Equity theory, popularly known as adams equity theory, aims to strike a balance between an employees input and output in a workplace. Equity theory proposes that peoples motivation, performance and satisfaction depend on their subjective evaluation of the relationships between their effortreward ratio and the effort reward of others in similar situations. Equity theory criticisms a number of demographic and psychological variables affect peoples perception of fairness and interactions with others people might perceive equity inequity not only in terms of the specific inputs and outcomes of a relationship, but also in terms of the system that determines those inputs and outputs not everyone will perceive the compensation system. An employee compares his or her jobs inputs with an outcomes ratio. The utility of equity theory in enhancing organizational effectiveness dr. Equity theory, most popularly known as equity theory of motivation, was first developed by john stacey adams, a workplace and behavioral psychologist, in 1963. Theory and research concerning social comparisons of personal attributes joanne v. Stacy adams, a workplace and behavioral psychologist, who asserted that employees seek to maintain equity between the inputs that they bring to a. Finally, summary and recommendations for future research will follow.
If the employee is able to find his or her right balance it would lead to a more productive relationship with the management. The theoretical framework for this research consisted of a combination of eri theory, expectancy theory and equity theory. Equity theory proposes that peoples motivation, performance and satisfaction depend on their subjective evaluation of the relationships between their effortreward. High productivity is a long term benefits of employee motivation. While equity theory is a significant step forward, the theory itself needs further specification. The research supports equity predictions in the area of underpayment, but the overpayment effects have not been satisfactorily demonstrated. Conflict and critical theories 215 united states and arrived in new york in 1941. The entity theory is based on the idea that all of a. Theory and research concerning social comparisons of personal. 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. An accounting concept that says that common stockholders take the greatest risk when they buy into a company. Equity theory is one of the major formulations relevant to financial compensation. Output can be things like salary, recognition, and responsibility.
Equity theory, as developed by adams 1965, considers motivation and job. Yet, an even more pertinent issue is whether the theory as suggested by adams 1965 really holds. If the employee perceives inequality, he or she he will act to correct the inequity. 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. Applications and criticisms avneet kaur jesus and mary college, university of delhi. Abstract motivational factors play an important role in increasing employee job satisfaction. Research supports equity predictions in the area of underpayment, but the overpayment effects have not been satisfactorily demonstrated. Equity theory is known as one of the general theory, which is very efficient in predicting employee behavior. There are some practical difficulties also in applying equity theory e. According to equity theory, it is the perception of equitability and inequitability.
Wood state university of new york at stony brook social comparison theory has evolved considerably since festinger 1954 originally proposed it. Equity theory of motivation management study guide. The core of the equity theory is the principle of balance or equity. If you want to go into technical details, this white paper has perfect explanations. Equity theory is based on the idea that individuals are motivated by fairness.
Process theories of motivation equity theory business essay. Some of the critics of the expectancy model were graen 1969 lawler 1971, lawler and porter 1967, and porter and lawler 1968. Critically evaluate mcgregors theroy x and theory y. A critique of equity theory and its major constructs will be examined.
Adams equity theory how fairness affects employee motivation. While the theory is a significant step forward, it needs further specification. Equity theory project gutenberg selfpublishing ebooks. Everybody who has actually traded and tried to use asset allocation methods is well aware of the failures of meanvarianceoptimization and why modern portfolio theory just does not work. Elaborations of the theory are presented in the areas of 1 determinants of. Most studies are unable to answer this question as this requires the theory to. As an example of equity theory, if an employee learns that a peer doing. The relevance of scientific management and equity theory in everyday managerial communication situations reginald l. Stacey adams equity theory employee motivation theories. May, 2016 many theorists support that mcgregors theory considers the field of management from a new angle, indicating a strong influential value.
Although seen as a weakness by many critics of the theory, the economical approach to relationships can help get to the bottom line very quickly. The theory is also known as adams inequity theory of motivation. The entity theory is a basic assumption that all economic activity conducted by a business is separate from that of its owners. Sep 25, 2016 equity theory proposes that a persons motivation is based on what he or she considers to be fair when compared to others redmond, 2010. Critics have also argued that people might perceive equityinequity not only in. Higher is individuals perception of fairness, greater is the motivation level and vice versa. Equity theory criticisms and related theories equity sensitivity construct equity sensitivity construct the equity sensitivity construct proposes that individuals have different preferences for equity and thus react differently to perceived equity and inequity. Equity predictions are more likely to apply to people who are morally mature. It is a cognitivecentered theory as it is basically concerned with the person himself, his beliefs, feelings or perceptions. Toward a resolution of the negativeinputs controversy article pdf available in personality and social psychology bulletin 32.
A critique will follow to determine the falsibility and utility of the theory. In the sections that follow, adams equity theory will be briefly summarized and the research. Equity theory proposes that individuals who perceive themselves as. Equity theory of work motivation is based on the social exchange process. The theory is fairly simple, allowing for most people to understand its general assumptions and relate to them. Scholars have questioned the simplicity of the model, arguing that a number of demographic and psychological variables affect peoples perceptions of fairness and interactions with others. Read this article to learn about the merits and criticisms of maslows theory of motivation. 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. While equity theory is a significant step forward, the. According to stephan robbins expectancy theory is a theory that says that the strength of a tendency. Get the complete knowledge about equity theory of motivation from myassignmenthelp experts. A positive critique of its economicbehaviorist formulations. Pdf the utility of equity theory in enhancing organizational. 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.
