person receives and benefits from in their work and wider career. etc.pay. Equity Theory explains why people can be happy and motivated by their situation one day. Adams' Equity Theory is therefore a far more complex and sophisticated motivational model than merely assessing effort (inputs) and reward (outputs). For example. partners etc. into their work situation. This explains for example why and how full-time employees will compare their situations and input-to-output ratios with part-time colleagues. expenses. Remember also that words like efforts and rewards. This comparative aspect of Equity Theory provides a far more fluid and dynamic appreciation of motivation than typically arises in motivational theories and models based on individual circumstance alone. or work and pay. are an over-simplification hence Adams' use of the terms inputs and outputs. which more aptly cover all aspects of what a person gives. as they see it.. friends. then so this will have a negative effect on the full-timer's sense of Equity. inputs equity outputs dependent on comparing own ratio of input/output with ratios of 'referent' others Inputs are typically: effort.it depends on our comparison between our ratio and the ratio of others. importantly. salary. It also explains why giving one person a promotion or pay-rise can have a demotivating effect on others. that what matters is the ratio. tolerates.

bonus and commission . etc .commitment.is the crucial aspect. if the change is perceived by other people to upset the Equity of their own situations then the solution can easily generate far more problems than it attempted to fix. team. Other people seek to improve the outputs by making claims or demands for more reward. adaptability. Some people reduce effort and application and become inwardly disgruntled. pension arrangements. interest. A free fully detailed diagram similar to the image below explaining Adam's Equity Theory is available in various formats. promotion. training. development. determination. recalcitrant or even disruptive.not in isolation . praise and thanks. skill. system.and especially its pivotal comparative aspect . between inputs and outputs. perks. If we feel are that inputs are fairly rewarded by outputs (the fairness benchmark being subjectively perceived from market norms and other comparable references) then generally we are happier in our work and more motivated to continue inputting at the same level. etc. heart and soul. resulting in demotivation. responsibility. reputation. enthusiasm. etc. travel.and so they must be managed and treated accordingly. flexibility. but for some people just the smallest indication of negative disparity between their situation and other people's is enough to cause massive disappointment and a feeling of considerable injustice. People respond to a feeling of inequity in different ways. When using or referring to the diagram emphasise that the calibration of the scales . tolerance. support of colleagues and subordinates. then we become demotivated in relation to our job and employer. Understanding Equity Theory . open hostility. If we feel that our ratio of inputs to outputs is less beneficial than the ratio enjoyed by referent others. not merely a judgement of whether rewards are appropriate for efforts: . or worse.plus intangibles recognition. with the ratio enjoyed or endured by relevant ('referent') others. benefits. Crucially fairness is measured by comparing one's own balance or ratio between inputs and outputs. Equity Theory reminds us that people see themselves and crucially the way they are treated in terms of their surrounding environment. Generally the extent of demotivation is proportional to the perceived disparity with other people or inequity.helps managers and policy-makers to appreciate that while improving one person's terms and conditions can resolve that individual's demands (for a while). ability. personal sacrifice. or seeking an alternative job. trust in our boss and superiors. stimulus.the comparison of input/output ratios . sense of achievement and advancement. or outwardly difficult.

As per this motivation theory. an individual’s motivation level is correlated to his perception of equity. The core of the equity theory is the principle of balance or equity.This interpretation of Adams' Equity Theory was updated and improved in December 2007. Thanks NT for your guidance in making these improvements. While evaluating fairness. employee compares the job input (in terms of contribution) to outcome (in terms of compensation) and also compares the same with that of another peer of equal cadre/category. D/I ratio (output-input ratio) is used to make such a comparison. fairness and justice practiced by the management. The previous summary failed to emphasise the pivotal significance of the comparative aspect within the theory. greater is the motivation level and vice versa. Equity Theory Ratio Comparison O/I a < O/I b O/I a = O/I b O/I a > O/I b Perception Under-rewarded (Equity Tension) Equity Over-rewarded (Equity Tension) . Higher is individual’s perception of fairness.

These referents are as follows: Self-inside: An employee’s experience in a different position inside his present organization.I know that I’ve performed better and harder than everyone else.Stacy Adams called this a negative tension state which motivates him to do something right to relieve this tension. they are likely to compare themselves with the outsiders.Jack’s job is not as desirable as I earlier thought it was. while employees with less experience rely on their personal experiences and knowledge for making comparisons. 1. Other-outside: Another employee or employees outside the employee’s present organization. salary. Moderating Variables: The moderating variables. 3. A comparison has been made between 2 workers A and B to understand this point. An employee might compare himself with his peer within the present job in the current organization or with his friend/peer working in some other organization or with the past jobs held by him with others. Don’t overexert) Change their outcome (Produce quantity output and increasing earning by sacrificing quality when piece rate incentive system exist) Choose a different referent Quit the job Change self-perception (For instance .) .) Change perception of others (For instance . While if this ratio is unequal. The referent chosen is a significant variable in equity theory. Other-inside: Another employee or group of employees inside the employee’s present organization. An employee’s choice of the referent will be influenced by the appeal of the referent and the employee’s knowledge about the referent. Thus. it leads to “equity tension”. J. Thus. Experience: Employees with greater experience know their organization very well and compare themselves with their own colleagues. 2. Self-outside: An employee’s experience in a situation outside the present organization.Males and females prefer same sex comparison. Referents OR Comparators: The four comparisons an employee can make have been termed as “referents” according to Goodman. Gender . It has been observed that females are paid typically less than males in comparable jobs and have less salary expectations than male for the same work. gender. a women employee that uses another women employee as a referent tends to lead to a lower comparative standard.Negative Tension state: Equity is perceived when this ratio is equal. education and the experience level are Education: Individuals with greater and higher education are more informed. Choices: The employees who perceive inequity and are under negative tension can make the following choices: Change in input (e.g.

