The core difference between Equity Theory and Goal Setting Theory lies in what they identify as the primary driver of employee motivation.
Equity Theory focuses on fairness and comparison, while Goal Setting Theory emphasizes the power of specific goals and feedback.
Understanding the Theories
Equity Theory Explained
Equity theory is based on individuals' perceptions about how fairly they are treated compared with their coworkers. This theory suggests that employees are motivated when they perceive their input (effort, skills, time) to output (pay, recognition, benefits) ratio is equitable compared to that of others. If they perceive an inequity (either over-rewarded or under-rewarded relative to peers), motivation may decrease, and they may seek to restore fairness by:
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Adjusting their inputs (e.g., reducing effort).
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Adjusting their outputs (e.g., seeking a raise).
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Distorting perceptions of their own or others' inputs/outputs.
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Changing the comparison referent.
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Leaving the situation (e.g., quitting).
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Practical Insight: Managers need to be mindful of perceived fairness in compensation, workload distribution, and recognition to maintain employee motivation and prevent dissatisfaction.
Goal Setting Theory Explained
Goal-setting theory states that employees are highly motivated to perform when specific goals are established and feedback on progress is offered. Developed largely by Edwin Locke, this theory posits that clear, challenging goals provide direction and mobilize effort. Key components include:
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Specificity: Goals should be clear and well-defined (e.g., "increase sales by 10%" vs. "increase sales").
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Challenge: Difficult but achievable goals lead to higher motivation than easy ones.
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Commitment: Employees must accept and commit to achieving the goals.
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Feedback: Regular feedback helps individuals track progress and adjust their strategies.
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Task Complexity: Goals should be broken down for complex tasks to prevent overwhelming individuals.
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Practical Insight: Setting SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals and providing regular performance feedback are crucial for leveraging this theory in the workplace.
Comparing the Two Theories
Here is a direct comparison of the two theories based on their fundamental principles:
| Feature | Equity Theory | Goal Setting Theory |
|---|---|---|
| Primary Focus | Perceived Fairness & Social Comparison | Setting Specific, Challenging Goals & Feedback |
| Motivation Driver | Desire to achieve or restore equity relative to others | Commitment to and progress towards defined objectives |
| Key Question | "Am I being treated fairly compared to others?" | "What do I need to achieve, and how am I doing?" |
| Core Mechanism | Comparison of input/output ratios | Clarity and challenge of goals, combined with feedback |
While both theories aim to explain and enhance employee motivation, Equity Theory looks outward at relational fairness, whereas Goal Setting Theory looks inward at the individual's relationship with their tasks and targets. A comprehensive approach to motivation in the workplace often involves considering elements from both theories.
