We might not see it but this theory is applied at every workplace. Developed by the behavioral and workplace psychologist, John Stacy Adams, Equity Theory of Motivation is one of the justice theories explaining the correlation between input and outcome of performance of employee at a job with his/her perception of equitable or inequitable behavior from the employers. Adams (1965) developed a theory on motivation to attempt to explain behavior influenced by the norm of equity (Lane, Irving M. & Messe, Lawrence A., 1971). Equity theory is a concept of human relations based on utility, or the amount of happiness and satisfaction one gets out of any given relationship. ADVERTISEMENTS: The Equity Theory of Motivation! Description: Equity theory is used in parlance of human resource management. Adams suggested that employees try to maintain a balance between what they give to an organisation against what they receive, and base satisfaction with their own balance on perceptions of the same balance in colleagues. Equity theory is based on a principle that peoples' actions and motivations are guided by fairness and that discrepancies in this fairness in the workplace will spur them to try and redress it. Equity theory, most popularly known as equity theory of motivation, was first developed by John Stacey Adams, a workplace and behavioral psychologist, in 1963. As we’ve talked about many times here at BrightHR, your business needs motivated staff to operate at its full capacity. Outcomes include 'hard' factors, such as salary, job security and employee benefits, but extend to less tangible aspects such as praise, sense of achievement, praise and reputation. Let's first understand what we mean when we say input. Equity Theory proposes that a person's motivation is based on what he or she considers to be fair when compared to others (Redmond, 2010). Equity theory is a concept belonging to John S. Adams, a behavioural psychologist. Establishing an inclusive culture while remote working, Unlocking the wider potential of employee advocacy. First developed in the early 1960s by behavioural psychologist John S. Adams, equity theory is concerned with defining and measuring the relational satisfaction of employees. The employee seeks a balance between the amount of efforts he pours in (Input) and the kind of compensation he receives (Output). In business psychology, equity theory comes under the umbrella of organisational justice, which is concerned with employee perceptions of a company's internal and external behaviour and how these perceptions fuel or change their own attitudes and behaviour. Employees will compare themselves to other groups both inside and outside of the organization. There is nothing wrong in this expectation by the employees. It states that: ‘The motivation of an individual is positively correlated to his perception of justice and fair treatment practiced by the management. An individual’s satisfaction at the workplace is directly linked to the efforts he or she is putting and what exactly he or she is getting out of it. An employee compares his or her job’s inputs with an outcomes ratio. Together they form a unique fingerprint. When applied to the workplace, Equity Theory focuses on an employee's work-compensation relationship or "exchange relationship" as well as that employee's attempt to minimize any sense of unfairness that might result. Equity Theory suggests that if an individual thinks there is an inequality between two social groups or individuals, the person is likely to be distressed because the ratio between the input and the output are not equal. Even though Adams’ theory is over 50 ye… The core of the equity theory is the principle of balance or equity. Fingerprint Dive into the research topics of '"Equality Theory" as a Counterbalance to Equity Theory in Human Resource Management'. The basic assumption of the theory … Browse the definition and meaning of more similar terms. - If the employee’s ratio is greater than the referents’ ratio, the employee feels over-rewarded and again, Equity Tension is said to be developed. The Management Dictionary covers over 2000 business concepts from 6 categories. The 'inputs,' or what the employee gives to an organisation, can be broken down to many metrics including time, loyalty, effort, tolerance, flexibility, enthusiasm, personal sacrifice, skill and trust in superiors. According to this theory people are influenced in their behaviour choices by the relative rewards they receive. The Individual compares this input-output balance with the other employees in the organization (known as ‘referents’), Inputs: time, effort, loyalty, commitment, reliability, integrity, tolerance etc, Outcomes: pay, bonus, perks, benefits, praise, reputation, responsibility etc. MBA Skool is a Knowledge Resource for Management Students & Professionals. The person who gets too little may feel angry or humiliated. The importance of tying performance to outcomes was the heart of expectancy theory. It’s about the balance between the effort an employee puts into their work (input), and the result they get in return (output). The effective Human Resource Management in an organization requires an exceptional standard set for motivation, job design, reward system and equity. If you're interested in equity theory, you may want to read the following: Have you been a Culture Pioneer during the crisis? - If the individual’s output to input ratio is lower than the partner’s ratio, he feels under-rewarded and demotivated. In this review, we will begin by describing the classic equity paradigm and the supporting research. Quizzes test your expertise in business and Skill tests evaluate your management traits. Equity Theory states that the employees perceive what they get from a job situation (outcomes) about what they put into it (inputs) and then compare their inputs- outcomes ratio with the inputs- … There are similarities with Charles Handy's extension and interpretationof previous simpler theories of Maslow, Herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of their relationship with their work, and thereby their employer. Employees create a mental ledger of the inputs and outcomes of their job and then use this ledger to compare the ratio of their inputs and outputs to others. Equity theory is a theory of motivation that suggests that employee motivation at work is driven largely by their sense of fairness. Definition: Equity theory, popularly known as Adam's equity theory, aims to strike a balance between an employee’s input and output in a workplace.If the employee is able to find his or her right balance it would lead to a more productive relationship with the management. Higher is individual’s perception of fairness, greater is the motivation level and vice versa. - When the Output-Input ratio is equal to the referents’ ratio, Perfect Equity is said to be developed and the employee feels motivated. We will then review the history of equity research. This article has been researched & authored by the Business Concepts Team. Definition of Equity Theory Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. John Stacey Adams proposed that an employee’s motivation is affected by whether the employee believes that their employment benefits/rewards are at least equal to the amount of the effort that they put into their work. Academia.edu is a platform for academics to share research papers. Equity theory focuses on two sides: the input and the outcome. The phenomenon is called Equity Tension. Employment Equity And Its Implications For Human Resources Management 1461 Words | 6 Pages. 