We might not see it but this theory is applied at every workplace. Next time we look at some common applications of motivational theory to the workplace: job design, goals setting and pay. The effective Human Resource Management in an organization requires an exceptional standard set for motivation, job design, reward system and equity. It’s about the balance between the effort an employee puts into their work (input), and the result they get in return (output). 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. In business psychology, equity theory comes under the umbrella of organisational justice, which is concerned with employee perceptions of a company's internal and external behaviour and how these perceptions fuel or change their own attitudes and behaviour. We conclude by arguing that, to implicitly insert a stronger ethics focus into the study and practice of HRM, perhaps there should be “equality theory” competing with equity theory for recognition in managerial and scholarly discourse. Equity theory is a concept belonging to John S. Adams, a behavioural psychologist. This article has been researched & authored by the Business Concepts Team. Browse the definition and meaning of more similar terms. The person who gets too much may feel guilt or shame. Description: Equity theory is used in parlance of human resource management. The theory helps explain why your employees’ motivation levels can go up and down at work. The Management Dictionary covers over 2000 business concepts from 6 categories. 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. Employees will compare themselves to other groups both inside and outside of the organization. The basic assumption of the theory … The equity theory was proposed by a Behavioral Psychologist, John Stacey Adams. Adams (1965) developed a theory on motivation to attempt to explain behavior influenced by the norm of equity (Lane, Irving M. & Messe, Lawrence A., 1971). It can be used in personal life, government or business. The components of employee equity appear in Table 1, Table 2, Table 3. Ethical ramifications of distributive equality so viewed are explored. It has been reviewed & published by the MBA Skool Team. Human Resource Management - What is Adam's Equity theory Print; View Comments. Nowadays, people are more willing to avoid unfair treatment in the workplace than any other aspect. It proposes that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship. In an HRM context, customer equity theory suggests an approach to managing people that also drives lifetime value and promotes workplace loyalty and retention. Equity theory is a concept of human relations based on utility, or the amount of happiness and satisfaction one gets out of any given relationship. Efficiency is the effective, profit-maximizing use of scarce resources and captures concerns with productivity, competitiveness, and economic prosperity Equity guarantees employees earn a fair wage for their work, be in a non-discriminatory environment, and have fair labor standards. This theory is particularly helpful for understanding job satisfaction. The principal object of any system is equity or fairness. Equity and its Impact on Pay Rates Equity Theory of Motivation: If a person perceives an inequity, a tension or drive will develop in the person’s mind, and the person will be motivated to reduce or eliminate the tension and perceived inequity. -          If the individual’s output to input ratio is lower than the partner’s ratio, he feels under-rewarded and demotivated. It states that: ‘The motivation of an individual is positively correlated to his perception of justice and fair treatment practiced by the management. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. The research supports equity predictions in the area of underpayment, but the overpayment effects have not been satisfactorily demonstrated. Do you know the four basic components of EI? The importance of tying performance to outcomes was the heart of expectancy theory. Outcomes include 'hard' factors, such as salary, job security and employee benefits, but extend to less tangible aspects such as praise, sense of achievement, praise and reputation. Quizzes test your expertise in business and Skill tests evaluate your management traits. The phenomenon is called Equity Tension. -          When the Output-Input ratio is equal to the referents’ ratio, Perfect Equity is said to be developed and the employee feels motivated. Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person Concept of Equity Theory in the Workplace Employees create a mental ledger of the inputs and outcomes of their job and then use this ledger to compare the ratio of their inputs and outputs to others. For example, consider two employees who work the … The more inequitable the relationship, the more distress individuals feel. Together they form a unique fingerprint. Output can be things like salary, recognition, and responsibility. Establishing an inclusive culture while remote working, Unlocking the wider potential of employee advocacy. Anuja Indirakumar Lecturer: Cathy Tadres HRM701 3 December 2016 Employment Equity Introduction This paper will look into the topic of employment equity, by looking into the designated groups affected, as well as its implications for human resources management. Equity Theory. Ethical ramifications of distributive equality so viewed are explored. According to this theory people are influenced in their behaviour choices by the relative rewards they receive. Equity theory is a theory of motivation that suggests that employee motivation at work is driven largely by their sense of fairness. In the 1960s and 1970s, scholars generally concentrated on testing Equity Theory’s applicability to romantic, social, and business relationships. Adams suggested that employees try to maintain a balance between what they give to an organisation against what they receive, and base satisfaction with their own balance on perceptions of the same balance in colleagues. The person who gets too little may feel angry or humiliated. It is centered around a cost-benefit analysis of any given relationship. Equity theory is based on a principle that peoples' actions and motivations are guided by fairness and that discrepancies in this fairness in the workplace will spur them to try and redress it. The theoretical precision and research related to equity theory, as it is conceived by Adams, are reviewed. As per this motivation theory, an individual’s motivation level is correlated to his perception of equity, fairness and justice practiced by the management. There is nothing wrong in this expectation by the employees. Academia.edu is a platform for academics to share research papers. An objective of customer equity in the marketing domain is increasing customer retention and ultimately profitability. There are similarities with Charles Handy's extension and interpretationof previous simpler theories of Maslow, Herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of their relationship with their work, and thereby their employer. Fingerprint Dive into the research topics of '"Equality Theory" as a Counterbalance to Equity Theory in Human Resource Management'. 