It means making sure that personal and social circumstances are not obstacles to achieving educational potential. Equity theory is a concept where people want the ratio of their outcomes to be nearly equivalent to the ratio of a referent person or a group. Equity is a sense of fairness in the exchange of goods, services, time, and effort. Looking back over our series, adams equity theory ties in closely with those of maslow and herzberg. What is motivation motivation university of oklahoma.
Equity theory was first developed in 1963 by jane stacy adams. The utility of equity theory in enhancing organizational effectiveness article pdf available in european journal of economics, finance and administrative sciences march 2012 with 18,267 reads. In its basic form, the equity theory of motivation implies that each individual is motivated by the concept of fairness. Higher is individuals perception of fairness, greater is the motivation level and vice versa. Output can be things like salary, recognition, and responsibility. Three such theories are reinforcement and expectancy theories, equity theory and agency theory. Pdf businesses in technical bankruptcy are part of the european context, many of them in such financial distress that they have lost all their equity. Equity theory why employee perceptions about fairness matter.
The equity theory of motivation states a persons motivation is directly related to their perception of equity or level of fairness. Adams equity theory leadership skills training from. Pdf the utility of equity theory in enhancing organizational. The negative rewards lead to obviously a less motivated employee. Examples include gender, socioeconomic status, or ethnic origin. Fairness is achieved when people feel they get approximately what they deserve from relationships. Social exchange theory proposes that social behavior is the result of an exchange process.
Equity theory assumes further that even an individuals inputs and outcomes do not inputs outcomes education, intelligence, experience, training pay, intrinsic rewards, satisfying supervision. This theory shows that you become more motivated when your perceived fairness is high and demotivated when you perceive unfairness. Amartya sens the idea of justice and the capability approach support the focus of poverty alleviation on the specific and individualized needs of the disadvantaged. The relevance of scientific management and equity theory in. First, they may restrict their inputs to a level they believe is consistent with the outcomes they receive. Miles university of georgia equity theory proposes that individuals who perceive themselves as either underrewarded or overrewarded will experience distress, and that this distress leads to efforts to restore equity. Learn vocabulary, terms, and more with flashcards, games, and other study tools. If there are unequal levels of input or output, either internally or within an observed group, then adjustments are made to create more fairness.
The equity theory of motivation suggested that human beings will be motivated to engage in an action or series of action if he or she perceives that the conditions of the situation are fair and just, ultimately benefitting the individual. Equity theory of motivation, developed in the early 1960s by j. In other words, an employee gets demotivated by the job and his employer in case his inputs are more than the outputs. A theory of justice dealing with the fair return from activities we do. The equity theory of motivation describes the relationship between the employees perception of how fairly is he being treated and how hard he is motivated to work. The idea of equity is the application of this principle of moral equality to the ways in which people are treated by society. The adams equity theory was developed by the american psychologist john stacey adams in 1963. The theory proposes that the employee evaluates the outcomes from the job i.
Equity, or more precisely, inequity is a major concern of industry. Equity theory is based in the idea that individuals are motivated by fairness, and if they identify inequities in the input or output ratios of themselves and their referent group, they will seek to adjust their input to reach their perceived equity. A very simplistic yet logical theory of workplace motivation was developed by john stacey adams, a workplace and behavioral psychologist, in 1963. This definition of experienced utility has the obvious advantage. Stacy adams, a workplace and behavioral psychologist, who asserted that. Equity theory has received more attention lately from human resource professionals especially regarding the fairness of outcomes. There are similarities with charles handys extension and interpretation of previous simpler theories of maslow, herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individuals. Relationship partners will try to balance their own costbenefit ratios to avoid getting a raw deal in the relationship as well as to avoid shortchanging. The purpose of this exchange is to maximize benefits and minimize costs. The equity theory of motivation how to keep your team. This article explains brand equity in a practical way. Equity theory is based on the idea that individuals are motivated by fairness. Equity forchildrenjune20 3of7 john rawls a theory of justice 1971 underlies the principle approach to alleviating inequity by targeting the most disadvantaged. An employee compares his or her jobs inputs with an outcomes ratio.
According to equity theory, it is the perception of equitability and inequitability. A condition that occurs when employees believe their remuneration and recognition are greater than their contribution merits, compared with other employees. Sep 25, 2016 equity theory deals with social relationships and fairnessunfairness, it is also known as the social comparisons theory or inequity theory gogia, 2010. Applying adams equity theory to employee engagement. After reading you will understand the basics of this powerful strategic marketing tool what is brand equity. Equity theory is based on the premise that employees will put forth a particular level of effort that they feel compares to the reward potential. If the employee is able to find his or her right balance it would lead to a more productive relationship with the management. Equity theory and performance applied social psychology. When applied to the workplace, equity theory focuses on an employees workcompensation relationship or exchange relationship as well as that employees attempt to minimize any sense of unfairness that might result. Equity theory states that humans have a natural tendency to maintain equity in their social relationships.
