It can be represented with the accounting equation. Equity theory adams, 1963, 1965 draws from exchange. Equity theory posits that when it comes to relationships, two concerns stand out. 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. Equity predictions are more likely to apply to people who are morally mature. Equity theory and performance applied social psychology asp. Adams equity theory calls for a fair balance to be struck between an employees inputs hard work, skill level, acceptance, enthusiasm, and so on and an employees outputs salary, benefits, intangibles such as recognition, and so on. Equity theory focuses on determining whether the distribution of resources is fair to both. 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. Jan 09, 2018 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. As per this motivation theory, an individuals motivation level is correlated to his perception of equity, fairness and justice practiced by the management. The dictionary meaning of the word equity is the quality of being fair and impartial.
A very simplistic yet logical theory of workplace motivation was developed by john stacey adams, a workplace and behavioral psychologist, in 1963. 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. I will examine the research on equity theory in regard to pay since it is assumed to be one of the. Contemporary turnover theorists posit a series of cognitive and affective. In the 1960s and 1970s, scholars generally concentrated on testing equity theorys applicability to romantic, social, and business relationships.
If there are unequal levels of input or output, either internally or within an observed group, then adjustments are made to create more fairness. It is centered around a costbenefit analysis of any given relationship. Equity theory was first developed in 1963 by jane stacy adams. Extrapolating from this, adams equity theory tells us that the higher an individuals perception of equity fairness, then the more motivated they will be. Equity theory of motivation management study guide. To understand adams equity theory in full, we need to first define inputs and outputs. Equity theory states that humans have a natural tendency to maintain equity in their social relationships. The theory helps explain why your employees motivation levels can go up and down at work. Generally speaking, equity is the value of an asset less the amount of all liabilities on that asset. The core of the equity theory is the principle of balance or equity. Equity theory is used in parlance of human resource management. Scribd is the worlds largest social reading and publishing.
Pdf a role for equity theory in the turnover process. It says that individuals compare their job inputs and outcomes with those of others and then respond to eliminate any inequalities. Equality is typically defined as treating everyone the same and giving everyone access to the same opportunities. The equity theory of motivation how to keep your team. Equity theory adams, 1963, 1965 continues to be a major model stimulat ing. Adams, equity theory is concerned with defining and measuring the relational satisfaction of employees. In 1963, john stacey adams introduced the idea that fairness and equity are key components of a motivated individual. If the employee is able to find his or her right balance it would lead to a more productive relationship with the management.
Equity, or more precisely, inequity is a major concern of industry. The central theme of the theory is the judgment of fair treatment. Equity theory definition first developed in the early 1960s by behavioural psychologist john s. Archived from the original pdf on 23 september 2015. Equity theory is a concept in industrialorganizational psychology that focuses on an individuals perceptions of how equitably they are being treated in their work organization.
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. Justice theorists generally consider two processes. Higher is individuals perception of fairness, greater is the motivation level and vice versa. But, in reality, the concept of fairness is not appreciated by all. Pdf this paper will focus on examining equity theory, its propositions and underlying. Equity theory is a concept of human relations based on utility, or the amount of happiness and satisfaction one gets out of any given relationship.
Equity is measured by comparing the ratio of contributions or costs and benefits or rewards for each person. Equity financing and debt financing management accounting and. The equity theory of relationships is based on a theory developed by workplace and behavioral psychologist john stacey adams. This article explains the adams equity theory, developed by john stacey adams in a practical way. Adams equity theory, a powerful theory of motivation toolshero.
