Equity Theory of Motivation – BMS Notes

Equity Theory of Motivation

• Equity theory is predicated on the notion that people are driven by a need for justice. If they see disparities in the input to output ratios between themselves and their reference group, they will attempt to modify their input in order to achieve the perceived parity. According to Adams, a person’s impression of fairness affects their level of motivation, and vice versa. If a person believes that their surroundings are unfair, their motivation will decrease.
• Colleagues comparing their work to that of someone who is paid more than them is perhaps the most typical way that workers experience the equity principle in action. When workers say something like, “I get paid a lot less than Jane, but this business couldn’t run without me,” or “John is paid a lot more than me, but doesn’t do nearly as much work,” equity theory is at work. Each of those scenarios involves someone who is demotivating himself by comparing their own effort-to-compensation ratio to that of another person.
• This Theory demonstrates:
• The vast and varied components that workers feel they bring or give to the workplace are called inputs, and they include things like education, experience, effort, loyalty, and devotion.
• The benefits employees believe they get from their work and employers are known as outcomes. These include direct salary and bonuses, perks, job stability, social rewards, and psychological support.
• Overrewarded: According to equity theory, individuals who experience overrewarding will see an imbalance in their working relationships and work to correct it.
• Equality: Employees will be encouraged to keep contributing and acting at the same level if they feel that there is equity.
• Unrewarded: Those who believe they have not received proper compensation attempt to lessen their sense of injustice by using similar tactics, but the results of these particular actions are now in reverse.
• The two underlying presumptions of this hypothesis on human behaviour are as follows:
• People contribute (make inputs) with the expectation of receiving certain results (rewards). A person’s prior education and experience, unique expertise, personal traits, etc. are examples of inputs. Pay, recognition, reputation, advancement, and fringe perks are examples of outcomes.
• People evaluate the satisfaction level of a given trade by calculating a ratio that compares their inputs and outputs to those of others. When a person determines that his or her personal outcome/input ratio is equal to that of other persons, equity occurs.
• An equation may illustrate the key ideas of the equity theory: the connection between an individual’s inputs and results should be balanced when compared to that of another individual. The individual could put in more effort if they believe the benefits exceed what is taken into account.
• The individual will most likely keep producing at the same rate if they believe the incentives are fair.
• In the event that an individual perceives their compensation to be unfair, they may get disgruntled, produce work of lower quality or quantity, or even depart the company.
• The following graphic depicts the three scenarios of equity theory:
• Equity in motivation plays the following roles: Workers compare their work inputs and results to those of others.
• A condition of equity is considered to exist if we believe our ratio to be the same as that of the pertinent individuals that we compare ourselves to. We think things are fair the way they are.
• Equity tension arises when we perceive the ratio to be uneven.
• The referent that an employee chooses also contributes to the intricacy of equity theory. An employee has four referent comparisons at their disposal:
• Self-inside: An employee’s experiences from inside their present company while holding a different role.
• Self-outside: A worker’s experiences in a circumstance or role that is not associated with their present employer.
• Other-inside: A different person or group of people who work for the same company as the employee.
• Other-outside: A person or group of people who are not affiliated with the employee’s company.
• Employees’ decisions about referents are impacted by their knowledge of referents as well as the referent’s appeal. Gender, tenure duration, organisational level, and degree of education or professionalism are the four moderating factors. Same-sex comparisons are preferred by both sexes. This implies that women’s tolerance for lesser income can stem from the comparable norm they use. Cross-sex comparisons will be made more often by workers in non-sex-segregated workplaces than by those in employment with a predominance of either gender.
• Short-term workers at their present companies often don’t know a lot about other workers.
• Long-tenured employees depend more on their peers for benchmarks.
• Higher ranking staff members often possess a more global perspective and greater knowledge about individuals inside other companies. As a result, these workers will compare themselves more to others.
• One of six decisions might be expected from workers when they detect injustice:
• Alter the inputs they use.
• Modify the results they produce.
• distort one’s own perceptions.
• skew how you perceive other people.
• Select an alternative referent.
• Get off of the field.
• The theory proves the following claims about unequal compensation:
• When paid on a time basis, overrewarded workers will generate more than what is needed to compensate them fairly.
• When paid according to production volume, overly compensated workers will create fewer, higher-quality units that will pay workers fairly.
• When paid on a time basis, underpaid workers will either perform less or lower-quality work.
• When compensated according to output volume, underpaid workers will generate a lot more low-quality units than those who are paid fairly.
• Overall, these claims have received support, but with some minor caveats.
• Overpayment disparities do not seem to significantly affect behaviour in the majority of work environments.
• Not everyone cares about equality.
• Workers seem to want fairness in the allocation of additional organisational incentives as well.
• Lastly, an attempt has been made to broaden the definition of equality and fairness in recent study.
• In the past, distributive justice—the idea of how fairly benefits are given to different people—was the main emphasis of equity theory.
• Procedural justice, or the perceived fairness of the procedure used to decide how rewards are distributed, should also be taken into account in equity.
• The data suggests that procedural justice is less likely to have an impact on employee satisfaction than distributive justice.
• Procedural fairness often has an impact on an employee’s decision to resign, organisational loyalty, and supervisor confidence.
• Employees are more likely to see their managers and the company favourably if they believe that procedures are fair, even if they are not happy with their salaries, promotions, or other personal results.