Equity Theory of Motivation

• Adam’s Equity Theory, also known as the Equity Theory of Motivation, was developed in 1963 by John Stacey Adams, a workplace behavioural psychologist.
• Equity theory proposes that all individuals compare their level of job inputs and outcomes with those of others and then actively seek to eliminate any inequities.
• 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 dissatisfaction and demotivation.

Core Idea: People tend to measure their inputs to the job and the outputs their receive from it with the inputs and outputs of others in their group. If this is unequal in any way, they try to restore balance, and that is a force of motivation.

Terminology

1. Equity refers to a sense of fairness and justice in the distribution of rewards and resources.
2. Inputs are the contributions an individual puts into their work, such as effort, skills, experience and dedication.
3. Outcomes are the rewards an individual receives for their inputs, such as salary, bonuses, promotions, recognition and job satisfaction.
4. Comparison is what individuals make between their input/output ratios and others’ input/output ratios. If these ratios are perceived unequal, this affects motivation and induces feelings of inequity.

Types of inequity

Underpayment inequity

$\frac{Perso{n}^{\prime }sOutcome}{Perso{n}^{\prime }sInput}<\frac{Other{s}^{\prime }Outcome}{Other{s}^{\prime }Input}$

• This is when an individual perceives that his outcomes are less as compared to his inputs in relation to others.
• To achieve equity in this case, the employee might alter his inputs (effort and commitment) or alter his output (asking for a raise), or reinterpreting the situation or leaving the situation (exiting the company)

Overpayment inequity

$\frac{Perso{n}^{\prime }sOutcome}{Perso{n}^{\prime }sInput}>\frac{Other{s}^{\prime }Outcome}{Other{s}^{\prime }Input}$

• This is when an individual perceives that his outcomes are more as compared to his inputs in relation to others.
• This might demotivate them from putting their all, so they might alter their inputs to be reduced.

Achieving Equity

$\frac{Perso{n}^{\prime }sOutcome}{Perso{n}^{\prime }sInput}=\frac{Other{s}^{\prime }Outcome}{Other{s}^{\prime }Input}$ An individual is said to be highly motivated if he is being treated fairly.