Equity Theory

Definition

Equity theory is a motivational model that suggests individuals are motivated to seek fairness and justice in the distribution of resources or outcomes in their relationships with others. It proposes that people evaluate their inputs (e.g., effort, experience, education) and outcomes (e.g., pay, recognition, opportunities) in comparison to those of their peers, and strive to maintain a sense of equity or fairness in these exchanges.

5 Must Know Facts For Your Next Test

1. Equity theory suggests that individuals are motivated to maintain a balance between their inputs (e.g., effort, skills, experience) and their outcomes (e.g., pay, recognition, opportunities).
2. When individuals perceive an imbalance or inequity in their input-outcome ratio compared to others, they experience tension and are motivated to restore equity.
3. Individuals can restore equity by adjusting their own inputs, altering their outcomes, changing their comparison group, or distorting their perceptions of inputs and outcomes.
4. Equity theory is a key component of content theories of motivation, as it focuses on the factors that energize, direct, and sustain human behavior.
5. Equity theory has important implications for reward systems in organizations, as employees are highly attuned to the fairness of compensation and recognition practices.

Review Questions

• Explain how equity theory relates to content theories of motivation.
  • Equity theory is considered a content theory of motivation because it focuses on the specific factors that drive and energize human behavior. It proposes that individuals are motivated to maintain a sense of fairness and balance between their inputs (e.g., effort, skills, experience) and their outcomes (e.g., pay, recognition, opportunities) in comparison to their peers. When individuals perceive an imbalance or inequity, they experience tension and are motivated to restore equity, which can involve adjusting their own inputs, altering their outcomes, changing their comparison group, or distorting their perceptions of inputs and outcomes.
• Describe the role of equity theory in process theories of motivation.
  • Equity theory is also considered a process theory of motivation, as it explains the cognitive processes individuals use to evaluate and compare their inputs and outcomes to those of others. The theory suggests that people engage in a mental calculation to assess the fairness of their exchange relationships, and this cognitive process ultimately influences their motivation and behavior. Equity theory helps explain how individuals determine what constitutes a fair or equitable outcome, and the steps they take to restore a sense of balance and justice in their relationships.
• Analyze the impact of equity theory on recent research on motivation theories.
  • Equity theory has had a significant impact on the development and evolution of motivation theories in recent decades. The theory has inspired further research on the importance of fairness and justice in the workplace, and has contributed to the understanding of how social comparisons and perceptions of equity influence employee motivation, job satisfaction, and organizational commitment. Recent studies have explored the role of equity theory in areas such as performance management, compensation systems, and the psychological contract between employers and employees. The continued relevance of equity theory highlights the enduring importance of fairness and justice as key drivers of human motivation.

Related terms

Distributive Justice: The perceived fairness of the outcomes or resources allocated to an individual in comparison to others.

Procedural Justice: The perceived fairness of the processes and procedures used to determine outcomes or resource allocation.

Social Comparison Theory: The tendency of individuals to compare themselves to others in order to evaluate their own abilities, opinions, and outcomes.