Equity theory centers around the idea that individuals are motivated by fairness and justice in their social exchanges. The core principle revolves around the perception of balanced inputs and outputs, both for oneself and in comparison to others.
Here are the principle pieces of equity theory:
Core Principle: Justice and Equity
- The foundation of equity theory rests on the principle of justice and equity. This implies that individuals are primarily concerned with fair treatment and expect to receive proportional rewards for their contributions.
- This principle dictates that people strive to maintain balance in their relationships, especially in the workplace.
Input-Output Ratio
- Equity theory focuses heavily on the input-output ratio.
- Inputs are what an individual brings to a situation, such as effort, skills, time, and qualifications.
- Outputs represent what an individual receives, like salary, benefits, recognition, and promotions.
- According to the provided reference: Individuals expect fair returns for their inputs, such as salary after work is done.
Social Comparison
- Individuals do not evaluate their input-output ratio in isolation.
- They compare their ratio to that of their relevant colleagues.
- As the reference mentions, individuals focus on equal input-output ratios with their colleagues, demonstrating equity.
- If an individual perceives their ratio as less favorable than others, they may experience feelings of inequity and reduced motivation.
Types of Equity
- Equity: When individuals perceive their input-output ratio as equal to that of their referent other. This leads to a sense of satisfaction and continued effort.
- Inequity: When individuals perceive that their input-output ratio is either less than (under-reward) or greater than (over-reward) that of their referent other, creating discomfort.
- Under-reward: Feeling that you are receiving less than you deserve for your efforts which could lead to demotivation, reduced productivity, or attempts to restore equity.
- Over-reward: Feeling that you are receiving more than you deserve, which may cause guilt but may not be strong enough to cause individuals to try and reduce their rewards. It is more likely that individuals will convince themselves that they deserve this to decrease the discomfort.
Practical Insights
- Salary and Compensation: Ensuring that employees are fairly compensated based on their contributions and comparable to their peers. Transparent pay scales can contribute to perceived equity.
- Performance Reviews: Clearly linking performance evaluations to rewards or promotions can reinforce equity.
- Recognition and Appreciation: Acknowledging and valuing the contributions of employees.
- Workload Distribution: Distributing workload fairly among team members to avoid imbalances.
- Transparency in Policies: Having clear and transparent workplace policies can build trust and reinforce the perception of fairness.
In summary, equity theory primarily focuses on the idea that individuals are motivated by a sense of fairness, and this sense of fairness stems from the balance in input-output ratios, both for the individual and in comparison to others.