However, equity theory takes a less straightforward and more fluid approach than previous models. A strength of equity theory is that it is supported by research findings. Equity definition is justice according to natural law or right. For example, stafford and canary 2006 have discovered that partners who perceived their relationships as fair and balanced experienced most satisfaction, thus supporting equity theorys suggestion that perceived fairness is necessary for happy relationships. This demand coupled with advances in trading technology has opened up the markets so that nowadays nearly. Applying adams equity theory to employee engagement. Adams equity theory, which stresses the importance of striking a balance between employee inputs and outputs. Pdf equity theory and interpersonal attraction researchgate. After reading it, you will understand the basics of this powerful motivation theory. Stacey adams equity theory employee motivation theories. 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. Equity theory is known as one of the general theory, which is very efficient in predicting employee behavior. Equity theory will help hrd explain employees behavior and provide them with the possible factors that might decrease efficiency and performance. The utility of equity theory in enhancing organizational effectiveness dr.
The views presented in this paper are those of the author and do not necessarily represent the views of odi. This lesson explains how equity theory is used by managers to motivate employees by providing a high. Working toward equity the terms equality and equity are often used interchangeably. The utility of equity theory in enhancing organizational effectiveness. Equity financing and debt financing relevant to pbe paper ii management accounting and finance dr. But adams equity theory is a far more complex and sophisticated motivational model than merely assessing effort inputs and reward outputs. As one can see from the above that equity theory of motivation has advantages as well as disadvantages and that is the reason why any company thinking of taking action on the basis of above theory should carefully read above points and then only should take the decision. In other words, an employee gets demotivated by the job and his employer in case his inputs are more than the outputs. According to the theory, finding this fair balance serves to. This paper will focus on examining equity theory, its propositions and underlying assumptions.
It ensures a basic minimum standard of education for all. Adams suggested that employees try to maintain a balance between what they give to an organisation against. An accounting concept that says that common stockholders take the greatest risk when they buy into a company. As weve talked about many times here at brighthr, your business needs motivated staff to operate at its full capacity. Equity theory is based in the idea that individuals are. Yet, the attractiveness of another is an important com. The utility of equity theory in enhancing organizational. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Equity theory, popularly known as adams equity theory, aims to strike a balance between an employees input and output in a workplace. The equity paradigm promotes investing in the transmission of services to people who need them most. There are some practical difficulties also in applying equity theory e. Conversely, an individual will be demotivated if they perceive unfairness.
In equity theory, motivation is affected by the individual perception of being treated fairly in comparison to others. Adams equity theory leadership skills training from. The adams equity theory was developed by the american psychologist john stacey adams in 1963. It means making sure that personal and social circumstances are not obstacles to achieving educational potential. Equity theory adds a crucial additional perspective of comparison with referent others people we consider in a similar situation. Equity theory proposes that individuals who perceive themselves as. It explores the perceptions of humans regarding their inputs in the relationship and the outcomes they get. 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. Equity theory and interpersonal attraction article pdf available in journal of applied psychology 743. Equity theory proposes that a persons motivation is based on what he or she considers to be fair when compared to others redmond, 2010. Fong chun cheong, steve, school of business, macao polytechnic institute company financing is a prior concern for operating any business, and financing is arranged before any business plans are made. Faisal almadi department of business administration, the hashemite university, jordan abstract this paper will focus on examining equity theory, its propositions and underlying assumptions. Equity theory of motivation examples explained hrf. Adams equity theory how fairness affects employee motivation.
Equity theory of motivation in the equity theory of motivation, employees motivation depends on their perception of how fair is the compensation and treatment for their work input. Inputs are defined as each participants contributions to the relational exchange and are. This theory of motivation states that positive outcomes and high levels of motivation can be expected only when employees perceive their treatment to be fair. The debate on equity and social justice, on equality and inequalities is ongoing. The higher an individuals perception of equity, the more motivated they will be. Looking back over our series, adams equity theory ties in closely with those of maslow and herzberg. In its basic form, the equity theory of motivation implies that each individual is motivated by the concept of fairness. Examples include gender, socioeconomic status, or ethnic origin. It will have an impact on socioeconomic polices and on the definition of the postmillennium. The former focuses on the means by which outcomes are distributed. The equity theory of motivation how to keep your team motivated. Equity theory has received more attention lately from human resource professionals especially regarding the fairness of outcomes.
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