Equity theory suggests that individuals who perceive themselves as either underrewarded or overrewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship. Adams equity theory, a powerful theory of motivation toolshero. Expectancy theory of motivation management study guide. Outputs are everything you get in return, like your salary, bonuses, raises and promotions. Reward systems are central to the human resource management function. Equity theory thus helps explain why pay and conditions alone do not determine motivation. Looking back over our series, adams equity theory ties in closely with those of maslow and herzberg. Equity theory of motivation examples explained hrf. The equity and fairness of employee compensation systems. Equity theory adds a crucial additional perspective of comparison with referent others people we consider in a similar situation. Adams equity theory goes beyond and is quite different from merely assessing effort and reward.
Lisa coffey msc in management at national college of ireland. By lyndsay swinton owner, management for the rest of us. However, equity theory takes a less straightforward and more fluid approach than previous models. In this example, monkeys receive a reward for good behavior in the. Stacey adams equity theory employee motivation theories. Equity theory states that the employees perceive what they get from a job situation outcomes about what they put into it inputs and then compare their inputs. But adams equity theory is a far more complex and sophisticated motivational model than merely assessing effort inputs and reward outputs. Motivating employees with limited pay incentives using equity theory and the fast.
As per this motivation theory, an individuals motivation level is correlated to his perception of equity, fairness and justice practiced by the management. Having chosen the research topic the next step was to set out objectives on which to base the research. This aim of this assignment is to determine the equity and fairness of employee compensation systems. According to the theory, finding this fair balance serves to. Like the reinforcement theory, vrooms expectancy theory focuses on the link between rewards and behavior. Motivation, according to the theory, is the product of valence, instrumentality and expectancy. Reward processes are based on reward philosophies and strategies and contain arrangements in the shape of policies and strategies and contain arrangements in the shape of policies, guiding principles. Effort reward imbalance an overview sciencedirect topics.
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 theory emphasizes the importance of a person actually experiencing the reward. The resultant feelings of resentment can lead to employees reducing their efforts in an attempt to redress the balance. In equity theory, motivation is affected by the individual perception of being treated fairly in comparison to others. Pdf this paper will focus on examining equity theory. The utility of equity theory in enhancing organizational effectiveness. Academy of management is collaborating with jstor to digitize, preserve and extend access to the academy. Equity is measured by comparing the ratio of contributions or costs and benefits or rewards for each person. The reward strategy and performance measurement evidence. Equity theory and its effect on performance outcome ijser. The utility of equity theory in enhancing organizational.
The adams equity theory was developed by the american psychologist john stacey adams in 1963. Remuneration systems differ according to their impact on. Reward constitutes an important element in human resources management. The views presented in this paper are those of the author and do not necessarily represent the views of odi. I will follow a line of investigation on equity theory in regard to its fundamental importance to organizations since it is assumed to be one of. Equity theory plays a role in analyzing organizational behavior. Equity theory states that peoples behavior correlates to the fairness with which theyre treated, according to warren plunkett, raymond attner and gemmy allen, authors of management. Managing employees reward appropriately is an important factor as a return for their contributions or performance to organization. Equity theory and employee motivation free download as word doc. The theory is also known as adams inequity theory of motivation. In terms of how the theory applies to work and management, we. Equity theory can be illustrated using an example from tolmans monkeys bell.
Equity theory is used in parlance of human resource management. According to the theory, employee motivation is the result of the balance between what an. Implement a reward and recognition scheme to make sure that good performance is noticed and shared. This article explains the adams equity theory, developed by john stacey adams in a practical way. In the sections that follow, adams equity theory will be briefly summarized. Theories of motivation provide a theoretical basis for reward management though some of the best known ones have emerged from the psychology discipline. As a key component of the overall human resource strategy, reward management is central to the productivity of employees which is also linked to the overall profitability of an organization, as well as its long term survival. A giver, more willing to accept less rewards, contribute more inputs. The theory basis of total reward includes maslows need hierarchy theory, alderfers erg theory. The researcher hereby declares that the thesis, the relationship between reward management and recognition in the workplace, is her own work and that all sources that have been referred to and quoted have been indicated and acknowledged with complete references. Taylors scientific management and adams equity theory because most employees working in many positions in manufacturing, home building, and food fast services do not have a college degree, or a degree in business where they may have come in contact with. The relevance of scientific management and equity theory in. Theories of compensation reinforcement and expectancy theory. Most commonly an individual will compare the role that they do to someone who is getting paid more than they are.
Reward management is an integral part of the measure of the competitiveness of an organization. After reading it, you will understand the basics of this powerful motivation theory. Abstract this study examines the concept of equity theory, its intention, and core hypothesis. Their purpose is to attract talented individuals, motivate them and retain those that have a better fit with the organization. You can identify equity theory in the workplace by listening to the phrases that people use in conversation. Considered one of the justice theories, equity theory was first developed in the 1960s by j. In this article, we discuss how the equity theory of motivation works, what inputs increase or decrease equity, as well as how to use. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Equity theory and its effect on performance outcome sultan gashgari. The resultant feelings of guilt can lead to the employees increasing their effort in an attempt to redress the balance. Equity theory international journal of business and social science. A condition that occurs when employees believe their remuneration and recognition are greater than their contribution merits, compared with other employees.