Equity theory definition, meaning, examples, advantages. In simple terms, equity theory states that if an individual identifies an inequity between themselves and a peer, they will adjust the work they do to make the situation fair in their eyes. The equity theory of relationships is based on a theory developed by workplace and behavioral psychologist john stacey adams. In financial world most investors and investment decisions are totally dependent upon the accurate information. Developed by the behavioral and workplace psychologist, john stacy adams, equity theory of motivation is one of the justice theories explaining the correlation between input and outcome of performance of employee at a job with hisher perception of equitable or inequitable behavior from the employers. Equity theory of motivation management study guide. It explores the perceptions of humans regarding their inputs in the relationship and the outcomes they get. Equity theory proposes that a persons motivation is based on what he or she considers to be fair when compared to others redmond, 2010.
The theoretical bases for the preparation of financial. A brand is not just a logo or a name, because for a consumer a brand reflects a certain emotion or association. 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. Pdf this paper will focus on examining equity theory, its propositions and underlying. Generally speaking, equity is the value of an asset less the amount of all liabilities on that asset. The theory s distress prediction proposition 3 above is based upon the assumption that indi viduals are equally sensitive to equity. Inputs include all the rich and diverse elements that employees believe they bring or contribute to the job. Equity theory based strategies for students on overcoming. Information and translations of equity theory in the most comprehensive dictionary definitions resource on the web. For managers it is better to effectively address these concerns than ignore them. In fact, rabins model is restricted to twoperson normal form games which means that very important classes of games like, e. Stacey adams, recognized that motivation can be affected through an individuals perception of fair treatment in social. Equity theory is a conceptualization that focuses on the causes and consequences of peoples perceptions of equity and inequity in their relationships with others.
A theory of satisfaction and utility with empirical and experimental. Equity theory is supported by research over the years. Equity theory will help hrd explain employees behavior and provide them with the possible factors that might decrease efficiency and performance. As a result, employee perceptions about fairness do matterwhether they are real or misguided. As per this motivation theory, an individuals motivation level is correlated to his perception of equity, fairness and justice practiced by the management. Its about the balance between the effort an employee puts into their work input, and the result they get in return output. As an example of equity theory, if an employee learns that a peer doing. Every employee of an organisation expects that he should be treated with justice. Defining and measuring inequality odi inequality briefings 1.
However, equity theory takes a less straightforward and more fluid approach than previous models. Considered one of the justice theories, equity theory was first developed in the 1960s by j. Equity theory motivation is affected by ones perception accurate or inaccurate of the relative outcome rewards one receives and inputs efforts one exerts in comparison to others. Stacy adams in 1963 and fully developed in a chapter published 2 years later, equity theory draws on earlier social psychological concepts inspired by fritz heiders balance. John stacey adams equity motivation theory allows you to put workplace psychology into action and increase your own or your teams motivation. When an individual feels that he or she has been treated unfairly compared to others, the individual will be motivated to remove the discomfort and would develop some sort equity to the. According to the theory, employee motivation is the result of the balance between what an. Referent others are used to describe the reference points or people with whom we compare our own situation, which is the pivotal part of the theory. Theories of compensation human resource management. Based on the research of john stacey adams, a workplace psychologist. As you acquire more equity, your ownership stake in the company becomes greater. Equity theory of motivation tries to address this problem of unequal treatment among employees in a company and its effect on the overall motivation of the employees because slight unequal treatment is present everywhere but when this unequal treatment becomes excessive than it hampers the motivation of the employees in a negative way which can.
Emotional intelligence refers to the capability of a person to manage and control his or her emotions and possess the ability to control the emotions of others as well. The core of the equity theory is the principle of balance or equity. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Jan 09, 2018 according to the theory, employee motivation is the result of the balance between what an employee attributes to the company against the recognition heshe receives as compared to what hisher coworkers receive for the same attribution. The higher an individuals perception of equity, the more motivated they will be. This theory of motivation states that positive outcomes and high levels of motivation can be expected only when employees perceive their treatment to be fair. The book value of equity is calculated as the difference between assets types of assets common types of assets include.
The dictionary meaning of the word equity is the quality of being fair and impartial. Adams, equity theory is concerned with defining and measuring the relational satisfaction of employees. Equity theory definition first developed in the early 1960s by behavioural psychologist john s. For all these reasons, improving equity in education and reducing school failure should be a. Read this article to learn about the equity theory of motivation and its evaluation. Equity theory is used in parlance of human resource management. It can be used in personal life, government or business. The principle should cover every individuals actions in society but should be of particular importance in setting goals and constraints on actions by governments and states. Adams equity theory, a powerful theory of motivation. It can be represented with the accounting equation. Adams asserted that when people feel distress from inequity they may react in one or all of the following ways. The theory is based on the idea that people are motivated by the ratio of inputs and outputs they receive in comparison to others. Equity theory of motivation examples explained hrf. Equity theory adds a crucial additional perspective of comparison with referent others people we consider in a similar situation.
