The equity theory of motivation has been developed by social psychologist Stacy Adams. This theory focuses on people’s sense of justice and fairness. According to this theory a person’s motivation depends on the degree of equity that people perceive in their work situation. An employee’s sense of satisfaction comes about when he perceives that he inputs are in balance with the outcomes. Inputs generally refer to a person’s qualification, experience and special abilities. Outputs are the salary, benefits, etc.
However, people regularly compare their outcome-input ratio to the outcome-input ratios of relevant others, i.e. friends, colleagues, neighbours etc. in the same organization or other organisations. Sometimes they may also compare their present job with some other position that he held in the past in the same or another organization.
Equity occurs when the when a person perceives his outcome-input ratio to be equal to the outcome-input ratio of relevant others. Inequity occurs when there is an imbalance between the person’s outcome-input ratio and the outcome-input ratio of relevant others. This leads to what is known as ‘equity tension’.
When the person feels under-rewarded, it creates anger and tension in him, when he feels over-rewarded it may create a sense of guilt. Presence of equity tension motivates a person to take steps to correct it. An under-rewarded person may reduce the quantity or quality of his output or lower his level of commitment to the job, an over-rewarded person may either work harder or discount the value of the reward to restore a sense of balance.
The biggest limitation of the equity theory is that is does not provide any guidelines on how to restore equity. However, it highlights the importance of social comparison and recognises the role of cognitive processes in motivation.
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