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Equity theory
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Equity theory
In management studies and in social policy, equity theory focuses on determining whether the distribution of resources is fair. Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person within an organization or social context. Considered one of the justice theories,[clarification needed] equity theory was first developed in the 1960s by John Stacey Adams, a workplace and behavioral psychologist, who asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others. According to Equity Theory, in order to maximize individuals' rewards, we tend to create systems where resources can be fairly divided amongst members of a group. Inequalities in relationships will cause those within it to be unhappy to a degree proportional to the amount of inequality. The belief is that people value fair treatment which causes them to be motivated to keep the fairness maintained within the relationships of their co-workers and the organization. The structure of equity in the workplace is based on the ratio of inputs to outcomes. Inputs are the contributions made by the employee for the organization. The theory can also be applied in a wider social context.
Equity theory stems from Social Exchange Theory. It proposes that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship.[citation needed] Equity is measured by comparing the ratios of contributions and benefits of each person within the relationship.[citation needed] Partners do not have to receive equal benefits (such as receiving the same amount of love, care, and financial security) or make equal contributions (such as investing the same amount of effort, time, and financial resources),[citation needed] as long as the ratio between these benefits and contributions is similar. Much like other prevalent theories of motivation, such as Maslow’s hierarchy of needs, equity theory acknowledges that subtle and variable individual factors affect each person's assessment and perception of their relationship with their relational partners. According to Adams in 1965, anger is induced by underpayment inequity and guilt is induced with overpayment equity. Payment, whether hourly wage or salary, is the main concern and therefore the cause of equity or inequity in most cases.[citation needed]
In any position, an employee wants to feel that their contributions and work performance are being rewarded with their pay. If an employee feels underpaid then it will result in the employee feeling hostile towards the organization and perhaps their co-workers, which may result in the employee not performing well at work anymore. It is the subtle variables that also play an important role in the feeling of equity. Just the idea of recognition for the job performance and the mere act of thanking the employee will cause a feeling of satisfaction and therefore help the employee feel worthwhile and have better outcomes.[citation needed] Employees can also feel positive inequity which may cause the worker to feel guilty and attempt to compensate for those feelings of guilt.
Individuals compare their job inputs and outcomes with those of others and then respond to eliminate any perceived inequities.[citation needed] Referent comparisons. This can include compensation, promotions, how hard or long they work.
Inputs are defined as each participant’s contributions to the relational exchange and are viewed as entitling them to rewards or costs.[citation needed] The inputs that a participant contributes to a relationship can be either assets – entitling them to rewards – or liabilities - entitling them to costs.[citation needed] The entitlement to rewards or costs ascribed to each input vary depending on the relational setting.[citation needed] In industrial settings, assets such as capital and manual labor are seen as "relevant inputs" – inputs that legitimately entitle the contributor to rewards. In social settings, assets such as physical beauty and kindness are generally seen as assets entitling the possessor to social rewards.[citation needed] Individual traits such as boorishness and cruelty are seen as liabilities entitling the possessor to costs. Inputs typically include any of the following:
Outputs are defined as the positive and negative consequences that an individual perceives a participant has incurred as a consequence of their relationship with another. When the ratio of inputs to outputs is close, then the employee should have much satisfaction with their job.[citation needed] Outputs can be both tangible and intangible. Typical outputs include any of the following:
Equity theory consists of four propositions:
Equity theory has been widely applied to business settings by industrial psychologists to describe the relationship between an employee's motivation and his or her perception of equitable or inequitable treatment.[citation needed] In a business setting, the relevant dyadic relationship is that between employee and employer.[citation needed] As in marriage and other contractual dyadic relationships, equity theory assumes that employees seek to maintain an equitable ratio between the inputs they bring to the relationship and the outcomes they receive from it. Equity theory in business, however, introduces the concept of social comparison, whereby employees evaluate their own input/output ratios based on their comparison with the input/outcome ratios of other employees. Inputs in this context include the employee’s time, expertise, qualifications, experience, intangible personal qualities such as drive and ambition, and interpersonal skills. Outcomes include monetary compensation, perquisites ("perks"), benefits, and flexible work arrangements which impact motivation, performance, and satisfaction of workers.[citation needed] Employees who perceive inequity will seek to reduce it, either by distorting inputs and/or outcomes in their own minds ("cognitive distortion"), directly altering inputs and/or outcomes, or leaving the organization. Workers will change the quality of their work based on their perceived compensation. These perceptions of inequity are perceptions of organizational justice, or more specifically, injustice.[citation needed] Subsequently, the theory has wide-reaching implications for employee morale, efficiency, productivity, and turnover.[citation needed]
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Equity theory
In management studies and in social policy, equity theory focuses on determining whether the distribution of resources is fair. Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person within an organization or social context. Considered one of the justice theories,[clarification needed] equity theory was first developed in the 1960s by John Stacey Adams, a workplace and behavioral psychologist, who asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others. According to Equity Theory, in order to maximize individuals' rewards, we tend to create systems where resources can be fairly divided amongst members of a group. Inequalities in relationships will cause those within it to be unhappy to a degree proportional to the amount of inequality. The belief is that people value fair treatment which causes them to be motivated to keep the fairness maintained within the relationships of their co-workers and the organization. The structure of equity in the workplace is based on the ratio of inputs to outcomes. Inputs are the contributions made by the employee for the organization. The theory can also be applied in a wider social context.
