Inputs: Each participant’s contributions that are viewed as entitling him/her to rewards or costs.
– Much theory related to Equity Theory has been conducted in laboratories and not real world settings.
– Some say the model is too simple there are other variables that affect people’s perceptions of fairness which vary from person to person.
– An overcompensated employee may adjust their efforts, or may inflate the value of their inputs in their mind, adopting a sense of superiority and thus decrease their efforts.
– Employees may adjust outcomes according to purchasing power and local market conditions.
– The value of inputs and outcomes will vary from person to person.
(3) Distressed employees attempt to fix an inequitable situation by distorting inputs and outcomes in their own minds, by actually changing inputs/outcomes, or by leaving the organization.
(2) Employees can and do determine what an equitable return should be by comparing themselves to coworkers.
(1) Employees except a fair return for their contribution.
(4) Those in distress will attempt to eliminate the inequity, in order to eliminate the distress.
Those who get too little feel angry/humiliated, while those with too much feel guilt or shame.
(3) Individuals in an inequitable relationship feel ‘distressed’.
Groups will reward those who treat others equitably, and punish those who don’t.
(2) Groups will evolve systems of equity, and induce members to adhere to these systems.
(1) Individuals try to maximize outcomes.
The person who gets too little may feel angry or humiliated. The person who gets too much may feel guilt or shame.
According to equity theory, the person who gets “too much” and the person who gets “too little” both feel distressed.
Outcomes, on the other hand, include salary, benefits, job security, reputation, sense of achievement, gratitude, etc.
Inputs include effort, time, loyalty, seniority, commitment, personal sacrifice, etc.
Equity theory was developed in 1963 by John Stacey Adams, who stated that an employee will consider himself to be fairly treated if the ratio of his inputs to outcomes is equivalent to those around him (by his perception).