The equity theory of motivation deals with the way people compare the value of themselves to others in similar work situations based on their inputs and outputs. The behavioral psychologist, john stacey adams, developed a useful model for explaining why employee perceptions about fairness matters. The book provides an analysis of the crucial literature on remuneration and performance. Therefore, equity theory will be helpful to management in perceiving what motivates employees. Control over these factors is central to ensuring a high degree of internal. Pdf reward systems are identified as one of the human resource management hrm practices that may impact motivation. It was published in the journal, experimental social psychology, 1965, new york titles inequality in social exchange. Adams called personal efforts and rewards and other. Adams equity theory, which stresses the importance of striking a balance between employee. Equity theory of motivation management study guide.
Ability to recruit and retain the best and the brightest avoid inefficiencies and costs that detract from companies employees will not be taken for granted by the employer importance of equity of compensation burns, 2012 to maintain companys marketability 8. Stacy adams, a workplace and behavioral psychologist, who asserted that. Equity theory proposes that a persons motivation is based on what he or she considers to be fair when compared to others redmond, 2010. One of the more important features of workplace equity lies in expectations. Reward management is also concerned with the development of appropriate organizational. Inputs are what you bring to the situation, like your skills, time and education. Higher is individuals perception of fairness, greater is the motivation level and vice versa. Equity theory is in play when individuals say things like. The relationship between reward management and recognition in the workplace, is her own work and that all sources that. International journal of management science and business administration, 33, pp. Equity theory adams equity theory explains the thought process an employee uses to determine the fairness of management decision making. The core of the equity theory is the principle of balance or equity. This theory is based on the assumption that, the reward earning behavior is likely to be repeated, i. Pdf the utility of equity theory in enhancing organizational.
Reward management is the process of developing and. Adams equity theory, a powerful theory of motivation. The utility of equity theory in enhancing organizational effectiveness introduction what motivates people to work. Theories of compensation human resource management. After reading it, you will understand the basics of this powerful motivation theory what is the adams equity theory. According to adam equity theory 1963, less reward may result to the decreasing of employees performance such as high number of absenteeism, as well as lack of interest in doing task that is. A famous content theory would be maslows hierarchy of needs, and a famous process theory would be the equity theory. Equity theory proposes that a persons motivation is based on what he or. This theory is based on the assumption that, the rewardearning behavior is likely to be repeated, i. Equity theory and employee motivation motivation self.
Miles university of georgia equity theory proposes that individuals who perceive themselves as. It is a cognitivecentered theory as it is basically concerned with the person himself, his. Thus, managers should try to reinforce the employee behavior, such. The notforprofit organisation champions better work and working lives and has been setting the benchmark for excellence in people and organisation development for more. If the employee is able to find his or her right balance it would lead to a more productive relationship with the management.
As a key component of the overall human resource strategy, reward management is central to the productivity of employees which is also linked to the overall profitability of. Equity theory of motivation equity theory was developed by james stacy adam. Reward management is about the design, implementation, maintenance, communication and evolution of reward processes which help organizations to improve performance and achieve their objectives. 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.
Reward systems motivating different generations a case study of volvo cars corporation tutor. In its basic form, the equity theory of motivation implies that each individual is motivated by the concept of fairness. In business psychology, equity theory comes under the umbrella of organisational justice, which is concerned with employee perceptions of a companys internal and external behaviour and how these perceptions fuel or change their own attitudes and behaviour. Adams equity theory leadership skills training from. The relationship between reward management and recognition in the workplace by lisa coffey. Equity theory, popularly known as adams equity theory, aims to strike a balance between an employees input and output in a workplace. According to equity theory, it is the perception of equitability and inequitability. The expectancy theory states that employees motivation is an outcome of how much an individual wants a reward valence, the assessment that the likelihood that the effort will lead to expected performance expectancy and the belief that the performance will lead to reward instrumentality. 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.
Reinforcement and expectancy theory, equity theory and agency theory which are explained below. The resultant feelings of resentment can lead to employees reducing their efforts in an attempt to. An employee compares his or her jobs inputs with an outcomes ratio. Applying adams equity theory to employee engagement. If youre interested in equity theory, you may want to read the following.
Therefore, equity theory will be helpful to management in perceiving what motivates employees berkowitz, 1965. However, the same theory is also applicable to an individuals selfmotivation, even outside the work environment. John stacey adams suggests that the higher an individuals perception of equity, the more motivated they will be and vice versa. Equity theory proposes that individuals who perceive themselves as. Therefore, equity theory will be helpful to management in perceiving what motivates. The equity theory of motivation deals with the way people. Issues and trends in reward management human resource. Managing employee performance and reward critically examines contemporary theory and practice in these central fields of human resource management hrm, providing a comprehensive overview of the key concepts and topics, and draws on a wide range of case studies to demonstrate the theories. 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. The adams equity theory was developed by the american psychologist john stacey. Its important for managers to be aware of this factor and actively give. A condition that occurs when an employee believes his or her remuneration and recognition are less than his or her contribution merits, compared with other employees. Equity theory why employee perceptions about fairness matter. The equity theory of motivation is typically used in the workplace as a management technique.