EQUITY THEORY

OF MOTIVATION
GROUP 9:
QUESTIONS TO ANSWER

Explain the equity theory of motivation

Agree or disagree with the outcomes of

inequity

Explain the research findings on the equity

theory
 HIGHLIGHTS

01
Equity Theory of Motivation
02 Concept

The Theory in the Organizational Settings

03

Consequences of the Theory’s Outcome

04

Application of the Theory in the Workplace

 Equity Theory of Motivation

Developed in 1963 by It shows the relationship

John Stacey Adams between Inputs and
Outcomes

It Indicates that, what The theory suggests that

one receives for their employees compare their
work has a direct effect job inputs and outcomes
on their motivation. against that of relevant
others

Positive outcomes and The theory seeks to strike a

high levels of motivation healthy balance between
can be expected only when the outcome and inputs
employees perceive their
treatment to be fair
Equity Theory of Motivation – INPUTS vrs
OUTCOMES
Inputs
• Spends 3 HOURS every
day to learn B-
• Attends lectures every day
• Pays attention in class

S
AM
EX

Student A

Inputs
• Spends 30 MINUTES every
day to learn
• Attends lectures twice a week
A+ • Does not pay attention in
class

Student B
Equity Theory of Motivation (Mathematical Illustration)
Scenario 1

EMPLOYEE REFERENT

INPUT 5 4

OUTCOME 10 8

RATIO (Outcome :
Input) 10 : 5 = 2 8:4=2
Equity Theory of Motivation (Mathematical Illustration)
Scenario 2

EMPLOYEE REFERENT

INPUT 5 3

OUTCOME 6 5

RATIO (Outcome :
Input) 6 : 5 = 1.2 5 : 3 = 1.67
Equity Theory of Motivation (Mathematical Illustration)
Scenario 3

EMPLOYEE REFERENT

INPUT 5 6

OUTCOME 12 10

RATIO (Outcome :
Input) 6 : 5 = 2.4 5 : 3 = 1.67
Equity Theory of Motivation – Organizational Setting
Equity Theory of Motivation: INPUTS & OUTPUTS
INPUTS

 Efforts
 Experience
 Educational Level
 Competency

OUTCOMES
Creativity
 Loyalty
 Enthusiasm for Work INPUT  Salary Levels
OUTCOME 


Time Commitments S S 
Pay Raise
Recognition
Skills
 Personal Sacrifice  Working Conditions
 Improved Reputation
 Job Security
 Sense of Growth

The comparison of the outcome-input ratio to that of relevant others indicates the perception of :

1) Fairness / Equity 2) Positive Inequity 3) Negative Inequity

Equity Theory of Motivation: Inputs vrs Outcomes

Employee Referent

Outcome Outcome
Inputs = Inputs
EQUITY

Outcome Outcome
Inputs > Inputs INEQUITY (Over-Rewarded)

Outcome Outcome
Inputs < Inputs INEQUITY (Under-Rewarded)
Equity Theory of Motivation – Equity / Fairness

A person obtains the feeling of

EQUITY / FAIRNESS when his
outcome / input ratio is equal to
another person’s outcome/input ratio

These group of persons are said to

feel satisfied
Equity Theory of Motivation – Positive Inequity
A person obtains the feeling of
POSITIVE INEQUITY when his
outcome / input ratio is MORE
THAN a referent person’s
outcome/input ratio

• These group of persons are said to

have a sense of shame or guilt
• May Increase their efforts / Inputs
to re-introduce fairness
Equity Theory of Motivation – Negative Inequity

A person obtains the feeling of

NEGATIVE INEQUITY when his
outcome / input ratio is LESS THAN
a referent person’s outcome/input
ratio

These group of persons are said to

feel angry and dissatisfied

• Seek to Negotiate for higher reward

within or outside the organization
• Increase their Inputs
• May make them lose self-esteem
 Equity Theory of Motivation – Consequences of Inequity
When employees perceive inequity, they can predicted to make one of six choices:

Change Change Distort

their their perception
inputs Outcomes of self

01 02 03

Distort Choose a Leave the

perceptions different field
of Others Referent

04 05 06
Equity Theory of Motivation – Application to
Business as Managers

Ensure a fair balance among team

members

Make sure you offer comparable

compensation

Know what your team values

 Equity Theory of Motivation:
Outcomes of Inequity (Extent of Agreement as Group 9)

POSITIVE INEQUITY NEGATIVE

INEQUITY

We agree with this outcome to the We turn to agree with this

extent that, people will have the outcome because people’s
feeling of guilt when they receive perception about what they
more than they ought to ought to receive per what they
give holds is always positive.

We disagree with this outcome to Hence, a negative outcome will

the extent that, most people demotivate them
overlook the “over-payment” and
continue with what they do
Equity Theory of Motivation – Research Findings
General Accepted Theory with a few Minor Qualification

Inequities created by Not everyone is equity

overpayment do not sensitive hence predictions
seem to have significant from the theory may not
impact on behaviour be accurate about these
persons

Failure to consider the

number of demographic and
psychological variables that
have affect people’s
perceptions of fairness and
interactions with others.
THANK YOU