Considered one of the justice theories. by directly altering inputs and/or outputs.  Employees who perceive themselves as being in an inequitable scenario will attempt to reduce the inequity either by distorting inputs and/or outcomes psychologically. Equity theory From Wikipedia.2 Fairness Model 3. the free encyclopedia Equity theory is a theory that attempts to explain relational satisfaction in terms of perceptions of fair/unfair distributions of resources within interpersonal relationships.  Employees decide what their equitable return should be after comparing their inputs and outcomes with those of their colleagues. 1965).1 Assumptions of equity theory applied to business 2.2. or by quitting the organization. The belief is that people value fair treatment which causes them to be motivated to keep the fairness maintained within the relationships of their coworkers and the organization.  Employees expect a fair and equitable return for their contribution to their jobs. The structure of equity in the workplace is based on the ratio of inputs to outcomes. equity theory was first developed in 1963 by John Stacey Adams.2.2 Implications for managers 3 Criticisms and related theories o o o    3. 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.Assumptions of the Equity Theory  The theory demonstrates that the individuals are concerned both with their own rewards and also with what others get in their comparison.3 Equity Theory and Game Theory 4 See also 5 References 6 Literature Background[edit] . Contents [hide]  1 Background o o 1.1 Definition of equity 1.3 Propositions 2 Equity theory in business o o  2.1 Inputs 1. Inputs are the contributions made by the employee for the organization.2 Inputs and outcomes   o  1.2 Outcomes 1.1 Equity Sensitivity Construct 3. a workplace and behavioral psychologist.

This can be illustrated by the following equation: 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.Equity theory proposes that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress. In any position. Partners do not have to receive equal benefits (such as receiving the same amount of love. This is in direct contrast with the idea of equity theory. anger is induced by underpayment inequity and guilt is induced with overpayment equity (Spector 2008). Thus. 2007). 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. 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. This dissatisfaction would result in the employee feeling underappreciated and perhaps worthless. It focuses on determining whether the distribution of resources is fair to both relational partners. which may result in the employee not performing well at work anymore. and appreciative. it would be acceptable for a more senior colleague to receive higher compensation. If an employee feels underpaid then it will result in the employee feeling hostile towards the organization and perhaps their co-workers. even when both have done the same amount and quality of work. The entitlement to rewards or costs ascribed to each input vary depending on the relational setting. care. since the value of his experience (and input) is higher. Payment whether hourly wage or salary. and that this distress leads to efforts to restore equity within the relationship. observant. an employee wants to feel that their contributions and work performance are being rewarded with their pay. it would help the workforce realize that the organization is fair. The way people base their experience with satisfaction for their job is to make comparisons with themselves to people they work with. In social settings. Much like other prevalent theories of motivation. The inputs that a participant contributes to a relationship can be either assets – entitling him/her to rewards – or liabilities .. Equity is measured by comparing the ratios of contributions and benefits of each person within the relationship. such as Maslow’s hierarchy of needs. In industrial settings. and financial resources). Definition of equity[edit] An individual will consider that he is treated fairly if he perceives the ratio of his inputs to his outcomes to be equivalent to those around him. If an employee notices that another person is getting more recognition and rewards for their contributions. . time. is the main concern and therefore the cause of equity or inequity in most cases. as long as the ratio between these benefits and contributions is similar. According to Adams (1965). and financial security) or make equal contributions (such as investing the same amount of effort.entitling him/her to costs. assets such as capital and manual labor are seen as "relevant inputs" – inputs that legitimately entitle the contributor to rewards. the idea is to have the rewards (outcomes) be directly related with the quality and quantity of the employees contributions (inputs). If both employees were perhaps rewarded the same. it would persuade the employee to be dissatisfied. all else being equal.

