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STACY ADAMS’ EQUITY THEORY

Wai Yan Tun

BBA (YUE), MBA (MEUE)
 What motivates people to work? 2

 Perception of equitability and in-equitability.

 Equity theory focuses on two sides ( Input and outcome).
 Employee compares inputs and outcomes ratio.
 Equity theory deals with human motives.
 Equity theory will help HRD explain employee’s behavior and
provide them how to control employees with efficiently and
effectively.
 That can be applied to any social situation in exchange takes
place.
 Equity is defined as justice and inequity as injustice.
Nature of Equity Theory (Stacy Adam) 3

 Exchange relationship

 “ give something and except something in return”

 Third variable ( coworker, relative, neighbor, group or himself)

 If the employee perceives inequality, will act to correct.

 Motivation is affected by the individual perception of being
treated fairly in comparison to others.
 The employee may lower productivity or reduce the quality.

 Inequities can lead to an increase in absenteeism and even

resignation of an organization.
 Cont’d
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 Inequity exists for an individual when he or she perceives an
imbalance.
 Inequity exists for person whenever he perceives that the ration of
his outcomes to inputs and the ration of others outcomes to others
inputs are unequal.
 Under-benefited and over-benefited.
 The result of inequity is “TENSION”.
 Cont’d

Inputs Outcomes 5

Education, intelligence, experience, Pay, intrinsic rewards, satisfying

training. supervision.

Skills, seniority, age, sex, ethnic Seniority benefits, fringe benefits, job
background status

Social status, job effort, personal Status symbols, job perquisites ,

appearance, health, spouse’s poor working conditions, monotony,
characteristics. fate, uncertainty.

Table has showed what inputs and outcomes are expected.

 Cont’d

 The problem arises if only the employee views a particular input

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and not the employer.

Equity exists

OP/IP = OA/IA
◊ O= the sum of all outcomes, ◊ I= the sum of all inputs,
◊ P= person, ◊ A= other

Inequity exists

OP/IP > OA/IA or OP/IP < OA/IA

 Cont’d
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 Distressing state will move individuals to take action to restore equity.

 The greater the inequity, the more distress individuals feel and the

harder they will try to restore equity (Adams, 1965).

 Decrease inputs and increase outputs.

 Inequity results for people not only when they are relatively underpaid

but also when they are overpaid.

 Consequences of Inequity 8

When employees are not satisfied with their job they react
negatively.
 Dissatisfaction, anger and guilt.
 Getting less of what they except = angry, resentment and dissatisfied.
 Receive more than their worth = guilty, shame, remorse
 Over-rewarded and under-warded
 Means of inequity reduction 9

 Person altering his inputs.

 Person altering his outcomes.
 Person distorting his inputs and outcomes cognitively.
 Person leaving the field.
 Person acting on other.
 Person changing the object of his comparison.
 How to remove inequity? 10

 These emotions are negative and should motivate individuals to move

toward reducing the imbalance.
 Individuals choose different referents determining their pay.
 Perry (1993) found a strong relationship between pay equity and job
satisfaction.
 In research show that, the positive relationship between pay and job
satisfaction, motivation, communication, occupation and performance.
 Pay and promotion are considered the most important outcome.
 Cont’d
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 Pay and promotion are important to provides performance feedback.
 While obviously many of these points can't be quantified and perfectly
compared, the theory argues that managers should seek to find a fair
balance between the inputs that an employee gives, and the outputs
received.
 And according to the theory, employees should be content where they
perceive these to be in balance.
Equity theory 12
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Thank You