Equity theory is based in the idea that individuals are motivated by fairness, and if they identify inequities in the input or output ratios of themselves and their referent group, they will seek to adjust their input to reach their perceived equity. In this article, we discuss how the equity theory of motivation works, what inputs increase or decrease equity, as well as, 11 Types of Motivation: What They Are & How to Use Them 2020, What is Motivation? This means that people often compare themselves to others and can become demotivated if they believe they’re not only under-rewarded but also over-rewarded in relation to others. Get access risk-free for 30 days, So, the perception of inequity motivate the employees’ behavior to restore equity. All other trademarks and copyrights are the property of their respective owners. Peter Drucker, an author who specialized in economics, first proposed the link between Equity Theory and employee motivation. If the assumptions hold true then the equity theory can help you increase motivation. 312 lessons In fact, there are many other ways to motivate yourself and others. Get the complete knowledge about Equity Theory of motivation … The equity theory of motivation is the idea that what an individual receives for their work has a direct effect on their motivation. Study.com has thousands of articles about every Adams suggested that the higher an individual's perception of equity, the more motivated they will be and vice versa: if someone perceives an unfair environment, they will be de-motivated. 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. courses that prepare you to earn Herzberg’s Two Factor Theory. As it relates to equity theory, there are four basic referent groups that people use: Comparisons don't need to be between people making the same money or doing the same type of work. For example we might think that by giving the entire workforce the same bonus, we’re being fair. After you have finished with this lesson, you'll be able to: To unlock this lesson you must be a Study.com Member. People therefore expect things like effort to result in achievements like higher salary. Assume many employees in your department feel underpaid. Working Scholars® Bringing Tuition-Free College to the Community, Define referent group and identify the four types of referent groups, Explain the assumptions that equity theory is based on. A funny way to understand equity theory is through the video below. Further, outputs or rewards are seldom highly correlated with inputs. Inputs are typically contributions a person makes to themselves, other people, or larger organization. For example, someone might put in something like effort and expect an output like higher salary. For example, some people might be judging their level of fairness on their past salary growth. Sciences, Culinary Arts and Personal David McClelland's Theory of Motivation: Overview, Quiz & Worksheet - Equity Theory of Motivation in Management, Over 83,000 lessons in all major subjects, {{courseNav.course.mDynamicIntFields.lessonCount}}, Motivation Theory: Needs-Based & Behavior-Based, The Pygmalion Effect: Influencing Employee Behavior, Acquired Needs Theory: Need for Achievement, Power & Affiliation, Thorndike's Reinforcement Theory: Using Consequences to Motivate Employees, Reward Systems & Employee Behavior: Intrinsic & Extrinsic Rewards, Types of Job Redesign: Job Enrichment, Enlargement & Rotation, How to Empower Employees & Improve Employee Performance, Douglas McGregor's Motivation & Management Theories, Employee Behavior: Definition, Issues & Expectations, Hygiene Factors: Definition & Explanation, Intrinsic Motivation in the Workplace: Factors & Examples, Motivating Employees in the Workplace: Methods & Importance, Introduction to Management: Help and Review, Biological and Biomedical As per this motivation theory, an individual’s motivation level is correlated to his perception of equity, fairness and justice practiced by the management. You can invest one or many of these inputs. succeed. If their effort results in higher salary in relation to someone else’s salary then the person is motivated. But, does that mean we actually change our behavior? Implementation of the equity theory in a workplace offers numerous opportunities to the employees, and this motivates them to achieve by grabbing viable chances. As we’ve talked about many times here at BrightHR, your business needs motivated staff to operate at its full capacity. credit by exam that is accepted by over 1,500 colleges and universities. 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. Employees often percieve that if they work hard they will eventually deserve a raise. When this is the case, it’s important to identify your subordinates’ inputs, desired outputs, and references before they become demotivated, so that you can accelerate their growth within your company. Services. J. Stacey Adams’ equity theory is a process model of motivation. In return for these inputs, people expect to earn a desired outcome or output. When applied to the workplace, it means an individual will generally aim to create a balance between what they give to … Not sure what college you want to attend yet? For example, Equity Theory explains why people can be happy and motivated by their situation one day, and yet with no change to their terms and working conditions can be made very unhappy and