Adams' Equity Theory calls for a fair balance to be struck between an
employee's inputs (hard work, skill level, tolerance, enthusiasm, and so
on) and an employee's outputs (salary, benefits, intangibles such as
recognition,and so on). According to the theory, finding this fair balance serves to ensure a
strong and productive relationship is achieved with the employee, with
the overall result being contented, motivated employees.
To do this, consider the balance or imbalance that currently exists between your employee's inputs and outputs, as follows:
Inputs typically include:
Two assumptions made on equity theory
Individuals make contributions for which they expect certain rewards. Inputs include such things as the individuals past training and experience, special knowledge, personal characteristics, etc. Outcomes or rewards include pay, recognition, status, prestige, etc.
Individual compares his input-outcome ratio with the input-outcome ratio of other members of his level or status in the organisation. If the individual feels that his ratio is equal to that of others, there is equity. Therefore, he feels happy and gets motivated. If the ratio is
significantly less than those of others,the individual feels underpaid and frustrated. If the ratio is significantly more, the individual feels overpaid and guilty. He is likely to reduce his input of effort to create equity. Equity relationship can be expressed by
Outcomes by a person = Outcomes byanotherperson
Inputs by a person Inputs by another person
Two merits of equity theory.
i. This theory makes managers realize that equity motive tends to be one of the
most important motives of the people in the organization.
ii. Feelings or perceptions in equity are important factor in work setting.
Management should take necessary steps to develop the perceptual skill of
the people.
How to Apply the Adams' Equity Theory
It is important to also consider the Adams' Equity Theory factors when striving to improve an employee's job satisfaction, motivation level, etc., and what can be done to promote higher levels of each.To do this, consider the balance or imbalance that currently exists between your employee's inputs and outputs, as follows:
Inputs typically include:
- Effort.
- Loyalty.
- Hard work.
- Commitment.
- Skill.
- Ability.
- Adaptability.
- Flexibility.
- Tolerance.
- Determination.
- Enthusiasm.
- Trust in superiors.
- Support of colleagues.
- Personal sacrifice.
Two assumptions made on equity theory
Individuals make contributions for which they expect certain rewards. Inputs include such things as the individuals past training and experience, special knowledge, personal characteristics, etc. Outcomes or rewards include pay, recognition, status, prestige, etc.
Individual compares his input-outcome ratio with the input-outcome ratio of other members of his level or status in the organisation. If the individual feels that his ratio is equal to that of others, there is equity. Therefore, he feels happy and gets motivated. If the ratio is
significantly less than those of others,the individual feels underpaid and frustrated. If the ratio is significantly more, the individual feels overpaid and guilty. He is likely to reduce his input of effort to create equity. Equity relationship can be expressed by
Outcomes by a person = Outcomes byanotherperson
Inputs by a person Inputs by another person
Two merits of equity theory.
i. This theory makes managers realize that equity motive tends to be one of the
most important motives of the people in the organization.
ii. Feelings or perceptions in equity are important factor in work setting.
Management should take necessary steps to develop the perceptual skill of
the people.
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