Name(s): Equity Theory of Motivation
Author: John Stacey Adams
Classification: Cognitive or Need-to-Know Motivation Theories
Equity Theory essentially is a calculus in determining a member's net contributions to an organization and using that to compare with other members in order to put everyone on an equal footing in terms of worth. There is no absolute comparison in terms of quantity but rather "from each according to her/his ability to each according to her/his net contribution. So, person A may output 1,000 units of something a day but may be a brute, while B may output only 300 units a day but be below average in strength and stature. However, if each is outputting in accordance to their capacity, then, there is equal value. A leader then can approach both and say that they are providing equivalent value to the organization from and Equity theory perspective.
In Adams' words:
Equity Theory focuses upon a person's perceptions of fairness with respect to a relationship. During a social exchange, an individual assesses the ratio of what is output from the relationship to what is input in the relationship, and also the ratio of what the other person in the relationship outputs from the relationship to what is input into the relationship. Equity Theory posits that if the person perceives that there is inequality, where either their output/input ratio is less than or greater than what they perceive as the output/input ratio of the other person in the relationship, then the person is likely to be distressed.
This "equity theory" at least addresses a more philosophical concern of a leader - the issue of fairness. In fact, one might classify this theory also under ethical theories of leadership. Here, Equity theory is in line with a "golden rule" type of thinking, do unto others. Justice is distributive, as John Rawls the modern ethicist would say. Immanuel Kant, the early 19th century philosopher, would say that a leader using Equity Theory is doing what should be universalized by treating everyone fairly.
Above ethics one must think of an ethos, or what ultimately is valuable in life. If human life is considered as valuable, then this thinking should permeate all the ethical systems that flow from this ethos. This includes everything from proscriptions against murder all the way down through providing citizens with health care and education, and so on down to the smallest organizational level, as in how a leader assesses a member's contribution. There must be recognition not only of the worth of the individual but the diversity of individuals, each being able to contribute in different capacities.
The scale is not accidental and similar to that seen in depictions of how truth and fairness have been balanced since the time when Goddess Maat was worshiped in Egypt (ca. 2375 BCE and 2345 BCE) .
Equity Theory is somewhat like Charles Handy's Motivation Calculus, in that what a person's individual efforts in an organization will achieve. There also is a comparison to Maslow's hierarchy of needs, where self esteem. Sense of self worth, and recognition by others rank high in value. Equity Theory takes these observations to a more sophisticated domain by comparing one organizational member to another and using that to motivate them; not as a competitive device but one that is designed to make each member feel valued and treated as any other member. Such a theory also may help overcome major visible differences among members, such as with respect to education, training, age, stature, and so forth. In essence, Equity Theory seems to help level the proverbial playing field by accounting for these differences in assessing contributions to the organization.
Stacey's theoretical foundation is based on two social dimensions. One is that people see themselves as identical if there is "a minimal psychological separation or distinction between them ." While there may be no empathetic bond, there is a sense of parity or belong to the same situation. Each's fate is tied to the next. In the second dimension, a person sees another as a person or in terms of a position, which is "essentially independent of the individual occupant ". There are different people who can occupy the same position. Stacey goes on, "we actively try to locate trans-situational attributes in others, so that we can better adapt in a stable and predictable social milieu." From these two dimensions of relationships - identity and position, six experiential categories emerge for a person. In each of these the person perceive s/he is in there will be also a perception of justice. Internal conflicts related to justice can be managed by altering that perception of which category s/he find her/himself. 
As with any theory, one must be careful in thinking this is "THE" explanation for why a leader is motivated, in this case providing equity and justice to members. There needs to be attention paid to the manner in which assessments are made. If the approach is purely subjective the manager's bias may enter, thus skewing the outcomes. Standards need to be quantifiable and published, so members can see that there is a public display of attempts to be equitable. On a larger scale, however, one cannot think that Equity Theory alone is a way of democratizing an organization, although it might help in some cases. Democratization requires participation and the fact that each member has a say in the decision making process authenticates that process. For Equity Theory to work at this level, one should ask whether or not evaluations should be done on a peer-review basis, rather than having a leader do it.
In the background, stand individual capabilities to make such peer assessments? How does one avoid personal prejudice, and is a member intellectually competent and experienced enough to make them?
We ask whether this theory could be used as a basis for formulating Key Performance Indicators by comparing what a member expects as her/his place in the organization and what actually occurs. In addition, this "ability calculus" could be taken into account in doing member/employee work assessment. At least it would make a manager more cognizant of individual abilities and a member's output. Instead of a manager or leader doing the equity-based assessment, one might consider a peer review process.
We must be wary about the theory being used in way not beneficial to organization's members. Frederick Taylor in the early part of the 20th century was noted for his time-motion studies in the workplace, and from that time to the present the practice is common of monitoring in detail worker movements, such as counting keystrokes, and disciplining the person if it a supervisor thinks that performance isn't adequate. Rather than chastising a worker or member outright, some have thought of ways of "encouraging" persons through the Equity Theory by using relative performance to persuade. That is, leaders can say they have the worker in mind in attempting to institute fairness and justice by evaluating work performance relatively, i.e., in terms of the ability to produce. Overall, however, the workplace rigidity remains, with no measure of democratization being taken .
We encourage you to expand on the discussion, add to the critique or even share your vision with regards to the future applications of the theory.
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