The present study aims to fill this particular research gap. Equity theory will help hrd explain employees behavior and provide them with the possible factors that might decrease efficiency and performance. Equity theory, most popularly known as equity theory of motivation, was first developed by john stacey adams, a workplace and behavioral psychologist, in 1963. What is equity theory and why should i be applying it. The adams equity theory posits that people maintain a fair relationship between the performance and rewards in comparison to others. Adams equity theory on job motivation and free diagram, plus more free online training materials. This demand coupled with advances in trading technology has opened up the markets so that nowadays nearly anybody can own equity. Reviewers of the research have reported that the predicted effects of underpayment on performance are well supported campbell and pritchard, 1976.
Plain and simple, equity is a share in the ownership of a company. In simple terms, equity theory states that if an individual identifies an inequity between themselves and a peer, they will adjust the work they do to make the situation fair in their eyes. Developed by the behavioral and workplace psychologist, john stacy adams, equity theory of motivation is one of the justice theories explaining the correlation between input and outcome of performance of employee at a job with hisher perception of equitable or inequitable behavior from the employers. The principal object of any system is equity or fairness. People develop beliefs about what is a fair reward for one job contribution an exchange people compare their.
Equity theory posits that if the person perceives that there is inequality, where either their outputinput ratio is less than or greater than what they perceive as the outputinput ratio of the other person in the relationship, then the person is likely to be distressed. John stacey adams proposed that an employees motivation is affected by whether the employee believes that their employment benefitsrewards are at least equal to the amount of the effort that they put into their work. Equity theory is based on a principle that peoples actions and motivations are guided by fairness and that discrepancies in this fairness in the workplace will spur them to try and redress it. Equity pay allocation is perceived to be to be fair motivation is sustained case 2. This paper proposes equity theory as a guiding aid in ph.
Equity theory equity is a subjective evaluation, not an objective one. Balance calibrated and measured against comparable references in the market place. Explains how people perceive fairness in an organization. Equity theory and job satisfaction in silicon valley scholarship. Adams equity theory, which stresses the importance of striking a balance between employee inputs and outputs. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. In essence, adams equity theory is about perceptions of fairness, something that every leader needs to regulate in order to maintain a functional business environment. In short, adams equity theory means that employees will become demotivated if. Excellent written content pdf files about management theories and great interviews. If there are unequal levels of input or output, either internally or within an observed group, then adjustments are made to create more fairness. Men who have been pulled away from their family by their work sometimes try to even the scales with expensive holidays.
To further illustrate equity theory considerations, a. Jan 09, 2018 according to the theory, employee motivation is the result of the balance between what an employee attributes to the company against the recognition heshe receives as compared to what hisher coworkers receive for the same attribution. Equity theory has received more attention lately from human resource professionals especially regarding the fairness of outcomes. This theory is based on social comparisons and the notion that unequity is a motivating state. Process theories of motivation equity theory business essay. The equity theory of motivation how to keep your team.
No matter what avenue of life is in question, fair treatment is something that everyone appreciates and demands. According to the theory, employee motivation is the result of the balance between what an. Equity theory approaches justice evaluations based on ratios of exchange inputs to exchange outcomes. Stacy adams, a workplace and behavioral psychologist, who asserted that. I will follow a line of investigation on equity theory in regard to its fundamental importance to organizations since it is assumed to be one of. In its basic form, the equity theory of motivation implies that each individual is motivated by the concept of fairness. As you acquire more equity, your ownership stake in the company becomes greater. Equity theory was first developed in 1963 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. Beehr, 1996 equity theory a version of discrepancy theory of job satisfaction focusing on the discrepancies between what one has on the job and what one thinks is fair what one should have equity theory social comparison takes place perceived discrepancies between ratios may produce tension or dissonance amount of discrepancy corresponds to the. Considered one of the justice theories, equity theory was first developed in the 1960s by j. Equity perceptions ones perception of an equitable situation 2. Equity theory adams, 1963 leeds school of business.
While workplace equity holds clear advantages for employees, the employers win as well. Equity theory is based in the idea that individuals are. In fact, equity theory is strongly based on the instrumental rationality postulate and essentially. This handy quiz and worksheet combo will check your knowledge of the equity theory of motivation that was developed in 1963. Equity theory vs other theories of motivation there are similarities between equity theory and older psychological motivation models like maslows hierarchy of needs. The utility of equity theory in enhancing organizational effectiveness article pdf available in european journal of economics, finance and administrative sciences march 2012 with 17,394 reads. Equity theory of motivation examples explained hrf. The adams equity theory was developed by the american psychologist john stacey adams in 1963. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. The striatum is a key part of the emotional circuitry of the brain and plays an important role in motivating and regulating behavior. Output can be things like salary, recognition, and responsibility. The relevance of scientific management and equity theory. Applying adams equity theory to employee engagement.
