Professional Documents
Culture Documents
Equity Theory
2 Exchange Scenarios
3
Equity Theory Applications
4 Strategies for
Resolution of Inequity
5 Conclusion
Balancing Employee Inputs and Outputs
Inputs Outputs
Effort Financial rewards (salary,
Loyalty benefits, perks, etc.)
Hard Work Intangibles that include:
Personal sacrifice Recognition, Reputation,
Responsibility, Sense of
Skill Achievement, Praise, Job
Ability security, Stimulus, Sense
Adaptability of achievement/growth.
Flexibility
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Exchange Scenarios
Equity
Equity Theory –
Inequity -- Underpayment Various
circumstances
Inequity - Overpayment
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Equity Theory – various circumstances
Case 1: Equity -- pay allocation is
perceived to be fair - motivation is
sustained
Case 2: Inequity -- Underpayment.
Employee is motivated to seek justice.
Work motivation is disrupted.
Case 3: Inequity - Overpayment. Could
be problem. Inefficient. In other cultures
employees lose face.
Causes of inequality
The labor market
Innate ability
Education
Race, and culture
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Consequences and effects of Inequity
Social cohesion
Economic incentives
Economic growth
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Strategies for
Resolution of Inequity
Alter the person’s outcomes
Alter the person’s inputs
Alter the comparison other’s outputs
Alter the comparison other’s inputs
Change who is used as a comparison
other
Rationalize the inequity
Leave the organizational situation
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Equity Theory Applications
Develop tools to pay people in proportion
to their contributions
Let employees know who their pay
referents are in the pay system: identify
pay competitors and internal pay
comparators.
Strive for consistent pay allocations
Monitor internal pay structure and position
in the labor market for consistency.
LOGO
Key Points
Much like the five levels of needs determined by Maslow
and the two factors of motivation as classified by
Herzberg (intrinsic and extrinsic), the Adams Equity
Theory of motivation states that positive outcomes and
high levels of motivation can be expected only when
employees perceive their treatment to be fair. An
employee’s perception of this may include many factors.
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Key Points
The idea behind Adams’ Equity Theory is to strike a
healthy balance here, with outputs on one side of the
scale; inputs on the other - both weighing in a way that
seems reasonably equal.
If the balance lies too far in favor of the employer, some
employees may work to bring balance between inputs
and outputs on their own, by asking for more
compensation or recognition. Others will be demotivated,
and still others will seek alternative employment
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Conclusion
If the balance lies too far in favor of the employer, some employees
may work to bring balance between inputs and outputs on their own,
by asking for more compensation or recognition. Others will be
demotivated, and still others will seek alternative employment
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LOGO
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