Expectancy theory

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This article may require cleanup to meet Wikipedia's quality standards.
Please improve this article if you can. (March 2009)
For legal expectancy, see Expectation damages.

Expectancy theory is about the mental processes regarding choice, or choosing. It

explains the processes that an individual undergoes to make choices. In organizational
behavior study, expectancy theory is a motivation theory first proposed by Victor Vroom
of the Yale School of Management.

Expectancy theory predicts that employees in an organization will be motivated when

they believe that:

• putting in more effort will yield better job performance

• better job performance will lead to organizational rewards, such as an increase in
salary or benefits
• these predicted organizational rewards are valued by the employee in question.

"This theory emphasizes the needs for organizations to relate rewards directly to
performance and to ensure that the rewards provided are those rewards deserved and
wanted by the recipients." [1]

- Emphasizes self interest in the alignment of rewards with employee's wants. -

Emphasizes the connections among expected behaviors, rewards and organizational goals

Vroom's theory assumes that behavior results from conscious choices among alternatives
whose purpose it is to maximize pleasure and to minimize pain. Together with Edward
Lawler and Lyman Porter, Vroom suggested that the relationship between people's
behavior at work and their goals was not as simple as was first imagined by other
scientists. Vroom realized that an employee's performance is based on individual factors
such as personality, skills, knowledge, experience and abilities.

Victor H. Vroom introduces three variables within the expectancy theory which are
valence (V), expectancy (E) and instrumentality (I). The three elements are important
behind choosing one element over another because they are clearly defined: effort-
performance expectancy (E>P expectancy), performance-outcome expectancy (P>O
expectancy).

E>P expectancy: Our assessment of the probability our efforts will lead to the required
performance level.
P>O expectancy: Our assessment of the probability our successful performance will lead
to certain outcomes.

Vroom’s model is based on three concepts: [2]

1. Valence - Strength of an individual’s preference for a particular outcome. For the

valence to be positive, the person must prefer attaining the outcome to not
attaining it.
2. Instrumentality – Means of the first level outcome in obtaining the desired second
level outcome; the degree to which a first level outcome will lead to the second
level outcome.
3. Expectancy - Probability or strength of belief that a particular action will lead to a
particular first level outcome.

Vroom says the product of these variables is the motivation.

In order to enhance the performance-outcome tie, managers should use systems that tie
rewards very closely to performance. Managers also need to ensure that the rewards
provided are deserved and wanted by the recipients.[3] In order to improve the effort-
performance tie, managers should engage in training to improve their capabilities and
improve their belief that added effort will in fact lead to better performance.[4]

Equity theory
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Equity Theory attempts to explain relational satisfaction in terms of perceptions of

fair/unfair distributions of resources within interpersonal relationships. Equity theory is
considered as one of the justice theories. It was first developed in 1963 by John Stacey
Adams, a workplace and behavioral psychologist, who asserted that 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 (Adams, 1965). The
belief is that people value fair treatment which causes them to be motivated to keep the
fairness maintained within the relationships of their co-workers and the organization. The
structure of equity in the workplace is based on the ratio of inputs to outcomes. Inputs are
the contributions made by the employee for the organization; this includes the work done
by the employees and the behavior brought by the employee as well as their skills and
other useful experiences the employee may contribute for the good of the company.
 [edit] Background

Equity theory proposes that individuals who perceive themselves as either under-
rewarded or over-rewarded will experience distress, and that this distress leads to efforts
to restore equity within the relationship. It focuses on determining whether the
distribution of resources is fair to both relational partners. Equity is measured by
comparing the ratios of contributions and benefits of each person within the relationship.
Partners do not have to receive equal benefits (such as receiving the same amount of love,
care, and financial security) or make equal contributions (such as investing the same
amount of effort, time, and financial resources), as long as the ratio between these
benefits and contributions is similar. Much like other prevalent theories of motivation,
such as Maslow’s hierarchy of needs, Equity Theory acknowledges that subtle and
variable individual factors affect each person’s assessment and perception of their
relationship with their relational partners (Guerrero et al., 2007). According to Adams
(1965), anger is induced by underpayment inequity and guilt is induced with
overpayment equity (Spector 2008). Payment whether hourly wage or salary, is the main
concern and therefore the cause of equity or inequity in most cases. In any position, an
employee wants to feel that their contributions and work performance are being rewarded
with their pay. If an employee feels underpaid then it will result in the employee feeling
hostile towards the organization and perhaps their co-workers, which may result the
employee not performing well at work anymore. It is the subtle variables that also play an
important role for the feeling of equity. Just the idea of recognition for the job
performance and the mere act of thanking the employee will cause a feeling of
satisfaction and therefore help the employee feel worthwhile and have more outcomes.

