Equity Theory of Motivation

John Stacy Adams propounded the Equity Theory of Motivation in 1963. It is based on the cognitive motivation theory. According to this theory, people want to be treated fairly in relation to other for motivation. Input and outcome ratio will help the individual to have an idea of being in a situation of equity or inequality. Inputs are the individual's efforts, responsibility and other factors that they put into the job, whereas outcomes are the promotion, pay raise, recognition of the work done in exchange for the inputs. Thus, the equity theory states that an individual compares his input/ outcomes to that of the other working in the same position in the organization or in other organizations and tries to establish equity. In the process of comparison, if the individual perceives any sort of inequity he or she will change his or her behavior at work. 

Equity theory is based on the assumption that members of an organization experience strong expectations of Justice, balance and fairness in treatment by the employees. In equity theory, two variables are important, i.e. inputs and outcomes. Inputs are the qualities and elements which a member of an organization perceives that he puts into his job outcomes are the things which the member receives from the organization and his job. Inputs and outcomes are important elements in the exchange relationship between the organization and its members. When the individual finds equity in the situation or feels that what he receives from the organization in terms of treatment and compensation is fair in terms of the effort and skills, he contributes to the organization, he is satisfied with the arrangement, and is normally committed to the organization and its goals. The basic idea behind equity theory can be better understood with the help of following figure:

Equity Theory of Motivation

The main findings of equity theory are as follows:

• Perceived inequity creates tension in the individual.
• The amount of tension is proportional to the magnitude of the inequity.
• The tension created in the individual motivates him/her to reduce it.
• The degree of motivation is proportional to the perceived inequity.

Positive Aspect of Equity Theory

• It helps in finding the equity between the groups so that group motivation is enhances. 
• It helps in providing the fair pay to the employees as per their personal capabilities. 
• It helps in seeing whether people fell the inequity by jobs or the pay gives them. 
• It also determines how input and outcomes of a person can be matched. 

Negative Aspects of Equity Theory 

• It cannot clearly provide the ideas, how to change the input and outcome of individual. 
• The equity between the people is almost impossible as it depends upon the personal perception of employees. 
• The input cannot be changed easily and the change in outcome can also become conflicting. 
• The equity theory can be useful only for the company having very small number of employee. 

The Limitations of the Equity Theory

• Equity theory is not precise enough to predict which actions are most probable. The methods of inequity reduction are also applicable to reduction of guilt caused by feeling of over-rewarded. Therefore, the construct of over-reward in equity has doubtful practical relevance.
• The weakest element of equity theory is its analysis of the process by which individuals choose comparison with others. The process by which individuals decide whom to compare themselves with is not clear.
• Equity theory is not a complete theory of motivation but deals only with one particulars aspect of motivation, i.e., its limited focus is on equity.

Comparison between ERG Theory and Maslow’s Need Hierarchy Theory

Alderfer’s ERG theory is an extension of Maslow’s theory. Alderfer suggested three categories of needs, rather than five: existence, relatedness and growth. Existence needs are similar to Maslow’s physiological and safety need categories. Relatedness needs involve interpersonal relationships and are comparable to aspects of Maslow’s love and ego needs. Growth needs are those related to the attainment of one’s potential and are associated with Maslow’s self-actualization needs.

Comparison between ERG Theory and Need Hierarchy Theory

Maslow’s Theory	Alderfer’s Theory
Self-actualization	Growth
Ego Needs, Love Needs	Relatedness
Safety Needs, Physiological Needs	Existence

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