Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. According to equity theory, it is the perception of equitability and inequitability. The reward strategy and performance measurement evidence. Equity theory is based on the idea that individuals are motivated by fairness. But it must focus on the needs of the organization and the people who work in it. The equity theory postulates that employees will weigh their input into a job against the output they receive from it the more the rewards, the greater their satisfaction. Scientific management theoryfrederick taylors ideas, put into practice by the gilbreths in the film cheaper by the dozen, focused. An employee compares his or her job s inputs with an outcomes ratio. The design and operation of reward management processes and practices should start from an understanding of the implications of the psychological contract concept, motivation theory an the factors affecting pay levels. As an example of equity theory, if an employee learns that a peer doing. Adams equity theory, a powerful theory of motivation. In his famous book, punished by rewards, alfie kohn 1993 argued that rewards are not necessary for. Equity theory is used in parlance of human resource. Equity theory thus helps explain why pay and conditions alone do not determine motivation.
Stacey adams equity theory employee motivation theories. Equity theory plays a role in analyzing organizational behavior. Equity theory is supported by research over the years. In the sections that follow, adams equity theory will be briefly summarized. Inputs include all the rich and diverse elements that employees believe they bring or contribute to the job. Equity theory is based on the premise that employees will put forth a particular level of effort that they feel compares to the reward potential. The equity and fairness of employee compensation systems. Equity theory also highlights the importance of management support. 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.
In equity theor y, motivation is affected by the individual perception of being. Equity theory suggests that once an individual has chosen an action that is expected to satisfy his or her needs, the individual assesses the equity or fairness of the outcome adams, 1965. Its about the balance between the effort an employee puts into their work input, and the result they get in return output. Equity theory of motivation management study guide. Expectancy theory and its implications for employee motivation. Reward systems are identified as one of the human resource management hrm practices that may impact motivation. Expectancy theory of motivation management study guide.
Theories of motivation provide a theoretical basis for reward management though some of the best known ones have emerged from the psychology discipline. Equity theory is based in the idea that individuals are motivated by fairness, and if they identify inequities in the input or output ratios of themselves and their referent group, they will seek. Importantly we arrive at our measure of fairness equity by comparing our balance of effort and reward, and. Looking back over our series, adams equity theory ties in closely with those of maslow and herzberg. Equity theory, popularly known as adams equity theory, aims to strike a balance between an employees input and output in a workplace. However, equity theory takes a less straightforward and more fluid approach than previous models. Equity theory suggests that individuals who perceive themselves as either underrewarded or overrewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship. The core of the equity theory is the principle of balance or equity. Equity theory proposes that individuals who perceive themselves as. 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.
Equity theory, most popularly known as equity theory of motivation, was first developed by john stacey adams, a workplace and behavioral psychologist, in 1963. Instead of focusing on money alone, adams equity theory looks at compensation in relation to our social environment, and its subsequent effect on motivation. Mar 16, 2020 equity theory explains how employees determine what is fair and how they act upon their perceptions. Reward management is adaptation of policies that reward employee on consistency, fair and equitable basis in line with organizational values.
Process theories explain how satisfaction comes about, as opposed to what causes motivation. Adams equity theory how fairness affects employee motivation. As a key component of the overall human resource strategy, reward management is central to the productivity of employees which is also linked to the overall profitability of an organization, as well as its long term survival. Therefore, equity theory will be helpful to management in perceiving what motivates employees berkowitz, 1965. According to carrell and dittrich 1978, employees who perceive inequity will seek to reduce it, either by distorting inputs andor outcomes in. In terms of how the theory applies to work and management, we each seek a fair balance. 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. Rewards as a motivation tool for employee performance diva. Considered one of the justice theories, equity theory was first developed in the 1960s by j. Miles university of georgia equity theory proposes that individuals who perceive themselves as. Equity theory why employee perceptions about fairness matter.