Miles university of georgia equity theory proposes that individuals who perceive themselves as either underrewarded or overrewarded will experience distress, and that this distress leads to efforts to restore equity. Inputs include all the rich and diverse elements that employees believe they bring or contribute to the job. This does not work well as they are trying to trade shortterm value money for longterm value emotion. Looking back over our series, adams equity theory ties in closely with those of maslow and herzberg. John stacey adamss equity theory has been a part of classical management literature since 1963. Equity theory, most popularly known as equity theory of motivation, was first developed by john stacey adams, a workplace. The utility of equity theory in enhancing organizational effectiveness introduction what motivates people to work. When applied to the workplace, equity theory focuses on an employees workcompensation relationship or exchange relationship as well as that employees attempt to minimize any sense of unfairness that might result. Its about the balance between the effort an employee puts into their work input, and the result they get in return output. Oct 28, 2014 in line with equity theory, more recent papers in behavioral economics, studying distributive behavior in situations in which people have earned the money being distributed, have found that the majority of people accept income inequalities as fair if the inequalities correspond to differences in contributions 17.
When an individual feels that he or she has been treated unfairly compared to others, the individual will be motivated to remove the discomfort and would develop some sort equity to the. In 1963, john stacey adams introduced the idea that fairness and equity are key components of a motivated individual. Miles university of georgia equity theory proposes that individuals who perceive themselves as either underrewarded or overrewarded will experience distress, and that. Based on the comparison that individuals use, each individual is likely to develop different perceptions of equity. Adams asserted that when people feel distress from inequity they may react in one or all of the following ways. For a business owner or manager, this is a particularly important lesson to learn with regard to employees. A principle of workplace equity dictates that employees be treated fairly in all employment decisions, without regard to their gender, color, race or other personal differences. Equity theory the motivation theories highlighted in the case which are equity theory and vrooms expectancy theory. There is nothing wrong in this expectation by the employees. In the study of the neuronal underpinnings of the behavioral results, we focus on the response in the striatum.
First, they may restrict their inputs to a level they believe is consistent with the outcomes they receive. A funny way to understand equity theory is through the video below. Equity represents a claim on the companys assets and earnings. The theory proposes that the employee evaluates the outcomes from the job i. Equity theory is also called inequity theory as it is the unequal difference that is often the area of interest. Stacey adams, proposes that employees perceive and assess a ratio of jobs inputs related to the outcomes they received for their performance to seek either equity or inequity in their situation and then corrects any. Adams equity theory how a manager can motivate their team. Individuals develop their perception of fairness by calculating a ratio of their inputs and outcomes and then comparing this to the ratio of others huseman, et. The equity theory of motivation how to keep your team motivated.
Model of equity theory is versus ir os or i inputs employees contribution to employer r referent comparison person s subject the employee who is judging fairness of the exchange equity theory exchange scenarios case 1. The utility of equity theory in enhancing organizational. The relevance of scientific management and equity theory in. First, they may restrict their inputs to a level they believe is. Equity theory based strategies for students on overcoming. Equity theory proposes that a persons motivation is based on what he. Adams equity theory builds on maslows hierarchy of needs and herzbergs two factor theory, and was first presented in 1963. This theory of motivation states that positive outcomes and high levels of motivation can be expected only when employees perceive their treatment to be fair. According to equity theory, it is the perception of equitability and inequitability. However, equity theory takes a less straightforward and more fluid approach than previous models. As an example of equity theory, if an employee learns that a peer doing. Introduction to equity theory first developed in 1963 by john stacey adams 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. Thus, if youre a manager or business owner, workplace equity is a principle. An extensive and influential literature on equity theory in social psychology has studied how perceptions of fairness.
The advantages of equity in the workplace bizfluent. Equity theory states that a persons motivation is based on what they believe is fair or not fair compared to others pennsylvania state university, 2016. Adams equity theory leadership skills training from. It has been accepted for inclusion in scripps senior theses by an authorized administrator of scholarship. This study used the epq because the format was more compatible with the. Section 3 explores why the equity theories have not been given any prominence in current accounting theory, practice and regulations.
In sum, although equity theory was invented several decades ago, it is still important in a lot of recent research. Furthermore, the striatum has been associated with social preferences and moral choices in many earlier studies 18, 20 28. Equity, or more precisely, inequity is a major concern of industry. The need for training equity theory and hr counseling. In the video, sheldon is almost obsessed with the present that was given to him. According to carrell and dittrich 1978, employees who perceive inequity will seek to reduce it, either by distorting inputs andor outcomes in. Scholl, 2000 when individuals look at the equity model on the job scale, they compare their contributions and rewards to that of those around them associates, coworkers, management, etc. In other words, an employee gets demotivated by the job and his employer in case his inputs are more than the outputs. An employee compares his or her jobs inputs with an outcomes ratio. Equity is measured by comparing the ratio of contributions or costs and benefits or rewards for each person. Individual rewardsindividual inputs others rewards others inputs.
The equity theory of motivation is comprised of four widely accepted tenants. Adams equity theory, a powerful theory of motivation. Abstract this study examines the concept of equity theory, its intention, and core hypothesis. The equity theory of motivation describes the relationship between the employees perception of how fairly is he being treated and how hard he is motivated to work. Despite their popularity, however, most people dont fully understand equity. Every employee of an organisation expects that he should be treated with justice. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Over the last few decades, the average persons interest in the equity market has grown exponentially. Equity theory is based on the idea that individuals are motivated by fairness. Equity theory proposes that peoples motivation, performance and satisfaction depend on their subjective evaluation of the relationships between their effortreward ratio and the effort reward of others in similar situations.