Equity Theory in Motivation
Understanding Fairness and Workplace Motivation
Introduction
• What is motivation? Motivation is
the force that drives individuals to
act and achieve goals.
• Why is motivation important in
the workplace? It impacts
productivity, employee satisfaction,
and retention.
• Overview of Equity Theory:
Developed by John Stacey Adams,
this theory explains how
perceptions of fairness influence
motivation.
Understanding
Equity Theory
• Definition: Equity Theory states that
employees assess fairness by comparing
their input-output ratio to others.
• Key Components: Inputs: Employee
contributions (effort, skills,
experience).Outputs: Rewards received
(salary, recognition, benefits).
• Comparison: Employees compare their ratio
with colleagues.
• Impact on motivation: If employees
perceive inequity, they may reduce effort,
seek higher compensation, or even leave
the company.
Types of Equity Perceptions
Equitable Situation: Inputs and Under-rewarded Inequity: Over-rewarded Inequity: Employees
outputs are perceived as fair, leading Employees feel undercompensated, receive more than their perceived fair
to motivation and job satisfaction. leading to demotivation and possible share, which can lead to guilt or
dissatisfaction. increased motivation.
Ensuring Fair Compensation:
Workplac Organizations should conduct
salary reviews and performance
e
appraisals.
Applicatio
ns of
Transparency in Rewards:
Clearly communicate promotion
criteria and rewards distribution.
Equity
Theory Recognition and Employee
Feedback: Acknowledge
employees' efforts and
contributions to maintain
perceived fairness.
Example: A Tech Company’s
Compensation Strategy
Case
Study
Issue: Employees discovered pay
disparities, causing dissatisfaction.
Examp Solution: The company introduced
transparent salary bands and
performance-based incentives.
le Outcome: Improved employee trust,
motivation, and productivity.
Challeng Bias in Performance
Evaluations
es in Lack of Transparent Promotion
Criteria
Maintaini Differences in Job Perceptions
ng Solutions:
Equity
• Implement objective performance metrics.
• Conduct regular employee surveys.
• Foster open communication about rewards
and expectations.
Compari
Maslow’s Hierarchy of Needs:
Focuses on fulfilling
psychological and self-growth
son with needs, while Equity Theory is
about fairness.
Other Herzberg’s Two-Factor Theory:
Motivati
Addresses job satisfaction
factors, whereas Equity
Theory deals with perception
on of fairness.
Theories Self-Determination Theory:
Emphasizes autonomy,
competence, and relatedness
rather than external fairness.
Conclusion
• Key Takeaways:
• Employees assess fairness by
comparing their input-output ratio
to others.
• Perceived inequity leads to
dissatisfaction and reduced
motivation.
• Companies should maintain fair
compensation, recognition, and
transparency.
• Call to Action: Organizations must
adopt fairness-driven policies to
maintain a motivated workforce.
References
• Adams, J. S. (1965). Inequity in
Social Exchange. Advances in
Experimental Social Psychology.
• Greenberg, J. (1990).
Organizational Justice:
Yesterday, Today, and Tomorrow.
Journal of Management.
• Robbins, S. P., & Judge, T. A.
(2019). Organizational Behavior.
Pearson.
