Adam’s Equity Theory

Adam’s Equity Theory

Equity theory, most popularly known as equity theory of motivation, was first developed by John Stacey Adams, a workplace and behavioral psychologist, in 1963.

John Stacey Adams proposed that an employee’s motivation is affected by whether the employee believes that their employment benefits/rewards are at least equal to the amount of the effort that they put into their work.

Definition of equity

An individual will consider that he is treated fairly if he perceives the ratio of his inputs to his outcomes to be equivalent to those around him. Thus, all else being equal, it would be acceptable for a more senior colleague to receive higher compensation, since the value of his experience (and input) is higher. The way people base their experience with satisfaction for their job is to make comparisons with themselves to people they work with. If an employee notices that another person is getting more recognition and rewards for their contributions, even when both have done the same amount and quality of work, it would persuade the employee to be dissatisfied. This dissatisfaction would result in the employee feeling under-appreciated and perhaps worthless. This is in direct contrast with the idea of equity theory, the idea is to have the rewards (outcomes) be directly related with the quality and quantity of the employees contributions (inputs). If both employees were perhaps rewarded the same, it would help the workforce realize that the organization is fair, observant, and appreciative.

This can be illustrated by the following equation:

Adam’s categorised employment benefits and rewards as outputs and an employee’s work effort as inputs.

Input Examples

• The number of hours worked by the employee

• An employee’s work responsibilities

• An employee’s work duties

• The work commitment demonstrated by the employee

• An employee’s loyalty

• An employee’s flexibility such as undertaking tasks at short notice

• The support that the employee has provided to the organisation, colleagues and line managers

Output Examples

• Salary

• Bonus

• Prizes

• Recognition of the employee’s contribution

• Positive work appraisals

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