Adams equity theory

EQUITY THEORY

2. This theory simply means that all the workers
in the organization should be treated equally,
then only they will be motivated& thereby
work efficiently & effectively for attaining
organizational goals.

3. People develop beliefs about what is a fair
reward for one’ job contribution - an exchange
People compare their exchanges with their
employer to exchanges with others-insiders
and outsiders called referents
If an employee believes his treatment is
inequitable, compared to others, he or she will
be motivated to do something about it -- that is,
seek justice.

4. Is versus Ir
Os Or
I = Inputs - employee’s contribution to
employer
R = Referent - comparison person
O = Outcomes – employers’ reward to employees

6. Case 1: Equity -- pay allocation is perceived
to be to be fair - motivation is sustained
Case 2: Inequity -- Underpayment.
Employee is motivated to seek justice. Work
motivation is disrupted.
Case 3: Inequity - Overpayment. Could be
problem. Inefficient. In other words,
employees lose their working mentality.

7. The employee is motivated to have an
equitable exchange with the employer.
To reduce inequity, employee may…
Reduce inputs (reduce effort)
Try to influence manager to increase outcomes
(complain, file grievance, etc.)
Try to influence co-workers’ inputs (criticize
others outcomes or inputs)
Withdraw emotionally - or physically (engage in
absenteeism, tardiness, or quit)

8. Develop tools to pay people in proportion to
their contributions
Let employees know who their pay referents
are in the pay system: identify pay competitors
and internal pay comparators.
Strive for consistent pay allocations
Monitor internal pay structure and position in
the labor market for consistency.