In equity theory, the _____________ is a key issue.
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Definition: Equity theory, popularly known as Adam's equity theory, aims to strike a balance between an employee’s input and output in a workplace. If the employee is able to find his or her right balance it would lead to a more productive relationship with the management. Show Description: Equity theory is used in parlance of human resource management. We might not see it but this theory is applied at every workplace. An individual’s satisfaction at the workplace is directly linked to the efforts he or she is putting and what exactly he or she is getting out of it. Let's first understand what we mean when we say input. Input includes hard work, skill-set, motivation, enthusiasm, and technical know-how. Output relates to salary, perks, bonus, and recognitions in the form of awards. If an individual thinks that he/she is treated in a fair manner, which means that ratio of their input to the output is comparatively similar to those around him/her, it would be acceptable. If there is nothing to compare, then he/her would judge with employees in other organisation at the same level. However, if an individual thinks that others are getting more rewards and recognition compared to him/her who is putting in similar amount of inputs in his/her job, it would lead to some imbalance. The dissatisfaction often leaves the employee demotivated which would result in lower productivity, and in some cases attrition. There is one thing to note that equity theory does not only depend on the input-to-output ratio but also on comparison with peer group. It aims to explain why people may be happy one day, and suddenly the motivation level goes down after they learn that others are enjoying better rewards for their efforts. The core of the equity theory is the principle of balance or equity. As per this motivation theory, an individual’s motivation level is correlated to his perception of equity, fairness and justice practiced by the management. Higher is individual’s perception of fairness, greater is the motivation level and vice versa. While evaluating fairness, employee compares the job input (in terms of contribution) to outcome (in terms of compensation) and also compares the same with that of another peer of equal cadre/category. D/I ratio (output-input ratio) is used to make such a comparison. Negative Tension state: Equity is perceived when this ratio is equal. While if this ratio is unequal, it leads to “equity tension”. J.Stacy Adams called this a negative tension state which motivates him to do something right to relieve this tension. A comparison has been made between 2 workers A and B to understand this point. Referents: The four comparisons an employee can make have been termed as “referents” according to Goodman. The referent chosen is a significant variable in equity theory. These referents are as follows: An employee might compare himself with his peer within the present job in the current organization or with his friend/peer working in some other organization or with the past jobs held by him with others. An employee’s choice of the referent will be influenced by the appeal of the referent and the employee’s knowledge about the referent. Moderating Variables: The gender, salary, education and the experience level are moderating variables. Individuals with greater and higher education are more informed. Thus, they are likely to compare themselves with the outsiders. Males and females prefer same sex comparison. It has been observed that females are paid typically less than males in comparable jobs and have less salary expectations than male for the same work. Thus, a women employee that uses another women employee as a referent tends to lead to a lower comparative standard. Employees with greater experience know their organization very well and compare themselves with their own colleagues, while employees with less experience rely on their personal experiences and knowledge for making comparisons. Choices: The employees who perceive inequity and are under negative tension can make the following choices: Assumptions of the Equity Theory
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View All Articles  Authorship/Referencing - About the Author(s)The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url. What is the key issue in equity theory?The core of equity theory says that individuals judge the fairness of their treatment based on how others like them are treated. Employees make social comparisons to others who are similarly situated in the organization.
What does the equity theory explain?Equity theory is a theory of motivation that suggests that employee motivation at work is driven largely by their sense of fairness. Employees create a mental ledger of the inputs and outcomes of their job and then use this ledger to compare the ratio of their inputs and outputs to others.
What is the equity theory quizlet?Definition. 1 / 7. Equity theory is an extension of social exchange theory (social interactions are transactions) with the assumption that people strive to achieve fairness in their relationships, and become distressed if they perceive unfairness.
What are the key principles of equity theory and expectancy theory?Under the Equity theory, if an individual perceived himself to be under-rewarded then he will be motivated to decrease the inequity by decreasing his performance. On the other hand, the Expectancy theory suggests that the individual may increase her performance if he perceives the outcome strongly to be desirable.
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