Equity theory adds a crucial additional perspective of comparison with referent others people we consider in a similar situation. In industrial settings, assets such as capital and manual labor are seen as relevant inputs inputs that legitimately entitle the contributor to rewards. Their criticisms of the theory were based upon the expectancy model being too simplistic in nature. The adams equity theory was developed by the american psychologist john stacey adams in 1963. Most criticisms on equity theory concern the artificial laboratory conditions in which the theory has been tested.
The first milestone on the issue was set by modigliani and miller1958 through which they presented in their seminal work two important propositions that shaped the economic theory behind capital structure and its effect on firm value. The core of equity is the principle of balance or equity. According to this theory of motivation, an individuals motivation level is connected with his perception of equity, fairness and justice practised by management. Victor vrooms expectancy theory of motivation an evaluation. However, equity theory takes a less straightforward and more fluid approach than previous models. Applying adams equity theory to employee engagement. Reviews the theoretical precision and research related to equity theory, as it is conceived by adams. Criticism to equity theory directed towards both the assumptions and practical application of equity theory 22. This paper will focus on examining equity theory, its propositions and underlying assumptions. The criticism of the modigliani and miller hypothesis finance.
Its about the balance between the effort an employee puts into their work input, and the result they get in return output. Martin university of mississippi in this article, we take a look at why and how managers should communicate with their employees the. Finally, there would be summary and recommendations for future research. Equity theories have been proposed by adams 1963a, 1965, homans 1961, jacques 1961, and patchen 1961. First developed by yale school of management professor victor vroom in 1964, the expectancy theory of motivation attempts to explain what keeps employees working. In this paper the focus will be on the expectancy theory of motivation which was propounded by victor vroom. It was published in the journal, experimental social psychology, 1965, new york titles inequality in social exchange. Equity theory criticisms and related theories equity. As per this motivation theory, an individuals motivation level is correlated to his perception of equity, fairness and justice practiced by the management. Equity theory adams, 1963, 1965 draws from exchange. Equity theory is used in parlance of human resource. The central theme of the theory is the judgment of fair treatment. If managers will keep workplace equity, then it means that there will be no distinction among employees and everything will be same. Equity theory criticisms a number of demographic and psychological variables affect peoples perception of fairness and interactions with others people might perceive equity inequity not only in terms of the specific inputs and.
This paper concentrates on equity theory as it is conceived by adams 1963a, 1965. Most criticisms on equity theory concern the artificial laboratory conditions in. Equity theory reminds us that people see themselves and crucially the way they are treated in terms of their surrounding environment, team, system, etc not in isolation and so they must be managed and treated accordingly. Looking back over our series, adams equity theory ties in closely with those of maslow and herzberg. In contrast to the principles of conventional management mentioned as theory x, the advocated theory y illuminated a cluster of new or redefined concepts such as selffulfilling prophecy and responsibility.
Toward a resolution of the negativeinputs controversy daniel romer personality and social psychology bulletin 1977 3. But, in reality, the concept of fairness is not appreciated by all. His dissertation, the functions of social conflict, took conflict theory in a new direction and was later named as one of the bestselling sociology books of the twenti. Adams equity theory, a powerful theory of motivation toolshero. Considered one of the justice theories, equity theory was first developed in 1963 by j.
Faisal almadi department of business administration, the hashemite university, jordan abstract this paper will focus on examining equity theory, its propositions and underlying assumptions. Other criticisms of exchange theory are also presented. But adams equity theory is a far more complex and sophisticated motivational model than merely assessing effort inputs and reward outputs. The equity theory of motivation employee motivation. Equity theory attempts to explain relational satisfaction in terms of perceptions of fairunfair distributions of resources within interpersonal relationships. The modigliani and miller hypothesis is identical with the net operating income approach. The utility of equity theory in enhancing organizational. Criticism of the equity theory of motivation since every organization has some structure, so it is not easy for the managers to have equity in the whole organization. Equity theory focuses on determining whether the distribution of resources is fair to both.
I will examine the research on equity theory in regard to pay since it is assumed to be one of the. 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. Criticism has been directed toward both the assumptions and practical application of equity theory. May 03, 2018 equity theory of motivation equity theory was developed by james stacy adam. John stacey adams proposed that an employees motivation is affected by whether the employee believes that their employment benefitsrewards are at least equal to the amount of the. Its underlying principle is that employees perform in work situations because they expect to receive a direct reward, a. This will result in improving organizational performance. Dec 05, 2014 criticism to equity theory directed towards both the assumptions and practical application of equity theory 22. The theoretical framework reflects the expectations of employees and managers of an equitable reward and recognition for expended effort alzawahreh and almadi, 2012. The relevance of scientific management and equity theory in.
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