Compensation, whether hourly or salaried, is a central concern for employees and is therefore the cause of equity or inequity in most, but not all, cases. According to Adams, underpayment inequity induces anger, while overpayment induces guilt. Much like other prevalent theories of motivation, such as Maslow’s hierarchy of needs, equity theory acknowledges that subtle and variable factors affect people’s assessment and perception of their standing relative to others. However, he might look outside the organization for comparison-for instance, he might visit to check salaries for positions like his at other publishing houses. For example, Ross would not compare his salary and responsibilities to those of the magazine company’s CEO. When an employee is comparing his input/outcome ratio to his fellow workers’, he will look for other employees with similar jobs or skill sets. On the other hand, Ross would perceive inequity if the ratio were different-say if Monica made more money for the same job or if Monica made a salary equal to Ross’s but had fewer job responsibilities. In other words, Ross perceives equity if Monica makes more money but also has more job responsibilities, because the ratio of inputs (job responsibilities) to outcomes (salary) is about the same. 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), as long as the ratio between these benefits and contributions is similar. The focus of equity theory is on determining whether the distribution of resources is fair to both relational partners. Individuals who discover they are in inequitable relationships will attempt to eliminate their distress by restoring equity.The person who gets too little may feel angry or humiliated. The person who gets too much may feel guilt or shame. According to equity theory, the person who gets “too much” and the person who gets “too little” both feel distressed. The more inequitable the relationship, the more distress they will feel. When individuals find themselves participating in inequitable relationships, they will become distressed.In addition, groups will generally reward members who treat others equitably and punish members who treat others inequitably. As a result, groups will evolve such systems of equity and will attempt to induce members to accept and adhere to these systems. Individuals can maximize collective rewards by evolving accepted systems for equitably apportioning resources among members.Individuals will try to maximize their outcomes.Equity theory includes the following primary propositions: However, if Ross perceived that Monica were being given more responsibility and therefore relatively more work along with the salary increase, then he would see no loss in equality status and not object to the change.Īn employee will feel that he is treated fairly if he perceives the ratio of his inputs to his outcomes to be equivalent to those around him. If Ross received a raise in pay but saw that Monica was given a larger raise for the same amount of work, Ross would evaluate this change, perceive an inequality, and be distressed. Let’s look at Ross and Monica, two employees who work for a large magazine-publishing company doing very similar jobs. Intangible outcomes might be recognition, praise, or a sense of achievement. Tangible outcomes include salary and job security. Outputs are what the employee receives from the employer and can also be tangible or intangible. Inputs include time spent working and level of effort but can also include less tangible contributions such as loyalty, commitment, and enthusiasm. Inputs are the employee’s contribution to the workplace. Accordingly, equity structure in the workplace is based on the ratio of inputs to outcomes. Adams, a workplace and behavioral psychologist, asserted that employees seek to maintain equity between what they put into a job and what they receive from it against the perceived inputs and outcomes of others.Įquity theory proposes that people value fair treatment, which motivates them to maintain a similar standard of fairness with their coworkers and the organization. Regarded as one of many theories of justice, equity theory was first developed in 1963 by John Stacey Adams. Individuals analyze their environment, develop reactions and feelings, and respond in certain predictable ways.Įquity theory attempts to explain relational satisfaction in terms of perceived fairness: that is, people evaluate the extent to which there is a fair or unfair distribution of resources within their interpersonal relationships. In contrast to the need-based theories we have covered so far, process-based theories view motivation as a rational process.