When the ratio of inputs to outcomes is close. Traupmann & Walster. 1978).assets such as physical beauty and kindness are generally seen as assets entitling the possessor to social rewards. Inputs typically include any of the following:                Time Effort Loyalty Hard Work Commitment Ability Adaptability Flexibility Tolerance Determination Enthusiasm 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. Individual traits such as boorishness and cruelty are seen as liabilities entitling the possessor to costs (Walster. Outputs can be both tangible and intangible.[1] Typical outcomes include any of the following:            Job security Salary Employee benefit Expenses Recognition Reputation Responsibility Sense of achievement Praise Thanks Stimuli Propositions[edit] Equity theory consists of four propositions: . than the employee should have much satisfaction with their job.

or by leaving the organization. either by distorting inputs and/or outcomes in their own minds ("cognitive distortion"). the theory has wide-reaching implications for employee morale. productivity. benefits. This concept is referred to as “social comparison”. the more distress individuals feel. When individuals find themselves participating in inequitable relationships. 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: 1. expertise. both the person who gets “too much” and the person who gets “too little” feel distressed. 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. 1978) . 1978). Equity theory in business. Individuals who perceive that they are in an inequitable relationship attempt to eliminate their distress by restoring equity.1. perquisites (“perks”). (Walster. injustice. The greater the inequity. In a business setting. and interpersonal skills. qualifications. 2. Employees who perceive inequity will seek to reduce it. or more specifically. These perceptions of inequity are perceptions of organizational justice. experience. Groups can maximize collective rewards by developing accepted systems for equitably apportioning rewards and costs among members. The person who gets too little may feel angry or humiliated. Systems of equity will evolve within groups. the relevant dyadic relationship is that between employee and employer. The more inequitable the relationship. 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”) . 1965). According to equity theory. and turnover. As in marriage and other contractual dyadic relationships. The only way groups can induce members to equitably behave is by making it more profitable to behave equitably than inequitably. Subsequently. they become distressed. Employees determine what their equitable return should be after comparing their inputs and outcomes with those of their coworkers. however. groups will generally reward members who treat others equitably and generally punish (increase the cost for) members who treat others inequitably. Inputs in this context include the employee’s time. [2] 2. introduces the concept of social comparison. Individuals seek to maximize their outcomes (where outcomes are defined as rewards minus costs). 1978) Equity theory 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. 4. or leaving the organization (Carrell and Dittrich. the more distress people feel and the more they try to restore equity. directly altering inputs and/or outcomes. Traupmann and Walster. a concept referred to as the “equity norm”. Employees expect a fair return for what they contribute to their jobs. 3. intangible personal qualities such as drive and ambition. The person who gets too much may feel guilt or shame. whereby employees evaluate their own input/output ratios based on their comparison with the input/outcome ratios of other employees (Carrell and Dittrich. Outcomes include monetary compensation. and flexible work arrangements. (Carrell and Dittrich. and members will attempt to induce other members to accept and adhere to these systems. by directly altering inputs and/or outputs. Thus. efficiency. 3. 1978).

. Thus a teacher from Alberta may accept lower compensation than his colleague in Toronto if his cost of living is different. Furthermore. This means a working mother may accept lower monetary compensation in return for more flexible working hours.  Although it may be acceptable for more senior staff to receive higher compensation. but also in terms of the overarching system that determines those inputs and outputs. those who prefer their own input/outcome ratios to be less than those of their relational partner. Scholars have questioned the simplicity of the model. Hatfield & Miles. It may be that he or she internalizes a sense of superiority and actually decrease his efforts. 1987). 1978). arguing that a number of demographic and psychological variables affect people's perceptions of fairness and interactions with others. one might feel that his or her compensation is equitable to other employees'. 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 differently to perceived equity and inequity. Thus. in a business setting. but one might view the entire compensation system as unfair (Carrell and Dittrich. the benevolent prefers to be under-benefitted. Three archetypal classes are as follows:  Benevolents. and perceptions need to be managed effectively.  Different employees ascribe personal values to inputs and outcomes. Preferences can be expressed on a continuum from preferences for extreme under-benefit to preferences for extreme over-benefit. Critics have also argued that people might perceive equity/inequity not only in terms of the specific inputs and outcomes of a relationship. 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. However he may also adjust the values that he ascribes to his own personal inputs. there are limits to the balance of the scales of equity and employees can find excessive executive pay demotivating. Criticisms and related theories[edit] Criticism has been directed toward both the assumptions and practical application of equity theory.Implications for managers[edit] Equity theory has several implications for business managers:  People measure the totals of their inputs and outcomes.  Staff perceptions of inputs and outcomes of themselves and others may be incorrect. much of the research supporting the basic propositions of equity theory has been conducted in laboratory settings. In other words.  An employee who believes he is overcompensated may increase his effort. and thus has questionable applicability to real-world situations (Huseman.  Employees are able to adjust for purchasing power and local market conditions. while a teacher in a remote African village may accept a totally different pay structure.

According to the Fairness Model. . (Huseman. those who prefer their own input/outcome ratios to be equal to those of their relational partner. 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. 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. For instance. the entitled prefers to be over-benefitted. Equity Sensitives. Equity Theory and Game Theory[edit] Behavioral economics has recently started to apply game theory to the study equity theory. In other words. 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).  Entitleds. an individual judges the overall "fairness" of a relationship by comparing their inputs and outcomes with an internally derived standard. Hatfield & Miles. those who prefer their own input/outcome ratios to exceed those of their relational partner.