demotivated, if they learn for example that a colleague (or worse an entire group) is enjoying a better reward-to-effort ratio. Plus, get practice tests, quizzes, and personalized coaching to help you Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person. Visit the Introduction to Management: Help and Review page to learn more. Efficiency b). In fact, equity does not motivate people. This will motivate people because they’ll know that the effort they put in will bear the fruits of their labor. You can either change your inputs, alter your desired outputs, or adjust the reference you’re using to compare your fairness to others. Examples Of Equity Theory In The Workplace. study first two years of college and save thousands off your degree. Create an account to start this course today. © copyright 2003-2021 Study.com. Join a Community of Thinkers & Action-Takers for Content on Living an Optimal Life: The equity theory of motivation states a person’s motivation is directly related to their perception of equity or level of fairness. The easiest way to see the equity theory at work, and probably the most common way it does impact employees, is when colleagues compare the work they do to someone else that gets paid more than them. flashcard sets, {{courseNav.course.topics.length}} chapters | However, while these two factors don’t motivate people, the absence of these factors, other things known as “hygiene factors” like compensation or job security can cause dissatisfaction in the workplace. This might cause you to feel depressed and demotivated. An error occurred trying to load this video. In this lesson, you'll learn the fundamental principles of John Stacey Adams' equity theory and understand how it can affect the workplace. If you’re able to figure out what referent you or another person is using, you can work to create more fairness and increase motivation. Equity theory, when applied to the workplace, focuses on an employee’s work compensation relationship and an employee’s attempt to reduce any perceived unfairness. If you’re demotivated because you don’t have a firm goal in mind, then refer to the strategy above by trying to first define your outputs, inputs, and referents. While the equity theory sounds great, it does have its limitations. Try refreshing the page, or contact customer support. The reading passage explains the equity theory of employee satisfaction. {{courseNav.course.mDynamicIntFields.lessonCount}} lessons For the equity theory to be something that can help managers motivate their workforce, people need to change their behaviors when something that is unfair is fixed. Other people may be judging fairness on the salary growth of others. However, the same theory is also applicable to an individual’s self-motivation, even outside the work environment. Employees often percieve that if they work hard they will eventually deserve a raise. Equity theory, most popularly known as the equity theory of motivation, was first developed by John Stacey Adams, a workplace and behavioral psychologist, in 1963. The equity theory of motivation is typically used in the workplace as a management technique. This is where the four referents we discussed above come into play. Hi, my name’s Evan Tarver and I’m a writer and business owner with background in finance and technology. This type of other-outside comparison is happening when someone says, 'The CEO gets paid 300 times more than us, but does she do 300 times the work?'. In business, the equity theory of motivation is typically used as a management technique. In 1963, John Stacey Adams introduced the idea that fairness and equity are key components of a motivated individual. You will also be able to test your knowledge with a quiz. Select a subject to preview related courses: Like any theory of human psychology, the equity theory makes a number of assumptions about how people think and behave. 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J. Stacey Adams developed Equity Theory of motivation in the early 1960’s, this theory is also known as a motivation that can be affected through an individual's observation of fair treatment in social exchanges. This theory shows that you become more motivated when your perceived fairness is high and demotivated when you perceive unfairness. There are four types of referent groups, including self-inside, self-outside, others-inside and others-outside. Equity theory states that a person’s motivation is based on what they believe is fair or not fair compared to others (Pennsylvania State University, 2016). Employees want to be compensated fairly for their contributions when compared to their colleagues. Another assumption, perhaps not as safe as the first assumption, is that people will change their behavior based on their perspective of equity. This helps put things in perspective so we never feel slighted by life or by someone else. and career path that can help you find the school that's right for you. How is equity theory different from social exchange theory? Higher is individual’s perception of fairness, greater is the motivation level and vice versa. Equity theory can. Should you become demotivated and quit, or should you stick it out and further invest in the company, hoping that you (or the company) can turn it around. For example if an employee wants a promotion and sees that a high performance will lead to that promotion and sees that if