Equity Theory of Motivation
Equity Theory was developed by James Stacy Adam. It was published in the journal, Experimental Social Psychology, 1965, New York titles ‘Inequality in Social Exchange’. The theory is also known as Adam’s Inequity Theory of Motivation. It is a cognitive-centered theory as it is basically concerned with the person himself, his beliefs, feelings or perceptions. Equity theory of work motivation is based on the social exchange process. Basically, he theory points out that people are motivated to maintain far relationship between their performance and reward in comparison to others.
Exchange relationship between a person’s inputs/outcomes in relation to those of other persons may be of three types:
1. Overpaid Inequity
In this case, the person perceives that his outcomes are more as compared to his inputs in relation to others. This relationship can be expressed by :
Person’s outcomes/Person’s inputs > Other’s outcomes/ Other’s inputs
In this case, the person might feel guilty
2. Underpaid Inequity
In this case, the person perceives that his outcomes are lower as compared to his inputs in relation to others. This relationship can be expressed as:
Person’s outcomes / Person’s inputs < Other’s outcomes /Other’s inputs
In this case, the person experience dissonance.
In this case, the person perceives that his outcomes in relation to his inputs are equal to those of others. This relationship can be expressed by :
Person’s outcomes / Person’s inputs = Other’s outcomes/ Other’s inputs
In this case person experiences satisfaction.
Assumptions of Equity Theory
1. An individual is concerned with his achievements (rewards and recognition) as well as with achievements of others.
2. Employees expect a fair and equitable return for their contribution to their jobs
3. Employees determine what return (equitable) they should receive after comparing their inputs with the outcomes their relational workers have received.
4. Employees who perceive themselves as being in an inequitable scenario will attempt to reduce the inequity either by distorting inputs and/or outcomes psychologically, by directly altering inputs and/or outputs, or by quitting the organization.
Merits of Equity Theory
1. The theory makes managers realize that equity motivate tends to be one of the most important motives of the people in the organization.
2. The theory is capable of contributing to both theory and practice of motivation.
Demerits of Equity Theory
1. Practically it is difficult to measure perception of people about output-input ratios.
2. The theory does not show clearly the specific actions a person should take to re-establish equity hen inequity is perceived.
3. The theory does not consider all motivation factors. Only personal perception is the basic consideration.
4. There is no standard measurement for efforts (inputs) and rewards, so, exact comparison with others is not possible.
5. An individual hardly accepts that he is getting more rewards than others. Most problems are of low return, the negative inequality.