Equity Theory in Action: Motivating for Workplace Fairness

Understanding Equity Theory: Enhancing Workplace Motivation Business Skills

People are motivated to work when they believe that their inputs and outcomes are fair in relation to those of others. Understanding the specific reference experiences that individuals use to judge fairness is a key step in improving workplace motivation.

Employees often think of outside referents, such as friends or people who hold similar roles at other organizations. They also compare themselves to their previous experience in the role.

Exploring the Basics of Equity Theory in Management

Equity theory is a motivational concept that describes how people’s perceptions of fairness impact their levels of job satisfaction and motivation. It’s based on the idea that employees keep a mental record, akin to a “ledger,” of their contributions to the organization and what they receive in return. These contributions, or ‘inputs,’ can include everything from their hard work to their skill level and education. The ‘outputs,’ on the other hand, can be things like salary, benefits and opportunities for career advancement.

When it comes to measuring the input-output balance, employees often compare their own results with those of others both within and outside the organization. If they perceive that their contribution-reward ratio is skewed, they will become demotivated because they feel under-rewarded. On the other hand, if they see that their ratio is closer to the ideal, they will be more motivated because they believe they’re receiving what they deserve.

This is why it’s so important for managers to understand the importance of balancing the input-output scale in their organizations. They need to make sure that they’re rewarding workers for the amount of effort they put in while also ensuring that no one is being treated unfairly. This is a delicate balance that can be difficult to strike, but it’s essential for motivating employees in the long run.

When evaluating the equity of their contributions, people use four referents to judge fairness. These referents are the person themselves, other people within their immediate social circle, other members of their team and their superiors. For example, a programmer who is being given a lower salary than another programmer may think that their situation is unfair because the other programmer has more experience.

Adams’ Equity Theory: Balancing Inputs and Outputs

Adams’ equity theory is a widely popular model used by organizations around the world to shape their thinking and decision making about fairness at work. It is based on the belief that people evaluate the fairness of their relations with others – including co-workers, managers, and colleagues – by the extent to which they perceive that their inputs (such as their effort, skills, and experience) are proportionally rewarded.

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People make these comparisons either to a specified referent person, such as a co- worker, or to a generalised other. This comparison may be a purely financial one, for example, the ratio of one’s compensation versus the contributions of other people, or it could be a socially meaningful measurement, such as the extent to which an individual is praised and recognised by their peers.

If an individual feels that their outcomes are equitable in relation to their inputs compared with those of other people, they will be motivated by this perception of fairness. However, if they feel that their outcomes are overpaid or underpaid in relation to their inputs compared with the outcomes of other people, they will become demotivated and will not be able to contribute effectively to the organization.

In order to maintain their motivation levels, they will strive to restore the balance between their inputs and outcomes. This can be achieved through a variety of means, including cognitive distortion (where they alter their own perceptions of others’ inputs and outcomes), seeking changes in the inputs or outputs themselves, or by changing their relationship with the organization. By taking this into account, managers can help employees to avoid demotivating situations such as overpaid inequity and underpaid inequity, and instead create a sense of fairness that will drive employee performance.

Implementing Equity Theory: Practical Workplace Strategies

As a manager, you know that employee morale and productivity are tied to an individual’s perception of fairness at work. But what you may not realise is that even small acts of unfairness can have a big impact on employees’ sense of equity in the workplace.

To understand why, we need to take a closer look at the basic tenants of Adams’ Equity Theory. The principle of this theory is that employees will try to maintain a balance between the inputs they put into their job (such as time and energy) and the outputs they receive from the business (such as rewards, recognition and career progression). When an individual feels like this ratio is skewed in favour of one side or another, they will start to feel distressed about their situation at work.

When individuals make these comparisons they use what are known as referent groups to guide their judgements about the fairness of their treatment at work. These referent groups are usually made up of other individuals, but can also be based on predefined social norms or societal expectations.

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For example, employees will often compare their pay rates with others working in similar roles to them, or a specific peer group within the organisation. They will also draw comparisons with people outside of the organisation, such as friends or family members.

As a result of these comparisons, employees can become demoralised if they feel that their inputs are not adequately rewarded or their contributions are not being recognised or valued. This can lead to feelings of dissatisfaction and low morale, which will then have a negative impact on their productivity and engagement at work.

Measuring Fairness: The Impact of Equity on Performance

In a work environment, it’s important to understand the context your employees are working under. While you don’t want to pry into their personal lives, it is helpful to know if an employee has a family situation that affects his or her performance at work. For instance, if an employee has to spend time with their children due to schooling commitments or childcare issues, that may impact the level of input he or she gives at work.

People typically make a variety of comparisons to judge the fairness of their treatment, known as referent groups. These referents can be categorized into four significant categories: Self-inside referents, drawing on their own experiences within the company; self-outside referents, using information about the organization as a whole and other companies they’ve worked for; and social or societal references.

Adams’ equity theory suggests that there is an underlying norm that people seek an equitable exchange in their interactions with others. While this concept doesn’t necessarily apply to a company setting, managers can take advantage of it by ensuring that the benefits they provide to their staff are proportional to the inputs employees give to the business.

By doing this, employees can maintain their sense of a balance between inputs and outputs, which helps them feel satisfied in their jobs. However, if an employee feels they are being treated unfairly, this can detract from their overall job satisfaction and even lead to burnout. To avoid this, it’s best to communicate transparently and be aware of the influence that organizational changes can have on an individual’s perception of fairness. This can be done by celebrating examples of fairness in the workplace and providing resources, such as an employee assistance program, to help employees cope with uncertainties and threatened identities.

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