27 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.

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 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<Oa/Ia.

Thus, inequity results not only when a person is under-benefited but also when he/she is over benefited.

An important issue of the equity theory is the emphasis on the individual ’s perception of what exists, even though it may not be real.

5. Application of Equity theory:

Inequalities in outputs or rewards can result into the individual exhibiting one of the following behaviours:

• lower levels of job satisfaction
• loss of motivation
• deviant workplace behavior low employee morale

The above behaviours shown by the individual can cause performance problems that negatively impact the entire organization. The equity theory does not predict what behaviours would result incase inequality is experienced.

Equity theory proposed that when a state of inequity is perceived by the individual, the individual would experience a state of distress. This distressing state will move individual to take action to restore equity. The greater the inequity, the more distress individuals feel, and the harder they will try to restore equity.

The result of inequity is also tension. If an individual experiences a deficit, an anger results but if he or she receives more than others, a feeling of guilt develops. This anger is usually directed toward other people and institution that caused inequity and sometimes it is self-directed.

As seen earlier also, if individual perceives equity at workplace, individual feels motivated.

And if individual perceives inequity at workplace, distress is experienced by the individual and individual will try to restore equality through use of equality restoration methods. The restoration of equality happens in two ways- actual restoration and other is psychological restoration. Restoring equity is either actual or psychological. Actual restoration of equity refers to the behaviour of the individuals who feel injustice to work less (decrease inputs), to demand a raise from their company (increase outputs) or destroy company equipment (decrease company outcome). Psychological restoration of equity refers to convincing one’s self that this inequitable relationship is somewhat equitable by distorting reality (Adams, 1965).

Because of that, Adams (1965) theorized, perceived inequity results in individual feel unpleasant and encourages people to move in the direction of reducing it, and the strength of motivation to do so will vary directly with the magnitude of inequity experienced. As a result Adams proposed several methods called “methods of inequity reduction” or “equity restoration methods”. The “equity restoration methods” adopted by an employee may result in a state of satisfaction for the employee but may not be be favourable for the organization. The “equity restoration methods adopted by an employee are as follows:

6.   Inequality reduction methods

Person altering his inputs:

In the case of felt inequity, a person may increase or decrease his inputs depending on whether the inequity is advantageous or disadvantageous. A person may view his or her outputs less than others resulting in decreasing inputs by the person. Similarly a person may view his or her outputs more than others resulting in increasing inputs by the person.

Inputs in the form of educational qualifications, skills, time, efforts, dedication and commitment can be altered but inputs in the form of gender, race, caste which the individual perceives as inputs cannot be altered.

For e.g., If X feels his/her outputs are less than Y’s outputs, which is because his/her inputs in the form of educational qualifications and ICT skills are less than Y, then X may try to acquire higher educational qualifications and upgrade his/her ICT skills so as to restore the balance of inputs and outputs.

Similarly, if X feels his/her outputs are more than Y’s outputs, inspite of X not showing the same commitment at workplace as that of Y, then X may try to show more commitment at workplace by taking on additional responsibilities so as to restore the balance of inputs and outputs.

Person altering his outputs:

A person may change his outcome either by increasing or decreasing them depending on whether the equity is advantageous or disadvantageous.

A person may view his or her inputs less than others resulting in decreasing outputs by the person. Similarly, a person may view his or her inputs more than others resulting in increasing outputs by the person.

For e.g., If A feels that his/her inputs are less than B’s inputs because A’s inputs in the form of time spend at workplace and efforts put are less than B’s, inspite of the same salary, A may decrease his/her output by not asking for travel benefits which A is entitled to.

Likewise, if A perceive that his/her inputs are more than Y’s inputs, which is because A’s inputs in the form of time put in at workplace and efforts put in are more, A will try to increase his/her output by convincing the boss or management to give a salary raise or other monetary benefits so as to restore the balance of inputs and outputs.

Person altering Perceptions of Self:

A person may cognitively vary perceptions of self by convincing oneself that balance is achieved by distorting reality. If a person feels others get less output, then the person may convince self that he or she deserves the same.

Person altering Perceptions of Others:

A person may cognitively vary his perceptions of others. If a person feel others get more outputs then the person may convince self that others deserve the same.

Change the situation:

If the person who perceives inequality cannot alter inputs, outputs, perceptions of self and others, than there are chances the person might quit his or her job, obtain a transfer, or increased cases of absenteeism are seen.

For e.g., If C perceives inequality in an organisation, where he/she feels other employees are not as committed and motivated at workplace as C, then C would change the situation by asking a transfer to other branch of same organisation or some other organisation to restore the input output ratio

Change Comparisons:

It is possible mentally to switch from one reference group or person to another, while still remaining physically in the same primary exchange relationship. In this method of equality restoration, person may change “the comparison other” with whom he or she compares himself or herself when he or she experiences inequality. This would reduce the severance of inequity.

For e.g., If D perceives inequality as his comparison is with the referent group of people staying in his building who gets better pay than D, then D may change the referent group by comparing his pay with his relatives who get paid equal or less than D and restore the severity of felt inequality.

To conclude, Adams proposed this theory in particular on how employees would behave in response to situations when they are treated less or more justly in comparison to others. As per the equity theory, the head or management of the organization must work to eliminate or minimize inequality when rewards or outputs are being allocated. When a balance is achieved between inputs and outputs, it is believed that employees will be more satisfied and willing to work towards higher levels of productivity or else dissatisfaction results which would harm the organisation’s productivity if left unattended.

References

• Adams, J. S. (1963). Towards an understanding of inequity. The Journal of Abnormal and Social Psychology, 67(5), 422. doi: http://dx.doi.org/10.1037/h0040968
• Adams, J. S. (1965). Inequity in social exchange. Advances in experimental social psychology, 2, 267-299. Retrieved January 25, 2017 from http://www.sciencedirect.com/scie nce/article/pii/S0065260108601082
• Al-Zawahreh, A. & Al-Madi, F. (2012). The utility of Equity theory in enhancing organizational effectiveness. European Journal of Economics, Finance and Administrative Sciences, 56, 1-31. Retrieved January 15, 2016 from http://eis.hu.edu.jo/Deanshifiles/pub 105362403.pdf
• Schultz, K. L., Schoenherr, T., & Nembhard, D. (2005). Equity theory effects on worker motivation and speed on an assembly line. Retrieved January 28, 2017 from https://www.researchgate.net/publication/267818487