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). If you're interested in equity theory, you may want to read the following: Have you been a Culture Pioneer during the crisis? MBA Skool is a Knowledge Resource for Management Students & Professionals. While equity theory is a significant step forward, the theory itself needs further specification. ADVERTISEMENTS: The Equity Theory of Motivation! Even though Adams’ theory is over 50 ye… 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. The equity theory has received support from research studies. Equity Theory states that the employees perceive what they get from a job situation (outcomes) about what they put into it (inputs) and then compare their inputs- outcomes ratio with the inputs- … The theory proposes that the employee evaluates the outcomes from the job i.e. First developed in the early 1960s by behavioural psychologist John S. Adams, equity theory is concerned with defining and measuring the relational satisfaction of employees. Keywords Distributive equality • Distributive justice • Status leveling • Egalitarian Introduction Distributive justice is broadly defined as the fair distribu- 12. The employee seeks a balance between the amount of efforts he pours in (Input) and the kind of compensation he receives (Output). If the employee perceives inequality, he or she he will act to Equity theory: the Golden Point of the Psychological Contract. Let's first understand what we mean when we say input. The phenomenon is called Equity Tension. However, awareness and cognizance of the wid… A proper balance between input and output ensures that an employee feels satisfied and motivated, contributing to their productivity. We will then review the history of equity research. The Individual compares this input-output balance with the other employees in the organization (known as ‘referents’), Inputs: time, effort, loyalty, commitment, reliability, integrity, tolerance etc, Outcomes: pay, bonus, perks, benefits, praise, reputation, responsibility etc. According to equity theory, both the person who gets “too much” and the person who gets “too little” feel distressed. Definition of Equity Theory Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. John Stacey Adams, a workplace and behavioural psychologist, put forward hisEquity Theory on job motivation in 1963. The Adams Equity Theory was developed by the American psychologist John Stacey Adams in 1963. Equity Theory Summary In essence, the Equity Theory of Motivation proposes that high levels of employee motivation in the workplace can only be achieved when each employee perceives their treatment to be fair relative to others. John Stacey Adams proposed that an employee’s motivation is affected by whether the employee believes that their employment benefits/rewards are at least equal to the amount of the effort that they put into their work. Every employee of an organisation expects that he should be treated with justice. Equity theory focuses on two sides: the input and the outcome. The 'inputs,' or what the employee gives to an organisation, can be broken down to many metrics including time, loyalty, effort, tolerance, flexibility, enthusiasm, personal sacrifice, skill and trust in superiors. - If the employee’s ratio is greater than the referents’ ratio, the employee feels over-rewarded and again, Equity Tension is … study and practice of HRM, perhaps there should be "equality theory" competing with equity theory for rec-ognition in managerial and scholarly discourse. The content on MBA Skool has been created for educational & academic purpose only. An employee compares his or her job’s inputs with an outcomes ratio. EQUITY THEORY This process theory focuses on workers' perceptions of the fairness of their work outcomes and inputs. According to Carrell and Dittrich (1978), “employees who perceive inequity will seek to reduce it, either by distorting inputs and/or outcomes in their own minds ("cognitive distortion"), directly altering inputs and/or outcomes, or leaving the organization.”. Equity Theory suggests that if an individual thinks there is an inequality between two social groups or individuals, the person is likely to be distressed because the ratio between the input and the output are not equal. - When the Output-Input ratio is equal to the referents’ ratio, Perfect Equity is said to be developed and the employee feels motivated. Adams suggested that employees try to maintain a balance between what they give to an organisation against what they receive, and base satisfaction with their own balance on perceptions of the same balance in colleagues. What is Adam's Equity theory The theory is built-on the belief that employees become demotivated, both in relation to their job and their employer, if they feel as though their inputs are greater than the outputs. Human Resource Management Arts & Humanities First developed in the early 1960s by behavioural psychologist John S. Adams, equity theory is concerned with defining and measuring the relational satisfaction of employees. Employment Equity And Its Implications For Human Resources Management 1461 Words | 6 Pages. -          If the employee’s ratio is greater than the referents’ ratio, the employee feels over-rewarded and again, Equity Tension is said to be developed. Description: Equity theory is used in parlance of human resource management. salary, fringe benefits, […] As we’ve talked about many times here at BrightHR, your business needs motivated staff to operate at its full capacity. An individual’s satisfaction at the workplace is directly linked to the efforts he or she is putting and what exactly he or she is getting out of it. Are your employees championing your brand? Input includes hard work, skills, and enthusiasm. The core of the equity theory is the principle of balance or equity. In this review, we will begin by describing the classic equity paradigm and the supporting research. Higher is individual’s perception of fairness, greater is the motivation level and vice versa. Equity theory, most popularly known as equity theory of motivation, was first developed by John Stacey Adams, a workplace and behavioral psychologist, in 1963. Published by the relative rewards they receive inequitable the relationship, the more the... 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