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    Equity Theory

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    Carlo Hafalla
    Equity theory proposes that people are motivated by fairness and seek to maintain equity between what they contribute to a situation and what they receive from it in comparison to others. When a person perceives an inequitable relationship between their inputs and outcomes relative to others, they experience tension and will take action to restore equity such as changing their inputs, outcomes, referent others, or leaving the situation. The theory identifies four types of referents people use to compare their inputs and outcomes - self-inside, self-outside, other-inside, and other-outside. Individual characteristics like gender, salary, education, and experience can moderate perceptions of equity.

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    Equity Theory

    Uploaded by

    Carlo Hafalla
    69 views2 pages
    Equity theory proposes that people are motivated by fairness and seek to maintain equity between what they contribute to a situation and what they receive from it in comparison to others. When a person perceives an inequitable relationship between their inputs and outcomes relative to others, they experience tension and will take action to restore equity such as changing their inputs, outcomes, referent others, or leaving the situation. The theory identifies four types of referents people use to compare their inputs and outcomes - self-inside, self-outside, other-inside, and other-outside. Individual characteristics like gender, salary, education, and experience can moderate perceptions of equity.

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    Equity theory proposes that people are motivated by fairness and seek to maintain equity between what they contribute to a situation and what they receive from it in comparison to others. When a person perceives an inequitable relationship between their inputs and outcomes relative to others, they experience tension and will take action to restore equity such as changing their inputs, outcomes, referent others, or leaving the situation. The theory identifies four types of referents people use to compare their inputs and outcomes - self-inside, self-outside, other-inside, and other-outside. Individual characteristics like gender, salary, education, and experience can moderate perceptions of equity.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    69 views2 pages

    Equity Theory

    Uploaded by

    Carlo Hafalla
    Equity theory proposes that people are motivated by fairness and seek to maintain equity between what they contribute to a situation and what they receive from it in comparison to others. When a person perceives an inequitable relationship between their inputs and outcomes relative to others, they experience tension and will take action to restore equity such as changing their inputs, outcomes, referent others, or leaving the situation. The theory identifies four types of referents people use to compare their inputs and outcomes - self-inside, self-outside, other-inside, and other-outside. Individual characteristics like gender, salary, education, and experience can moderate perceptions of equity.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    EQUITY THEORY

    Equity Theory is based on the simple belief that people want to be treated fairly relative to
    the treatment of others. The core of the equity theory developed by John Stacey Adams is the
    principle of balance or equity. 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. O/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.

    Referents – are the four comparisons an employee can make according to Goodman. The referent
    chosen is a significant variable in equity theory. These referents are as follows:

     Self-inside: An employee’s experience in a different position inside his present


    organization.
     Self-outside: An employee’s experience in a situation outside the present
    organization.
     Other-inside: Another employee or group of employees inside the employee’s present
    organization.
     Other-outside: Another employee or employees outside the employee’s present
    organization.

    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. 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:

     Change in input (ex. Don’t overexert)


     Change their outcome (Produce quantity output and increasing earning by sacrificing
    quality when piece rate incentive system exist)
     Choose a different referent
     Quit the job
     Change self-perception (For instance - I know that I’ve performed better and harder
    than everyone else.)
     Change perception of others (For instance - Jack’s job is not as desirable as I earlier
    thought it was.)

    Assumptions of the Equity Theory

     The theory demonstrates that the individuals are concerned both with their own rewards and
    also with what others get in their comparison.
     Employees expect a fair and equitable return for their contribution to their jobs.
     Employees decide what their equitable return should be after comparing their inputs and
    outcomes with those of their colleagues.
     Employees who perceive themselves as being in an inequitable scenario will attempt to
    reduce the inequity either by distorting inputs and/or outcomes psychologically, by directly
    altering inputs and/or outputs, or by quitting the organization.

    References: https://www.managementstudyguide.com/equity-theory-motivation.htm
    https://www.toolshero.com/psychology/theories-of-motivation/adams-equity-theory/

    Group 9 : Dumpit Ralvin F.


    Hafalla, Carlo
    Jucar, Johara Majanil P.
    Napanoy, Mik-mik
    Tanalgo, Dhea Kaye

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