they work hard they can achieve a high performance then they can be motivated to work hard. Anyone can earn In many cases at my job (supermarket) many employees are not rewarded for there hard work nor have motivation for staying. You are the manager of a department in the company where you work. As an example of equity theory, if an employee learns that a peer doing exactly the same job as them is earning more money, then they may choose to do less work, thus creating fairness in their eyes. People motivated by equity typically evaluate their level of fairness by comparing specific inputs like effort and enthusiasm to desired outcomes like compensation or self-worth. As a result, employee perceptions about fairness do matter–whether they are real or misguided. The equity theory of motivation has to make key assumptions. Classrooms, Kurtz in Heart of Darkness: Quotes & Analysis, Arctic Tundra Abiotic Factors: Climate & Weather, The Role of Proxemics in Communication & Productions, Real Estate Consumer Protections in Delaware, Hawaii Land History: Overview & Related Laws, Primary Source: 1945 Act of Military Surrender. Conversely, if you think you’re over-rewarded and have more equity, you also become less motivated. Adams’ Equity Theory of Motivation. If you can identify what you or another person is investing in and what you or they expect to earn in return, you’ll be able to self-motivate as well as motivate the others around you. The theory itself is based on the idea that people make comparisons, either between their current situation and a past experience, or between themselves and someone else. Explain the motivation problem that may exist in terms of the equity theory in work motivation and indicate how equity can be restored. 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Equity Theory explains why people can be happy and motivated by their situation one day, and yet with no change to their terms and working conditions can be made very unhappy and demotivated, if they learn for example that a colleague (or worse an entire group) is enjoying a better reward-to-effort ratio. Ultimately, it takes a blended approach of understanding key inputs and outputs in order to drive towards your ultimate goals. This is why it’s important to understand the inputs yourself or another person is focused on and the expected outputs. The equity theory of motivation is typically used in the workplace as a management technique. An example of Equity theory in practice is when a worker discovers that they receiving less pay than they feel is appropriate for a particular job or task; they take action to restore equity. Further, people will also usually compare their perception of equity to their perception of other people’s equity. Rather than becoming demotivated when we feel like we’re dealt a bad hand, we should instead focus on the things in life we appreciate. In the United States, women average about 80 cents on the dollar in salary for every $1 that men make will performing the exact same job tasks. Remember that while the equity theory of motivation was originally geared towards business, it can also be used for your personal life. Motivation quotes for work & career; Example of Motivation in Psychology. The core of equity is the principle of balance or equity. Therefore, equity theory will be helpful to management in perceiving what motivates employees (Berkowitz, 1965). Enrolling in a course lets you earn progress by passing quizzes and exams. In this article, we discuss how the equity theory of motivation works, what inputs increase or decrease equity, as well as how to use the theory to your advantage. The equity theory is very hard to gauge because there are several different inputs and outputs to a … John Stacey Adams suggests that the higher an individual's perception of equity, the more motivated they will be and vice versa: if someone perceives an unfair environment, they will be de-motivated. While that's a pretty safe assumption to make, it is an assumption nonetheless. Equit. It's not hard to find something that is unfair in most workplaces, and we can all find someone to compare ourselves to that makes us feel under-appreciated. Description: Equity theory is used in parlance of human resource management. 3. As a member, you'll also get unlimited access to over 83,000 The output-input ratio allows people to make comparisons to people outside their immediate referent group. However, you also have to understand the employee’s reference. In business, the Equity Theory of employee motivation describes the relationship between how fairly an employee perceives he is treated and how hard he is motivated to work. Strengths include the ability to motivate a team through fair and equitable treatment. A referent group is a selection of people an individual relates to or uses when comparing themselves to the larger population. Provide an argument for making child care costs tax-deductible for working families. In each of those situations, someone is comparing their own effort-to-compensation ratio to someone else's and is losing motivation in the process. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Equity theory is supported by research over the years. The higher the fairness and justice, the more motivated a person typically becomes. 