Equality and equity in compensation harvard business school. Covering the conceptual framework of reward management and its practical application, the. But adams equity theory is a far more complex and sophisticated motivational model than merely assessing effort inputs and reward outputs. In the video, sheldon is almost obsessed with the present that was given to him. Output can be things like salary, recognition, and responsibility. As a result, employee perceptions about fairness do matterwhether they are real or misguided. Handling challenging assignment is also the indication of faith from management and act as reward. Adams equity theory, which stresses the importance of striking a balance between employee inputs and outputs. Higher is individuals perception of fairness, greater is the motivation level and vice versa. Sep 25, 2016 since research on equity theory had previously studied pay, greenberg 1988 wanted to study workplace status as an outcome of equity theory. Bachelor thesis in management control, school of business, economics and law, university of gothenburg, spring 2009. The theory basis of total reward includes maslows need hierarchy theory, alderfers erg theory.
As per this motivation theory, an individuals motivation level is correlated to his perception of equity, fairness and justice practiced by the management. Equitable reward processes ensure that relativities between jobs are measured as objectively as possible and that equal pay is provided for work of equal value. The utility of equity theory in enhancing organizational. Academy of management is collaborating with jstor to digitize, preserve and extend access. Reward management is the process of developing and implementing strategies, policies and systems which help the organization to achieve its objectives by obtaining and keeping the people it needs and by increasing their motivation and commitment.
The equity theory of motivation how to keep your team motivated. A famous content theory would be maslows hierarchy of needs, and a famous process theory would be the equity theory. The following discussion will provide an indepth discussion on expectancy theory as documented in literature sources. Equity theory adds a crucial additional perspective of comparison with referent others people we consider in a similar situation. Pdf reward systems are identified as one of the human resource management hrm practices that may impact motivation. Theories of motivation and their application in organizations. Reward systems may consist of several components, including financial and nonfinancial rewards, in fixed and variable amounts. The case for promoting equity in developing countries 19 4.
Vrooms ideas, adams equity theory, and lockes goal theory in appendix i. Equity is achieved when people are rewarded appropriately in relation to others within the organization. The expectancy theory states that employees motivation is an outcome of how much an individual wants a reward valence, the assessment that the likelihood that the effort will lead to expected performance expectancy and the belief that the performance will lead to reward instrumentality. 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. 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. Ever since j s adams outlined his equity theory in the late 1950s, a wide. When senior leaders are available to talk through any equity issues, employees will feel much more confident that their input and voice is heard. In equity theory, motivation is affected by the individual perception of being treated fairly in comparison to others.
Applying adams equity theory to employee engagement. Managing employee performance and reward critically examines contemporary theory and practice in these central fields of human resource management hrm, providing a comprehensive overview of the key concepts and topics, and draws on a wide range of case studies to demonstrate the theories. Adams equity theory goes beyond and is quite different from merely assessing effort and reward. The purpose of this study was to assess whether equity theory applied to situations where employees experienced inconsistencies between their job status and work area redmond, 2010. Adams equity theory leadership skills training from. Nov 20, 2018 the adams equity theory was developed by the american psychologist john stacey adams in 1963. Praise can be simple recognition for work in presence of other employees. Reward management is an integral part of the measure of the competitiveness of an organization. A funny way to understand equity theory is through the video below. Reinforcement, expectancy, and equity principles are discussed. The adams equity theory was developed by the american psychologist john stacey adams in 1963.
If the employee is able to find his or her right balance it would lead to a more productive relationship with the management. Pdf the utility of equity theory in enhancing organizational. 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. Adams equity theory, a powerful theory of motivation toolshero. Therefore, equity theory will be helpful to management in perceiving what motivates employees. Management theories of motivation other approaches to motivation are driven by aspects of management, such as productivity, human resources, and other considerations.
Pdf this paper will focus on examining equity theory. John stacy adams introduced equity theory in 1963, and addressed our tendency to compare ourselves to others. For managers it is better to effectively address these concerns than ignore them. If the employee perceives inequality, he or she he will act to correct the inequity. Equity theory proposes that individuals estimate the ratio of what has been contributed i. These issues might well be around pay structures, the system for increased reward, or perks like flexible hours everyone has a. Equity is measured by comparing the ratio of contributions or costs and benefits or rewards for each person.
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