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Robbins & Judge (2007, p.186) defines Motivation “as the processes that account for an individual’s intensity, direction, and persistence of effort towards attaining a goal”. Equity theory comes under process theory which gives the perception whether the individual is going to work hard or not depending upon the rewards and possible outcomes. This paper discusses and describes the equity theory of motivation with its implications to managers in the light of a real organizational example.


John Stacey Adams, a workplace and behavioural psychologist,” articulated a construct of equity theory on job motivation and job satisfaction in 1965” (Okpara, 2006, p.226). “In equity theory individual make comparisons of their job inputs (for example efforts, experience, education, competence) and their outcomes (for example salary level, raises, recognition) with those of referent others and then respond to eliminate any inequities”(Robbins & Judge,2007,p.205). This theory states that “an individual who perceives that she or he is being treated unfairly in comparison to others will be motivated to act in ways that reduce the perceived inequity”(Campling,Poole,Wiesner,Schermerhorn,2006,p.394). An individual should feel a fair balance of what he/she puts into the jobs and what he/she gets out of it. Adams called these as inputs and outcomes (Okpara, 2006). Individuals are more likely to be motivated when they feel fairly or equitably treated. And when they are unfairly treated they are highly prone to the feeling of disaffection and demotivation.

In equity theory the most crucial feature is comparison. In equity theory employees make comparisons of their job inputs (efforts) and outcomes (rewards) with relevant others. According to Robbins & judge (2007) there are four referent comparisons that an employee can use:

1) Self- inside: The Employee will compare his or her experiences in a different position inside the employee’s current organization

2) Self- outside: The Employee will compare his or her experiences in a situation or position outside the employee’s current organization.

3) Other '' inside: The employee will compare with another individual or group of individuals inside the organization.

4) Other-outside: The employee will compare with another individual or group of individuals outside the organization.

Employees might compare themselves to friends, neighbours, co-workers or colleagues in same organization or other organization. Employee may choose its referent depending upon four variables '' gender, length of tenure, level in the organization and amount of education or professionalism. Employees with short tenure in their current organization don’t have much information about individuals or group of individuals within the organization. So these employees don’t make comparison with their colleagues while those with long tenure make comparisons with their colleagues. Employees in top position and with higher amount of education tend to have more information about people in other organization. So these employees make comparisons with individual or group of individuals from other organization (Robbins & Judge, 2007).

“The theory posits that people calculate a mental ratio of the outcomes (i.e. rewards) they receive and the inputs (i.e. effort) that they expend and compare it to the outcomes/inputs ratio of their referent” (Allen, Takeda and White, 2005, p.642).If the ratio of their outcomes/input is equivalent to the outcomes/input ratio of other employee then a state of equity exist. But state of inequity exists when their ratio is not equivalent, that means an employee’s own ratio of outcomes/input could be more than, or less than to that of other employees and so they experience equity tension. When they are underrewarded, the tension creates anger and when overrewarded the tension creates quilt (Allen, Takeda and White, 2005).When...
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