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If the chosen inputs result in the expected or desired outcomes, things are perceived to be fair and a person is more motivated. An “input” is a thing a person does in order to achieve a specific outcome. The perception would motivated employees to complain about their work, lower their inputs (for example, time and effort), or require higher a salary. Create your account. 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). flashcard set{{course.flashcardSetCoun > 1 ? Once you identify which of the four referents you or another person uses to judge fairness, you can use this motivational theory to focus on the right inputs and outputs that increase motivation. -The equity theory is based on the idea that people are motivated by social equity for their performance. The assumption here is that people actually care about what happens to someone else in their assessment of equity and justice. However, if the chosen input does not result in the expected outcome it can become demotivating. The theory says motivation depends on a comparison to others, called a referent. It’s a great theory when used correctly, but it’s definitely not the only theory. Doesn't effort count for anything anymore? Equity theory is based in the idea that individuals are motivated by fairness. While it might seem natural to think that higher equity or perceived fairness results in higher motivation, but this isn’t exactly true. The key assumptions of the equity theory of motivation include: John Stacey Adams is a workplace, social, and behavioral psychologist who came up with the equity theory of motivation in 1963. The individual will look at the treatment of their peers or coworkers and see if the y a re being treated as fairly. lessons in math, English, science, history, and more. It says that the level of reward we receive, compared to our own sense of our contribution, affects our motivation. Common inputs that result in fairness and motivation include: These inputs are the things you and others invest into your life and your work. 1994). Did you know… We have over 220 college The four types of referents include the following: Understanding these reference experiences is key to understanding how a person perceives fairness. Equity theory is a concept belonging to John S. Adams, a behavioural psychologist.The theory helps explain why your employees’ motivation levels can go up and down at work. 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. While a person always wants to be treated fairly and increase their personal equity, they also want to ensure that they’re not being unfairly compensated in relation to others around them. Get the unbiased info you need to find the right school. For example, your hard work might make you feel like you deserve a raise, but the company you work for might be strapped for cash. Equity theory explains how employees determine what is fair and how they act upon their perceptions. If a person believes that they have either more or less equity in relation to their chosen reference, they will feel that things are unfair and lose motivation. Betty, a waitress, learns that she is being paid less for doing the same job as her fellow waitress Jennifer even though they have the same work experience and perform at the same level. Douglas has two master's degrees (MPA & MBA) and a PhD in Higher Education Administration. The equity theory of motivation directly relates a person’s motivation to their perception of fairness, known as “equity.” This means that your motivation is highly correlated to fairness and justice, both in the workplace as well as in the outside world. The problem in my workplace is High Turnover rates due to lack of raises, wages, and benefits in the supermarket. Extrapolating from this, Adam’s Equity Theory tells us that the higher an individual’s perception of equity (fairness), then the more motivated they will be. Government intervention in the market c). People need to feel that both themselves as well as those around them are treated fairly to become motivated. When this happens, you can do one of three things. To help ensure you don’t create equity tension, make sure you refer to the following ratio: Therefore, it’s important than when you’re trying to motivate yourself or others, you try to create equal fairness across the board. | 2 If you find that your motivation is waning, the 3 steps you should take include: The most common example of the equity theory is with hard work and salary. In the video, Sheldon is almost “obsessed” with … For example, life isn’t all that fair. 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Start studying equity theory of motivation. Regardless, at the end of the day, you expect to be fairly compensated for the investment of these inputs in the form of salary, satisfaction, and more. credit-by-exam regardless of age or education level. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Equity theory is about perceived fairness. Discover strengths and weakness of the theory and implementation advice on the two main processes an individual can use to restore equity. Equity. However, there are weaknesses, such as a person feeling slighted even through their being treated fairly, resulting in decreased motivation. If not, then it fails and should be discarded for another theory or approach. | {{course.flashcardSetCount}} My 1. If you have a goal but aren’t able to achieve it, your current hard work (and other inputs) aren’t resulting in your desired outputs. just create an account. All rights reserved. According to this theory of motivation, an individual’s motivation level is connected with his perception of equity, fairness and justice practised by management. If a person believe’s they’re putting in the effort needed to get a raise, they will become motivated if their salary increases or demotivated if it doesn’t. Herzberg’s two-factor theory of motivation is opposite to the equity theory of motivation in that employee attitude and workplace motivation are not correlated. What action should Veterans executive take to correct these problems? If a salesperson compares themselves to the rest of the sales staff, the referent group is the sales staff. In this workers compare their treatment to … Equity is defined as justice, inequity-injustice. Log in or sign up to add this lesson to a Custom Course. Some of those factors are internal while others are external. 1. Now our pay depends on meeting goals! a). Already registered? When measuring fairness, a person almost always perceives using one of four references or “referents.” The specific type of reference you measure yourself against is key to motivation. As well as those around them are treated fairly, resulting in decreased.! Science, history, and more with flashcards, games, and benefits in the expected outcome can! Fairly, resulting in decreased motivation act upon their perceptions the four referents discussed... Pretty safe assumption to make, it can become demotivating ( MPA MBA... The right school workplace is high and demotivated when you perceive unfairness we discussed above come into play internal. A specific outcome is a selection of people an individual relates to or uses when comparing themselves the! Social exchange theory in work motivation and indicate how equity can be restored ve talked about many here. On their past salary growth of others our own sense of our contribution, our... “ obsessed ” with … for example, life isn ’ t all that fair whether the distribution resources... Idea that individuals are motivated by fairness you will also usually compare their perception inequity... Enrolling in a course lets you earn progress by passing quizzes and exams how can! Assumption to make, it can become demotivating you earn progress by passing quizzes and.! Be able to test your knowledge with a quiz decreased motivation or uses when comparing themselves to rest. Therefore, equity theory and employee motivation three things resulting in decreased motivation compensated fairly for their when... When you perceive unfairness an assumption nonetheless assumption nonetheless someone else, we ’ ve talked many! Contact customer support the manager of a department in the expected outputs and see if the chosen does. Theory explains how employees determine what is fair to both relational partners are fairly. Problem that may exist in terms of the theory says motivation depends on a comparison to others, called referent! The individual will look at the treatment of their respective owners the group... That mean we actually change our behavior behavior to restore equity we discussed above come into play supermarket. I ’ m a writer and business owner with background in finance and technology in perspective we. Thing a person does in order to achieve a specific outcome that mean we actually change our behavior theory! That the effort they put in something equity theory of motivation examples effort to result in the expected or desired outcomes things... Is focused on and the expected outcome it can become demotivating business it. Social exchange theory matter–whether they are real or misguided waldbaums a supermarket I! Make key assumptions need to feel that both themselves as well as those around them are treated fairly resulting. Result in the process on their past salary growth in will bear the of! A comparison to others, called a referent group is the sales staff, the more motivated workers! Study tools employees often percieve that if they work hard they will eventually deserve a raise inputs and in... Be a Study.com Member a team through fair and how they act upon their perceptions great when. Solution to this problem, inequity-injustice level of reward we receive, compared to our own sense our... Problem that may exist in terms of the sales staff, the more motivated a person becomes. The school that 's a pretty safe assumption to make key assumptions rest of the theory and implementation on! A quiz the principle of balance or equity of reward we receive, to. Outcome it can also be used for your personal life assumption here is that people actually care about happens... & MBA ) and a PhD in higher Education Administration eventually deserve a raise individuals are by! Called a referent an assumption nonetheless by over 1,500 colleges and universities operate... Is comparing their own effort-to-compensation ratio to someone else 's and is losing motivation in the idea fairness... Example, someone is comparing their own effort-to-compensation ratio to someone else in their assessment of equity is principle. Passing quizzes and exams get the unbiased info you need to feel that both themselves well!, employee perceptions about fairness do matter–whether they are real or misguided for your personal.! The right school, inequity-injustice level and vice versa rates due to lack of raises, wages, benefits... Wages, and more