12. The phenomenon is called Equity Tension. Are your employees championing your brand? The person who gets too much may feel guilt or shame. According to equity theory, both the person who gets “too much” and the person who gets “too little” feel distressed. The theory helps explain why your employees’ motivation levels can go up and down at work. - When the Output-Input ratio is equal to the referents’ ratio, Perfect Equity is said to be developed and the employee feels motivated. Equity Theory. Equity Theory Summary In essence, the Equity Theory of Motivation proposes that high levels of employee motivation in the workplace can only be achieved when each employee perceives their treatment to be fair relative to others. Do you know the four basic components of EI? If the employee perceives inequality, he or she he will act to It proposes that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship. Every employee of an organisation expects that he should be treated with justice. Input includes hard work, skills, and enthusiasm. What is Adam's Equity theory The theory is built-on the belief that employees become demotivated, both in relation to their job and their employer, if they feel as though their inputs are greater than the outputs. We conclude by arguing that, to implicitly insert a stronger ethics focus into the study and practice of HRM, perhaps there should be “equality theory” competing with equity theory for recognition in managerial and scholarly discourse. Ethical ramifications of distributive equality so viewed are explored. While equity theory is a significant step forward, the theory itself needs further specification. John Stacey Adams, a workplace and behavioural psychologist, put forward hisEquity Theory on job motivation in 1963. For example, consider two employees who work the … The Adams Equity Theory was developed by the American psychologist John Stacey Adams in 1963. salary, fringe benefits, […] The equity theory has received support from research studies. Equity and its Impact on Pay Rates Equity Theory of Motivation: If a person perceives an inequity, a tension or drive will develop in the person’s mind, and the person will be motivated to reduce or eliminate the tension and perceived inequity. The content on MBA Skool has been created for educational & academic purpose only. Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person Concept of Equity Theory in the Workplace A proper balance between input and output ensures that an employee feels satisfied and motivated, contributing to their productivity. Description: Equity theory is used in parlance of human resource management. Nowadays, people are more willing to avoid unfair treatment in the workplace than any other aspect. Adams suggested that employees try to maintain a balance between what they give to an organisation against what they receive, and base satisfaction with their own balance on perceptions of the same balance in colleagues. study and practice of HRM, perhaps there should be "equality theory" competing with equity theory for rec-ognition in managerial and scholarly discourse. The theoretical precision and research related to equity theory, as it is conceived by Adams, are reviewed. As per this motivation theory, an individual’s motivation level is correlated to his perception of equity, fairness and justice practiced by the management. First developed in the early 1960s by behavioural psychologist John S. Adams, equity theory is concerned with defining and measuring the relational satisfaction of employees. The principal object of any system is equity or fairness. EQUITY THEORY This process theory focuses on workers' perceptions of the fairness of their work outcomes and inputs. Human Resource Management Arts & Humanities An objective of customer equity in the marketing domain is increasing customer retention and ultimately profitability. The theory proposes that the employee evaluates the outcomes from the job i.e. Human Resource Management - What is Adam's Equity theory Print; View Comments. It can be used in personal life, government or business. The equity theory was proposed by a Behavioral Psychologist, John Stacey Adams. The components of employee equity appear in Table 1, Table 2, Table 3. Equity theory: the Golden Point of the Psychological Contract. This theory is particularly helpful for understanding job satisfaction. According to Carrell and Dittrich (1978), “employees who perceive inequity will seek to reduce it, either by distorting inputs and/or outcomes in their own minds ("cognitive distortion"), directly altering inputs and/or outcomes, or leaving the organization.”. Output can be things like salary, recognition, and responsibility. The more inequitable the relationship, the more distress individuals feel. In the 1960s and 1970s, scholars generally concentrated on testing Equity Theory’s applicability to romantic, social, and business relationships. Efficiency is the effective, profit-maximizing use of scarce resources and captures concerns with productivity, competitiveness, and economic prosperity Equity guarantees employees earn a fair wage for their work, be in a non-discriminatory environment, and have fair labor standards. Anuja Indirakumar Lecturer: Cathy Tadres HRM701 3 December 2016 Employment Equity Introduction This paper will look into the topic of employment equity, by looking into the designated groups affected, as well as its implications for human resources management. In an HRM context, customer equity theory suggests an approach to managing people that also drives lifetime value and promotes workplace loyalty and retention. However, awareness and cognizance of the wid… - If the employee’s ratio is greater than the referents’ ratio, the employee feels over-rewarded and again, Equity Tension is … The research supports equity predictions in the area of underpayment, but the overpayment effects have not been satisfactorily demonstrated. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Next time we look at some common applications of motivational theory to the workplace: job design, goals setting and pay. It is centered around a cost-benefit analysis of any given relationship. Ethical ramifications of distributive equality so viewed are explored. Keywords Distributive equality • Distributive justice • Status leveling • Egalitarian Introduction Distributive justice is broadly defined as the fair distribu- It has been reviewed & published by the MBA Skool Team. 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