[edit] Definition of equity

An individual will consider that he is treated fairly if he perceives the ratio of his inputs
to his outcomes to be equivalent to those around him. Thus, all else being equal, it would
be acceptable for a more senior colleague to receive higher compensation, since the value
of his experience (an input) is higher. The way people base their experience with
satisfaction for their job is to make comparisons with themselves to the people they work
with. If an employee notices that another person is getting more recognition and rewards
for their contributions, even when both have done the same amount and quality of work,
it would persuade the employee to be dissatisfied. This dissatisfaction would result in the
employee feeling underappreciated and perhaps worthless. This is in direct contrast with
the idea of equity theory, the idea is to have the rewards (outcomes) be directly related
with the quality and quantity of the employees contributions (inputs). If both employees
were perhaps rewarded the same, it would help the workforce realize that the
organization is fair, observant, and appreciative.

This can be illustrated by the following equation:

[edit] Inputs and outcomes

[edit] Inputs

Inputs are defined as each participant’s contributions to the relational exchange and are
viewed as entitling him/her to rewards or costs. The inputs that a participant contributes
to a relationship can be either assets – entitling him/her to rewards – or liabilities -
entitling him/her to costs. The entitlement to rewards or costs ascribed to each input vary
depending on the relational setting. In industrial settings, assets such as capital and
manual labor are seen as "relevant inputs" – inputs that legitimately entitle the contributor
to rewards. In social settings, assets such as physical beauty and kindness are generally
seen as assets entitling the possessor to social rewards. Individual traits such as
boorishness and cruelty are seen as liabilities entitling the possessor to costs (Walster,
Traupmann & Walster, 1978). Inputs typically include any of the following:

• Time
• Effort
• Loyalty
• Hard Work
• Commitment
• Ability
• Adaptability
• Flexibility
• Tolerance
• Determination
• Enthusiasm
• Personal sacrifice
• Trust in superiors
• Support from co-workers and colleagues
• Skill

[edit] Outcomes

Outputs are defined as the positive and negative consequences that an individual
perceives a participant has incurred as a consequence of his/her relationship with another.
When the ratio of inputs to outcomes is close, than the employee should have much
satisfaction with their job. Outputs can be both tangible and intangible (Walster,
Traupmann & Walster, 1978). Typical outcomes include any of the following:

• Job security
• Esteem
• Salary
• Employee benefit
• Expenses
• Recognition
• Reputation
 • Responsibility
• Sense of achievement
• Praise
• Thanks
• Stimuli

[edit] Propositions

Equity Theory consists of four propositions:

1. Individuals seek to maximize their outcomes (where outcomes are defined as

rewards minus costs)[1].
2. Groups can maximize collective rewards by developing accepted systems for
equitably apportioning rewards and costs among members. Systems of equity will
evolve within groups, and members will attempt to induce other members to
accept and adhere to these systems. The only way groups can induce members to
equitably behave is by making it more profitable to behave equitably than
inequitably. Thus, groups will generally reward members who treat others
equitably and generally punish (increase the cost for) members who treat others
inequitably.
3. When individuals find themselves participating in inequitable relationships, they
become distressed. The more inequitable the relationship, the more distress
individuals feel. According to equity theory, both the person who gets “too much”
and the person who gets “too little” feel distressed. The person who gets too much
may feel guilt or shame. The person who gets too little may feel angry or
humiliated.
4. Individuals who perceive that they are in an inequitable relationship attempt to
eliminate their distress by restoring equity. The greater the inequity, the more
distress people feel and the more they try to restore equity. (Walster, Traupmann
and Walster, 1978)