Equity Theory (Adams, 1963)

People develop beliefs about what is a fair reward for one job contribution - an exchange People compare their exchanges with their employer to exchanges with others-insiders and outsiders called referents If an employee believes his treatment is inequitable, compared to others, he or she will be motivated to do something about it -- that is, seek justice.

Model of Equity Theory

Is versus Ir Os Or I = Inputs - employees contribution to employer R = Referent - comparison person

S = Subject the employee who is judging fairness of the exchange

Equity Theory - Exchange Scenarios

Case 1: Equity -- pay allocation is perceived to be to be fair - motivation is sustained Case 2: Inequity -- Underpayment. Employee is motivated to seek justice. Work motivation is disrupted. Case 3: Inequity - Overpayment. Could be problem. Inefficient. In other cultures employees lose face.

Consequences of Inequity
The employee is motivated to have an equitable exchange with the employer. To reduce inequity, employee may Reduce inputs (reduce effort) Try to influence manager to increase outcomes (complain, file grievance, etc.) Try to influence co-workers inputs (criticize others outcomes or inputs) Withdraw emotionally - or physically (engage in absenteeism, tardiness, or quit)

Equity Theory Applications

Develop tools to pay people in proportion to their contributions Let employees know who their pay referents are in the pay system: identify pay competitors and internal pay comparators. Strive for consistent pay allocations Monitor internal pay structure and position in the labor market for consistency.

Expectancy Theory
Expectancy Theory (Victor Vroom)
The strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual.

Expectancy Theory Relationships

EffortPerformance Relationship
The probability that exerting a given amount of effort will lead to performance.

PerformanceReward Relationship
The belief that performing at a particular level will lead to the attainment of a desired outcome.

RewardsPersonal Goals Relationship

The degree to which organizational rewards satisfy an individuals goals or needs and the attractiveness of potential rewards for the individual.

Expectancy Theory Components

EXPECTANCY THEORY: Conclusions

The key is the understanding of an individuals goal and the linkage between the three relationships.

There is no universal principle for explaining everyones motivations.