Why is Equity Theory Important?

Equity Theory

It is important to maintain a balance in a group of people. The equity theory deals with the elements to make sure that the balance is maintained. Many employees complain of unequal distribution of wages. It is a significant concern for organizations across the world. This particular theory was devised to control such grievances and maintain an equal distribution of funds. It will help justify things. The theory is considered as one of the justice theories as well. You need to understand the theory from the perspective of justice. It will help you understand the importance and implication of the theory. The following sections will help you learn more about the theory. First, you need to know what it means.

What is Equity Theory?

This theory is also known as Adam’s equity theory. The theory mentions that there should be a balance between an employee's input and output. The employee needs to understand the job and learn the importance of the same. It is equally important for him/her to find their significance in the job. If you love what you are doing, productivity will automatically be better. The theory emphasizes this balance. You need to understand that you cannot justify the work if you do not like it. It is often found that an employee feels out of place if the job is not appropriate for him/her. The balance between the input and output gets hampered. Learning the equity theory will benefit the organisation and help them select the right people for the job. Know how to prepare balance sheet.

It is essential to learn the equity theory of motivation to understand how the idea is implied practically. The following section will help you learn about the implications and their relation to motivation.

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Equity Theory of Motivation

It is essential to keep the employees always motivated. Motivation is a significant factor, and all organizations need to put in efforts to keep the employees motivated. An employee will not be able to deliver well if he/she feels out of place or have some grievances. The equity theory of motivation formulated by John Stacey Adams looks into the behavioural aspects of the employees. You need to understand that there are many situations in an organization which does not seem fair apparently. But, if the employee can understand and adjust to the problem and make necessary changes, the situation will seem acceptable. It depends on the employee as well as the organization. You should have good leadership styles. Equal pay is something every employee cribs about. But, the work, each employee does is different. Also, situations where employees of the same level, doing the same work, get unequal payment. You can ask the employer about it or adapt to the situation. You can go and talk to the employee getting more money and understand why it is so. There can be reasons like better experience, more knowledge, a better educational qualification that has resulted in this inequality. You must try and understand these and work hard to get in the same zone. The thinking pattern makes the situation seem fair, and the work runs smoothly. Equity theory of motivation asks you to seek out fairness from an unfair situation.

John Stacey Adams was the person who formulated the theory. The following section will learn how he developed the theory and why it is still essential.

Understanding Adams’ Equity Theory

John Stacey Adams is a renowned psychologist. He is famous for his works on human behaviour and formulating the theory of justice. He is the one who understood how motivation could help improve productivity. Equity theory is the theory of justice created by John Stacey Adams. Today it is one of the most commonly used techniques for motivating employees and increasing productivity. To understand the theory better, you need to understand the inputs and the outputs related to it. You need to learn these elements and the typical inputs and outputs to understand equity theory.

The common inputs may include:

• Working hours or the effort one puts in
• Commitment to the work
• Enthusiasm towards the job
• Experience in that particular function
• Personal sacrifices (if any)
• The level of loyalty shown by the individual towards the organization
• The flexibility showed by the individual

These common inputs have a significant role to play in the outputs or the outcome. The expectation of an individual must have some relevance. Get details about cultural capital. You need to understand if the input given by you is sufficient for the output. The typical outputs may include.

• Salary
• Bonus
• Pension
• Annual holiday allowance
• Company car
• Stock options
• Recognition
• Promotion
• Performance appraisals
• Sense of achievement
• Learning

Now, to understand equity, you must be able to relate your inputs to the outputs. The equity theory explains that an individual will not only look into these two factors and be happy. He/she will look into the others' outputs and compare them with theirs. John Stacey Adams stated that the individual would analyze the surroundings and mould himself/herself in such a way that the situation seems fair. This is in case they find any inequity. Such inequities generally result in grievances and hamper productivity. Hence, it is always recommended to compare all the inputs along with the outputs before concluding. Read about malthusian theory.

The inputs and outputs have a significant role to play in the equity theory. You need to understand each element if you want to understand the theory well. It is equally essential to learn the components of the theory well.

What are the Components of Equity Theory?

The inputs and outputs are the essential components of equity theory. You will be unable to understand or learn the theory well if you do not understand its relation. As mentioned earlier, the inputs are generally your effort, hard work, commitment, etc., resulting in outputs like salary, bonus, etc. If you look at the employee grievances, you will understand that they are mostly related to these elements. Most employees compare the outputs without looking at the inputs. It results in huge grievances. But, if you look into the inputs and compare them with getting a better salary, you will understand the difference. The employee who understands the same and works on the inputs gets better outputs to understand equity and implement the theory correctly. An organization also must help the employees understand the differences and keep them motivated.

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