Equity Theory:

Equity theory was introduced by John Stacey Adam based on the idea that fairness and
equity are important components that keep individual motivated. The theory is states that
people motivation is highly correlated to their perception of equity, fairness and justice with
respect to others either within organisation or outside of organisation. When an individual
identify mismatch in equities based on the output/input ratios of themselves and their
reference group, they will seek to respond to the situation by adjusting their input to reach
their perceived equity. Therefore, if the individual perception of equity is high then they are
more motivated and unfair treatment will result in demotivation.
Below is the ratio that is considered by an individual to understand fairness.

Reference: Organisation Behaviour Stephen P Robbins

Examples of inputs and outputs that are taken into account in equity theory.

Reference : https://www.tankonyvtar.hu/hu/tartalom/tamop412A/2011-0023_Psychology/030300.scorml
The limitation with equity theory is that theory does not take into account that every individual
is unique and have different needs, values and cultural background. Thus, for some individual’s
social rewards and status are more important outcomes that keep them motivated rather than
equity. However, in broader sense ensuring equity is one of the key components to motivation.

Vrooms Expectancy Theory

The theory states that the intensity of a tendency to perform in certain way is dependent on
the strength of one’s expectation that performance will lead to definite outcome/rewards
that are attractive to individual. The theory concentrates on the following 3 relationships.

Reference: Organisation Behaviour Stephen P Robbins

1) Effort-performance relationship: It is the probability perceived by the individual that

giving certain amount of effort will be recognized while determining his/her
performance.
2) Performance-reward relationship: It talks about the degree to which individual
perceives that working at a certain performance level will lead to attainment of
rewards.
3) Rewards-personal goals relationship: It is the degree of how much reward is
attractive or appealing to the individual and whether it satisfies personal goals and
needs.
Advantages of the Expectancy Theory
 It is based on behaviour that final objecting of the individual is to maximize pleasure
and minimize pain.
 The theory focuses upon the expectations and perception of individual and
emphasizes on rewards/outcome.
Limitations of the Expectancy Theory
 The expectancy theory tends to be idealistic in nature because in many organisation
there is no direct correlation between performance and rewards. It is also based on
various other parameters such as seniority, personal favouritism etc.