This post is the fifth in a series on motivation theory. Over the next few weeks, we’ll review the history of empirical thought on how to motivate followers.
Equity theory is less of a full theory of motivation, and more of a warning to organizations. The theory itself attempts to explain employee satisfaction through exploring employees’ perceptions of fair distribution of rewards. The theory was first developed and presented by John Stacy Adams in 1963. Adams asserted that employees desire to maintain equity between their inputs and the organization’s outputs.
Inputs are the contributions that employees make. They can include time, effort, loyalty hard work and many others. Outputs are positive or negative consequences that individuals perceive have been given in response to inputs. These can include job security, esteem, salary, benefits and more. Based on the mental equation in their head, employees evaluate whether their input/output equation is fair by comparing it to others. Individuals believe they’re being treated fairly when their ration of inputs to outputs matches those around them. If individuals believe they’re over- or under-paid, they will experience distress and a lack of performance will result.
Equity theory presents organizations with a warning about over-compensation or lowering expectations of certain individuals. Over-compensated employees may respond by working harder, or they may alter their perceptions about the worth of their contribution and reduce their contribution. Likewise, employees may perceive others as over-compensated and respond by reducing their effort. While many argue that equity theory offers an overly simple means of explaining employee behavior, most still heed the warnings it offers.
David Burkus is the editor of LDRLB. He speaks, consults and serves on the faculty of management at Oral Roberts University’s College of Business.