Equity Theory of Motivation | Management

After reading this article you will learn about the equity theory of motivation.

After inner drives, needs and motives have stimulated the motivation process and the individual has chosen an action that he (she) expects will lead to attainment of a certain goal, the individual assesses the fairness or equity outcomes associated with that goal in light of the effort that will be expended to reach it and the presumed reward linked to it.

Much of the current thinking on equity has been shaped by the equity theory developed by J. Stanley Adams, who contends that people are motivated to seek social equity in the rewards they receive for performance.

The equity theory has received support from research studies. This theory is particularly helpful for understanding job satisfaction. According to this theory people are influenced in their behaviour choices by the relative rewards they receive. The basic assumption of the theory is that either receive or are going to receive. The basic assumption of the theory is that people are motivated by a desire to be equitably treated at work.

In this context, equity is defined as the belief that one is being treated fairly relative to the treatment of others. According to Adams, the outcomes from the job include a pay, recognition, promotions, social relationship and intrinsic rewards. To get these rewards, the individual contrib­utes various inputs to the job, such as time, experience, effort, education and loyalty.

Equity is determined through the calculation of a simple ratio: what effort they are expected to put on the job (their input) in relation to what they can expect to receive after putting that effort (their outcome or reward).

This input-outcome ratio is supposed to provide us with a means of comparison with the ratios of other individuals or groups. Adams believed that an individual compares the ratio of his inputs and outcomes to the input-outcome ratio of another individual who, he thinks, is comparable to him.

Adams used the following formula to express these ideas:

Outcomes/Individual’s own inputs = Outcome/Comparable individual’s inputs

These ratios are arrived at in what is probably a non-quantifiable and subjective way; comparison of the two ratios, is likely to be in precise, but the individuals’ attitudes are affected nonetheless. Three alternatives are possible, the individual may feel equitably rewarded, under rewarded, or over rewarded.

Equity is supposed to exist when the two ratios are equivalent. This may occur even though the other person’s outcomes are greater than the individual’s own outcomes—provided that the other’s inputs are also proportionately greater.

Inequality comes about when, in the employee’s mind, inputs exceed the relative or perceived values of outcomes.

If an individual does not see a balance in the formula, he will become highly dissatisfied and attempt to resolve balance by working more or less efficiently or by trying to obtain greater rewards. The belief, on the basis of comparisons, that an inequality exists, in the form of either underpayment or overpayment, will have possible adverse motivational and behavioural effects on performance.

The key factor is whether an inequality is perceived, not whether it actually exists. Thus, it is clear that the equity theory addresses the issues of both motivation and job satisfaction.

People who feel under rewarded compared with someone else try to reduce the inequity.

There are various ways of reducing inequity:

(1) Decreasing one’s inputs by exerting less effort,

(2) Increasing one’s outcomes by asking for a pay hike,

(3) Distorting the original ratios by rationalizing,

(4) Trying to get the other person to change his (her) outcomes or inputs,

(5) Leaving the situation, and

(6) Changing the object of comparison.

It is also possible for an individual to feel over rewarded relative to the other person. This is likely to have a damaging consequence in the sense that those who experience inequity under these conditions are motivated to reduce it.

Four methods can be used to reduce this kind of inequity:

(1) Increasing one’s inputs by exerting more effort,

(2) Reducing one’s outcomes by producing fewer units, if paid or a per-unit basis,

(3) Distorting the original ratios by rationalising, and

(4) Trying to reduce the inputs or increase the outcomes of the other person.

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