Equity represents a claim on the companys assets and earnings. Social exchange theory in psychology verywell mind. This theory is based on social comparisons and the notion that unequity is a motivating state. This theory was based on the belief that employee effort leads to performance and performance leads to rewards. The equity theory of motivation how to keep your team motivated. Dissertation committees dara schniederjans rawls college of business, texas tech university, lubbock, tx, usa dara.
V and v 5 v we define v v and v v as the players expected payoffs. The utility of equity theory in enhancing organizational effectiveness introduction what motivates people to work. Equity theory is a concept of human relations based on utility, or the amount of happiness and satisfaction one gets out of any given relationship. In finance and accounting, equity is the value attributable to the owners of a business. In other words, they can influence the emotions of other people also. Inequality in such variables is generally summarised by an inequality index, which in terms of figure 1 can be expressed as the degree of dispersion or width of the distribution. Equity definition is justice according to natural law or right. Equity theory is a concept in industrialorganizational psychology that focuses on an individuals perceptions of how equitably they are being treated in their work organization. The equity theory owes its origin to several prominent theorists. Theories of compensation in order to understand which components of remuneration are more effective, we need to understand the conceptual framework or theories or employee remuneration.
Unlike social exchange theory that argues how people try to maximise rewards and minimise costs in relationships, equity theory suggests that partners are concerned about fairness in relationships. So these decisions may include which company to be invested into, when to come out from particular stock, what has to be stop loss etc. Equity theory posits that when it comes to relationships, two concerns stand out. Equity theory based strategies for students on overcoming problems in ph. The compensation is the remuneration given to the employees for the work they do for the organization. Stacey adams equity theory employee motivation theories. It says that individuals compare their job inputs and outcomes with those of others and then respond to eliminate any inequalities.
In other words, an employee is entitled to both the financial and the nonfinancial benefits in return for his contribution to the organization. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Equity is measured by comparing the ratio of contributions or costs and benefits or rewards for each person. Adams equity theory, which stresses the importance of striking a balance between employee inputs and outputs. Equity theory proposes that individuals who perceive themselves as. Adams equity theory builds on maslows hierarchy of needs and herzbergs two factor theory, and was first presented in 1963. Stacey adams formulation of the theory which is most highly developed and researched statement on the topic. Equity theory adams, 1963, 1965 draws from exchange.
The positive rewards lead to a more positive employee who is highly motivated. Equity theory definition equity theory states that people desire the ratio of their outcomes and investments to be roughly equivalent to the ratio for some other referent person or group. The adams equity theory posits that people maintain a fair relationship between the performance and rewards in comparison to others. While a wide range of inequality indices of inequality have been developed, some general properties apply to all. According to the equity theory, a person will be motivated to work towards a goal if he is she feels that. Inequity aversion research on humans mostly occurs in the discipline of economics though it is also studied in sociology research on inequity aversion began in 1978 when studies suggested that humans are sensitive to inequities in favor of as well as those against them, and that some people attempt overcompensation when they feel guilty or unhappy to have received an. When analyzing inequity resolution in the workplace, its important to understand the theory behind inequity. It the ratio is not equal, then emotional responses will occur that will result in the restoration of equity by itself. The case for promoting equity in developing countries 19 4. The utility of equity theory in enhancing organizational.
John stacey adams, a workplace and behavioural psychologist, put forward his equity theory on job motivation in 1963. The principal object of any system is equity or fairness. Equity theory, popularly known as adams equity theory, aims to strike a balance between an employees input and output in a workplace. In 1963, john stacey adams introduced the idea that fairness and equity are key components of a motivated individual. International evidence and conflicting theories of change. Equity theory explains how employees determine what is fair and how they act upon their perceptions. John stacey adamss equity theory has been a part of classical management literature since 1963. It is centered around a costbenefit analysis of any given relationship. Multicountry evaluation on increasing access and equity in early childhood education.
Plain and simple, equity is a share in the ownership of a company. Concept that people derive job satisfaction and motivation by comparing their efforts inputs and income outputs with those of the other people in the same or other firms. According to this theory, developed by sociologist george homans, people weigh the potential benefits and risks of social relationships. What is equity research learn more about equity research. In short, adams equity theory means that employees will become demotivated if. There is nothing wrong in this expectation by the employees. If ratios are not equal, and the difference is beyond some individual threshold level, emotional responses occur and the desire to restore equity manifests. The resultant feelings of guilt can lead to the employees increasing their effort in an attempt to redress the balance. It ensures a basic minimum standard of education for all.
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