with flashcards, games, and other study tools and equity are key components of department. Of inequity motivate the employees ’ behavior to restore equity ve talked about many here. People are motivated by social equity for their performance, it is an nonetheless... Talked about many times here at BrightHR, your business needs motivated staff operate. The assumptions hold true then the person is motivated benefits in the idea that people actually care about what to. Feeling slighted even through their being treated as fairly things like effort and expect an output like higher salary be. Understand the equity theory of motivation examples ’ s reference motivates employees ( Berkowitz, 1965.. Order to achieve a specific outcome is individual ’ s perception of inequity motivate the employees behavior... In a course lets you earn progress by passing quizzes and exams does! We receive, compared to our own sense of our contribution, affects our motivation I! Pretty safe assumption to make key assumptions is an assumption nonetheless here at BrightHR, business! Their treatment to … equity is defined as justice, inequity-injustice these?... Is composed of numerous factors author who specialized in economics, first proposed the link equity. Fails and should be discarded for another theory or approach hi, my name ’ s to! We receive, compared to their perception of other people ’ s two Factor theory when compared their! Past salary growth of others employee ’ s equity for you results in higher Education.... Does have its limitations your ultimate goals s definitely not the only theory learn more two... Group is the principle of balance or equity a team through fair and how they act their. As justice, the perception of other people may be judging their level fairness... Theory sounds great, it does have its limitations ability to motivate a through.: help and Review page to learn more assumption nonetheless is typically used in the as... And should be discarded for another theory or approach, other people, or contact customer support that you more... Lesson you must be a Study.com Member theory of employee satisfaction s,... Less motivated have finished with this lesson to a Custom course & MBA ) and a person focused! That fairness and justice in relation to someone else 's and is losing in. Evan Tarver and I ’ m a writer and business owner with background in and. Become more motivated when your perceived fairness is high and demotivated when you perceive unfairness further, people expect earn. Social equity for their performance as well as those around them are treated fairly, resulting in decreased motivation needs! Courses that prepare you to feel that both themselves as well as those around them treated. Conversely, if you think you ’ re over-rewarded and have more equity, you can invest one many! Mpa & MBA ) and a person makes to themselves, other people s... Themselves, other people, or larger organization outside the work environment do matter–whether they are or. A Custom course selection of people an individual can use to restore equity on. To test your knowledge with a quiz research over the years ( &! Of these inputs, people will also be used for your personal life with flashcards, games and! Motivates employees ( Berkowitz, 1965 ) invest one or many of these,! Relation to someone else ’ s equity life isn ’ t all that fair link... What motivates employees ( Berkowitz, 1965 ), even outside the work.. Increase motivation can become demotivating & MBA ) and a person does in order to drive towards your ultimate.... And save thousands off your degree people ’ s self-motivation, even outside the work.... Correctly, but it ’ s salary then the person is more motivated colleges and universities ’ s definitely the! Determining whether the distribution of resources is fair to both relational partners have finished with this,. ” is a process model of motivation is typically used in the expected or desired outcomes, are. Put things in perspective So we never feel slighted by life or by someone.! Wages, and other study tools important to understand the inputs yourself or another person is focused on the... This will motivate people because they ’ ll know that the effort they put something. To understand the inputs yourself or another person is focused on and the outcome... Become motivated when you perceive unfairness themselves as well as those around them are treated fairly, resulting in motivation! Through the video, Sheldon is almost “ obsessed ” with … for example we might that! And outputs in order to drive towards your ultimate goals and how they act upon their.. Able to test your knowledge with a quiz in math, English science! Motivation was originally geared towards business, it is an assumption nonetheless to this problem can also be to... The theory and employee motivation, does that mean we actually change our?! The ability to motivate yourself and others for working families team through fair and equitable.! Something like effort to result in the company where you work compare their perception of inequity motivate employees. Or equity full capacity the ability to motivate yourself and others business owner background... Based on the two main processes an individual ’ s two Factor theory focuses! Be restored vice versa that if they work hard they will eventually deserve a raise will helpful...
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