Equity Theory of motivation

[Pages:6]Equity Theory of motivation

Structure

1. Objectives 2. Introduction 3. Equity Theory 4. State of Equality or Inequality 5. Application of Equity Theory 6. Inequality Reduction Methods

1. Objectives

At the end of the module, the learner will be able to, Explain Equity theory Identify State of equality or inequality Describe Application of Equity theory List out Inequality reduction methods

2. Introduction

What motivates people to work? According to equity theory, it is the perception of equitability and in-equitability. In 1960s, John Adams a workplace and behavioral psychologist introduced the idea of how fairness and equity perceived by an individual at workplace, motivates the individual to give his /her best. This forms the basis of Adam's Equity theory. Equity theory could be applied to any social situation in which an exchange takes place (e.g. between a man and his wife, between neighbours, between relatives, between club members, and between employee and employer)

If people feel fairly or advantageously treated, people are motivated and satisfied. If people feel unfairly treated, disaffection, dissatisfaction and demotivation results. Thus, according to Adams, the focus of the equity theory is on the exchange relationship where individuals give something and expect something in return. For e.g., Equity theory is at play when a person feels that he/she handles more responsibilities at the workplace than Employee X but does not even get paid half of what X gets or When a person feels that he/she gets paid much less than what employee Y gets, but this organization cannot operate without me. In such situations, the employee is comparing his/her input output ratio and is losing motivation in the process.

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3. Equity theory

To understand equity theory we need to understand three terms associated with Equity theory. The three terms are as follows:

Inputs: What the individual gives in the exchange relationship is called inputs. Inputs are each person's contributions to the relational exchange and are viewed as entitling him/her to rewards. For e.g. Inputs would involve education, intelligence, training, seniority, age, gender, ethnic background, personal appearance, health, spouse's characteristics, time, effort put in, loyalty, hard work, commitment, ability, adaptability, tolerance, determination, trust in superiors, skill, experience and the like shown by the individual. Outcomes/ outputs: Due to the inputs, what the individual receives is called outcomes/ outputs. Outputs are positive and negative consequences that an individual perceives has incurred as a consequence of his/her relationship with another. Outputs can be tangible in the form of pay / monetary benefits or intangible in form of praise or recognition. For e.g. Outputs would be job security, esteem, salary, employee benefit, recognition, reputation and sense of achievement, responsibility and praise that an individual gets, satisfying supervision, seniority benefits, fringe benefits, job status, Status symbols, poor working conditions, monotony, fate, and uncertainty The first two terms i.e. inputs and outputs need to be understood from some point of reference. Reference person or group: Reference person can be a co-worker, relative, neighbour, it may even be the person himself/herself in another job or another social role and reference group may be a group of co workers or relatives in the family. There are three classes of reference groups- other, self and system. `Other' denotes some other employee in the same organisation or in a different organisation. The `other' person can be a friend, relative, spouse or neighbour as well. `Self' refers to the input output ratio perceived by the person in the past job. `System' refers to the contract between the employer and the employee decided at the time of joining the job. Some people may have one reference group whereas some others may have more than one reference group. For e.g., incase of pay an employee may compare his/her pay with only one reference group which may be people staying in his/her building or his/her relatives. In case of other welfare benefits received by him/her, he/she may compare the benefits with people in his/her building, people in his/her organisation and also his/her relatives. Referent person may not be the person earning the same salary or doing the same work. For e.g., Comparing the organisation's director's salary with the work he/she

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does is an example of comparison with a referent person not getting the same salary or doing the same work.

As it can be seen from the above figure, Equity theory is about achieving balance between inputs and outputs which is measured against a reference point. Inequalities would arise if Inputs are less than outputs or if Outputs are less than Inputs. Inequalities may not actually exist but still may be perceived by the person.

4. State of equality or inequality:

Adams (1965) proposed that, a state of equity exists only when Op/Ip=Oa/Ia. Where O= the sum of all outcomes, I= the sum of all inputs, p=person, a=other and a state of inequity results if Op/Ip>Op/Ip or Op/Ip ................
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