Adam’s Equity Theory

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Understanding Key Features of Adam’s Equity Theory

The Adam's Equity Theory, proposed by psychologist John Stacy Adams in 1963, is a motivational theory that focuses on the concept of fairness and equity in social exchanges.

The theory suggests that people are motivated to maintain a fair balance between what they contribute to a situation and what they receive from it and also by comparing the ratio of the rewards they receive in relation to the rewards received by others for similar contributions.

The Equity Theory is principally an economic approach for individuals who tend to compare their job inputs and outputs with those of others. The theory was pioneered by John Stacey Adams, a behavioral psychologist, who describes three main outcomes that individuals compare:

  • Inputs: The effort, skills, experience, and other factors that an individual contributes to their job.
  • Outcomes: The rewards that an individual receives for their work, such as salary, benefits, recognition, and promotion opportunities.
  • Outcomes of others: The rewards that other people receive for their work.

According to Adams, individuals strive to achieve and maintain equity in their relationships, and they feel distressed when they perceive an imbalance. He suggests that employees tend to judge fairness of their work situations by cognitively comparing their inputs to the organization with the outcomes they received in return and also by comparing the ratio to those of other people (Adams, 1965).

Inequity refers to a perceived lack of fairness or justice in a situation, often resulting in unequal distribution of resources, opportunities, or privileges among individuals or groups.

In the context of Adam's equity theory, inequity occurs when a person perceives that the ratio of his or her outcomes to inputs and the ratio of a relevant other’s outcomes to inputs are unequal. When there is equity, there is satisfaction.

In this way, the employee feels to be treated fairly and is motivated to put in optimum performance and even reciprocates the organization by engaging in organizational citizenship behavior(s)Opens in new window.

In case the outcome is more than expected, one will increase input (to preserve self-esteem). If the outcome is less, one feels inequity and is motivated to take corrective action which may include reducing input to match outcome or if that is not possible, resorting to absenteeism or taking more sick days. Individuals, thus, perform a ‘cost-benefit analysis’. If estimated benefit justifies cost of more efforts, they develop a drive for action. This theory is useful in designing incentive/reward scheme.

J. Stacey Adams posits that an employee who perceives inequity in his or her rewards seeks to restore equity. The theory emphasizes equity in pay structure of employees’ remuneration.

Employee’s perception of how they are being treated by their firm is of prime importance to them. The dictum ‘a fair day work for fair day pay’ denotes a sense of equity felt by employees. When employees perceive inequity, it can result in lower productivity, higher absenteeism or increase in turnover.

This theory traces the cause of employee’s satisfaction and dissatisfaction in the job to their perception of fairness or unfairness in the balance between their job efforts and job rewards. It is, therefore, necessary for the organization to develop a fair balance between the job efforts called input and the job rewards called output.

The individuals constantly verify own benefits in terms of:

  • pay-benefits-status,
  • promotion and recognition, and
  • job satisfaction as well as job title.

Employees might compare themselves to friends, neighbors, colleagues at work and peers and known persons in similar organizations and more sources of information like print and electronic media, books and libraries and a host of websites.

It is seen that the equity theory, in contrast to internal needs theories of motivation, is noticeably concerned with the social processes that influence motivation and behavior. These are just a few of the facets of the equity theory and the theory has received good support through fact finding, evaluation and research.

Adams' Equity Theory is a valuable tool for understanding and improving employee motivation. By creating a workplace where employees perceive that they are being treated fairly, managers can help to boost employee morale, productivity, and retention.

Here are some tips for managers who want to apply Adams' Equity Theory in their workplaces:

  • Be transparent about pay and rewards. Employees should know what they are being paid and what other employees are being paid for similar work.
  • Communicate openly and honestly with employees about their performance and their contributions to the organization.
  • Provide opportunities for employees to provide feedback on their compensation and rewards.
  • Be willing to adjust pay and rewards when appropriate.

By following these tips, managers can create a workplace where employees feel valued and appreciated, which can lead to increased motivation and productivity.

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  • References
    • Human Resource And Personnel Management, (“Equity Theory” pg 275) By K Aswathappa
    • Business & Managerial Communication (“Equity Theory” pg 472) By Sailesh Sengupta
    • Human Resource Management, (“Adam’s Equity Theory” pg 262) By Pattanayak, Biswajeet

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