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Equity Theory of Motivation

Batul Nafisa Baxamusa
The equity theory of motivation is used to describe the relationship between the employees perception of how fairly is he being treated and how hard he is motivated to work. This article will help you know more on equity theory, the principle of balance or equity.
Motivation is the activation of an energized goal-oriented behavior. It is seen not only humans, but even animals show a level of motivation to achieve their goals. People with a vision always control their destiny and the life they live.
If a person is without a vision in life, he or she is controlled by the will of others and end up living a life not their own, but one that is on terms dictated by others. Everyone takes up a job as they are motivated by some factor or the other.
Some are motivated by the challenge they will face in carrying out their job, some are motivated by the level of fame they may earn, others and majority of people are motivated by the money they will earn.
The last factor plays a major role in making or breaking a company. People will work better when they are motivated enough with the pay scale, the incentives and the perks they are offered in return of a job well done.

Introduction to Equity Theory

There was a time when employers thought employees to be just another input required for production of output, that is, goods and services. This thinking was changed with the research conducted known as Hawthorne Studies, by Elton Mayo from 1924 to 1932.
This study showed that employees are not just motivated by the money, but their attitudes as well. Thus, the Hawthorne Studies initiated the human relations approach to management and the needs and motivation of employees was the primary concenter of managers.

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Equity theory helps propose the idea about individuals who think of themselves as over-rewarded or under-rewarded. These individuals will experience distress that tries to restore balance. Equity thus measures the contributions and benefits earned by each individual.
It is not necessary one needs to put in exactly the same contribution as the other partner, as long as there is a balance between contributions and benefits. Thus, every individual employee feels his contribution and work needs to be rewarded with equal pay.
If the individual feels underpaid, s/he will come under distress and feel hostile towards the company. To avoid this feeling of hostility, equity theory comes into play.

What is Equity?

When individuals think their inputs are rewarded according to their outputs and is equal to others around them, they are satisfied. But when they notice others are getting more recognition and rewards, in spite of doing the same amount of work, they become dissatisfied.
This leads to feelings of unworthiness and under-appreciation. This is the opposite of equity, wherein the outcome (rewards) are directly proportional to the quality and quantity of work of the employee.
When all employees are rewarded equally, the general feeling about the organization becomes fair and appreciable. The following equation will help explain what is equity in a clear and concise manner:
Individual's outcome / Individual's own input = Rational partner's outcome / Rational partner's input

Equity Theory Examples

As the main focus of the researchers moved towards employees and their motivation factors, following the Hawthorne Study results, there were many theories put forward to understand employee motivation. The following are the five major equity theory examples that have helped in understanding motivation.
  • Maslow's Need-Hierarchy Theory: Maslow put forward five levels of needs of employees. These needs included physiological, safety, ego and self-actualizing. Maslow put forward an argument that said the lower level needs of employees need to be satisfied before the next higher level need is fulfilled to motivate them. 
  • The motivation was categorized into factors by Herzberg; motivators and hygiene. The motivators including intrinsic factors like achievement and recognition help produce job satisfaction. The hygiene or extrinsic factors like pay and job security lead to job dissatisfaction.
  • Vroom's Theory: This theory was based on the belief that employee effort leads to performance and performance leads to rewards. These rewards can be positive or negative. The positive rewards lead to a more positive employee who is highly motivated. The negative rewards lead to obviously a less motivated employee.
  • Skinner's Theory: This theory states that the positive outcomes will be repeated and behavior that lead to negative outcome won't be repeated. Thus, managers should try to reinforce the employee behavior, such that it leads to positive outcomes. Negative reinforcement by managers will lead to negative outcomes.
  • Adam's Equity Theory Model: This theory shows that employees strive to achieve equity between themselves and their coworkers. This equity can be achieved when the ratio of employee outcomes over inputs is equal to other employee outcomes over inputs.

Adam's Equity Theory of Motivation

Psychologist John Stacey Adams put forward his equity theory model in 1962. He puts emphasis on the importance of determining motivation as relative and not an absolute factor. The theory deals with one's own perception and not any other objective indicator.
Like the other more prevalent theories of motivation mentioned above, the Adam's theory recognizes the variable factors that can affect employee's assessment and perception of their relationship with their work and the employer.
This theory was created on the belief that employees are demotivated in relation to their job and employer if their inputs are greater than the outputs. Employees respond their demotivation in form of reduced effort, increase dissatisfaction and may even become disruptive.

Equity Equations

Overpayment Inequity
Outcomes(self) / Inputs (self) > Outcomes (other) / Inputs (other)
Underpayment Inequity
Outcomes(self) / Inputs (self) < Outcomes (other) / Inputs (other)

-Outcomes(self) / Inputs (self) = Outcomes (other) / Inputs (other)

Application of Equity Theory of Motivation

When a manager is striving to achieve employee satisfaction, motivation levels, etc. then he should consider Adam's Equity Theory. Therefore, he should consider the balance and imbalance that is seen in the inputs and outputs of the employee. When we talk about equity theory, we use the terms input and output.
This input helps determine his/her reward or pay. Some of the inputs made by an individual towards his/her organization include:
  • Ability to do his/her job
  • Adaptability around the company environment
  • Flexibility
  • Tolerance
  • Determination

  • Enthusiasm to complete a task or job
  • Commitment towards his/her work and organization
  • Hard work
  • Loyalty
  • Time given to the company
  • Efforts take to complete tasks as required
  • Personal sacrifice
  • Trusting superiors when it comes to delegation and management
  • Support given and taken from colleagues
Outputs are the tangible and intangible rewards or pay given to an individual based on his/her inputs. These outputs include:
  • Thanks
  • Responsibility entrusted upon an individual
  • Employee benefits
  • Salary received in accordance to company policy, experience and work done
  • Job security
  • Recognition for work done
  • Praise received
  • Increase in reputation

How to Inoculate it in an Organization

Employees compare themselves with other employees who do not put in the inputs that are equal to the outputs they receive. They tend to compare themselves with other employees to find out if they are being treated fairly.
Employees may seek a balance between their inputs and outputs and it is not always possible to give them correct balance. To give a fair outcome to all employees, the managers should try to understand the employees better. They should know what the employee are aiming for and try to give them the best possible reward they expect.
Basically managers, should understand what is to be done and the actions taken that will help motivating the employees. Managers should try to tie the rewards to employee performance. It means when the rewards should match the amount of performance put forward by the employee.
The managers should hold regular meetings with the employees and discuss goal setting and personal development. They should be able to set goals for their team and help them create a personal development plan. A reward and recognition plan will help in increasing good performance that is noticed and shared by employees.
It is not possible for the manager to treat each employee equally. You need to recognize the rewards that motivate individual employee. You can consider equity theory examples like flexible working hours for a working mothers or across the board wage increase or giving responsibility with some amount of authority.
In the end, research has shown that it works when over-rewarded employees produce more high quality service and under-rewarded employees tend to decrease their input.