Equity theory stems from Social Exchange Theory. It proposes that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship.[citation needed] Equity is measured by comparing the ratios of contributions and benefits of each person within the relationship.[citation needed] Partners do not have to receive equal benefits (such as receiving the same amount of love, care, and financial security) or make equal contributions (such as investing the same amount of effort, time, and financial resources),[citation needed] as long as the ratio between these benefits and contributions is similar. Much like other prevalent theories of motivation, such as Maslow’s hierarchy of needs, equity theory acknowledges that subtle and variable individual factors affect each person's assessment and perception of their relationship with their relational partners. According to Adams in 1965, anger is induced by underpayment inequity and guilt is induced with overpayment equity. Payment, whether hourly wage or salary, is the main concern and therefore the cause of equity or inequity in most cases.[citation needed]
In any position, an employee wants to feel that their contributions and work performance are being rewarded with their pay. If an employee feels underpaid then it will result in the employee feeling hostile towards the organization and perhaps their co-workers, which may result in the employee not performing well at work anymore. It is the subtle variables that also play an important role in the feeling of equity. Just the idea of recognition for the job performance and the mere act of thanking the employee will cause a feeling of satisfaction and therefore help the employee feel worthwhile and have better outcomes.[citation needed] Employees can also feel positive inequity which may cause the worker to feel guilty and attempt to compensate for those feelings of guilt.
Individuals compare their job inputs and outcomes with those of others and then respond to eliminate any perceived inequities.[citation needed] Referent comparisons. This can include compensation, promotions, how hard or long they work.
Inputs are defined as each participant’s contributions to the relational exchange and are viewed as entitling them to rewards or costs.[citation needed] The inputs that a participant contributes to a relationship can be either assets – entitling them to rewards – or liabilities - entitling them to costs.[citation needed] The entitlement to rewards or costs ascribed to each input vary depending on the relational setting.[citation needed] In industrial settings, assets such as capital and manual labor are seen as "relevant inputs" – inputs that legitimately entitle the contributor to rewards. In social settings, assets such as physical beauty and kindness are generally seen as assets entitling the possessor to social rewards.[citation needed] Individual traits such as boorishness and cruelty are seen as liabilities entitling the possessor to costs. Inputs typically include any of the following:
Outputs are defined as the positive and negative consequences that an individual perceives a participant has incurred as a consequence of their relationship with another. When the ratio of inputs to outputs is close, then the employee should have much satisfaction with their job.[citation needed] Outputs can be both tangible and intangible. Typical outputs include any of the following:
Equity theory consists of four propositions:
Equity theory has been widely applied to business settings by industrial psychologists to describe the relationship between an employee's motivation and his or her perception of equitable or inequitable treatment.[citation needed] In a business setting, the relevant dyadic relationship is that between employee and employer.[citation needed] As in marriage and other contractual dyadic relationships, equity theory assumes that employees seek to maintain an equitable ratio between the inputs they bring to the relationship and the outcomes they receive from it. Equity theory in business, however, introduces the concept of social comparison, whereby employees evaluate their own input/output ratios based on their comparison with the input/outcome ratios of other employees. Inputs in this context include the employee’s time, expertise, qualifications, experience, intangible personal qualities such as drive and ambition, and interpersonal skills. Outcomes include monetary compensation, perquisites ("perks"), benefits, and flexible work arrangements which impact motivation, performance, and satisfaction of workers.[citation needed] Employees who perceive inequity will seek to reduce it, either by distorting inputs and/or outcomes in their own minds ("cognitive distortion"), directly altering inputs and/or outcomes, or leaving the organization. Workers will change the quality of their work based on their perceived compensation. These perceptions of inequity are perceptions of organizational justice, or more specifically, injustice.[citation needed] Subsequently, the theory has wide-reaching implications for employee morale, efficiency, productivity, and turnover.[citation needed]