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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.
If we feel that our ratio of inputs to outputs is less beneficial than the ratio
enjoyed by referent others, then we become demotivated in relation to our
job and employer.
People respond to a feeling of inequity in different ways.
Generally the extent of demotivation is proportional to the perceived
disparity with other people or inequity, 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, resulting in demotivation, or worse, open hostility.
Some people reduce effort and application and become inwardly
disgruntled, or outwardly difficult, recalcitrant or even disruptive. Other
people seek to improve the outputs by making claims or demands for more
reward, or seeking an alternative job.
Understanding Equity Theory - and especially its pivotal comparative aspect
- 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), 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.
Equity Theory reminds us that people see themselves and crucially the way
they are treated in terms of their surrounding environment, team, system,
etc - not in isolation - and so they must be managed and treated
accordingly.
A free fully detailed diagram similar to the image below explaining Adam's
Equity Theory is available in various formats.
When using or referring to the diagram emphasise that the
calibration of the scales - the comparison of input/output ratios -
is the crucial aspect, not merely a judgement of whether rewards
are appropriate for efforts:
click to enlarge