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Equity Theory: Akash Patil Cmba4

Equity theory proposes that employees seek fairness or equity between their input into their job (such as time, effort, skills) and their outcomes (such as pay, benefits, recognition) compared to others. When an employee perceives inequity, such that their outcomes do not match their inputs relative to others, they may feel under-rewarded or over-rewarded. Under-rewarded employees may feel angry and reduce inputs, while over-rewarded employees may increase quality. The theory also outlines how employees may respond to perceived inequity through changing inputs, outcomes, perceptions, referents, or leaving their job.

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Aniket Akh
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83 views8 pages

Equity Theory: Akash Patil Cmba4

Equity theory proposes that employees seek fairness or equity between their input into their job (such as time, effort, skills) and their outcomes (such as pay, benefits, recognition) compared to others. When an employee perceives inequity, such that their outcomes do not match their inputs relative to others, they may feel under-rewarded or over-rewarded. Under-rewarded employees may feel angry and reduce inputs, while over-rewarded employees may increase quality. The theory also outlines how employees may respond to perceived inequity through changing inputs, outcomes, perceptions, referents, or leaving their job.

Uploaded by

Aniket Akh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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EQUITY THEORY

Akash Patil
CMBA4
Introduction to Equity Theory
First developed in 1963 by John Stacey Adams

Employees seek to maintain equity between the


inputs that they bring to a job and the outcomes that
they receive from it against the perceived inputs and
outcomes of others.

The structure of equity in the workplace is based on


the ratio of inputs to outcomes
Equity Theory
1)Equity:
A person feels equitably treated when his outcome/input ratio
is equal to other persons outcome/input ratio.
Individuals outcome = Others outcome
Individuals input Others input
Equitably paid workers are said to feel satisfied.
Equity Theory
2)Under rewarded inequity / Negative inequity:
A person feels under rewarded when his outcome/input ratio is
less than whom the person compare himself.
Individuals outcome < Others outcome
Individuals input Others input
Equity theory states that an underpaid worker feels angry.

3)Over rewarded inequity /Positive inequity:


A person feels over rewarded when his outcome/input ratio is
greater than whom the person compare himself.
Individuals outcome > Others outcome
Individuals input Others input
Equity theory states that an overpaid worker produce higher
quality.
Inputs & Outputs
Inputs Outputs
Individuals contribution to Organizations return to an
an Organization. Individual.

Time Job Security


Effort Salary
Loyalty Employee benefits
Hardwork Recognition
Commitment Reputation
Abilities Sense of achievement
Consequences of Inequity
Based on equity theory, when employees
perceive an inequity, they can be predicted to
make one of six choices.
They change their inputs.
They change their outcomes
They distort perceptions of self
They distort perceptions of others
They choose a different referent
They leave the field
References
Robbins, S.P- Organisational Behaviour.
pg. 183.
Schultz, K., Schoenherr, Nembhard, D. (2006).
Equity theory effects on worker motivation and
speed on an assembly line. Retrieved from:
http://www.hbs.edu/units/tom/pdf/kschultz.pdf
THANK YOU FOR YOUR ATTENTION!

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