Chapter 7 – Equity, Expectancy, and

Goal Setting
• Adams’s Equity Theory of Motivation

Holds that motivation is a function of fairness

in social exchanges.
 The Individual-Organization Exchange
Relationship
• An employee’s inputs, for which he expects a
just return, include education/training, skills,
creativity, seniority, age, personality traits,
effort expended, and personal appearance.
 Negative and Positive Inequity
• Negative inequity - Comparison in which
another person receives greater outcomes for
similar inputs.
• Positive inequity - Comparison in which
another person receives lesser outcomes for
similar inputs.
 Dynamics of Perceived Inequity
• People have varying sensitivities to
perceived equity and inequity
• Inequity can be reduced in a variety of ways
 Expanding the Concept of Equity:
Organizational Justice
• Distributive justice - The perceived fairness of
how resources and rewards are distributed.
• Procedural justice - The perceived fairness of
the process and procedures used to make
allocation decisions.
• Interactional justice - Extent to which people
feel fairly treated when procedures are
implemented.
 Practical Lesson from Equity Theory
• Equity theory provides managers with yet another
explanation of how beliefs and attitudes affect job
performance.
• Research emphasizes the need for managers to pay
attention to employees’ perceptions of what is fair and
equitable.
• Treating employees inequitably can lead to litigation and
costly court settlements.
• Employees’ perceptions of justice are strongly influenced
by the leadership behavior exhibited by their managers
• Managers should pay attention to the organization’s
climate for justice
 Expectancy Theory
• Expectancy theory - Holds that people are
motivated to behave in ways that produce
valued outcomes.
 Vroom’s Expectancy Theory
• Motivation boils down to the decision of how
much effort to exert in a specific task
situation.

• Expectancy - Belief that effort leads to a

specific level of performance.
 Vroom’s Expectancy Theory
• Instrumentality - A performance  outcome
perception
• Valence - The value of a reward or outcome
• Outcomes - refer to different consequences
that are contingent on performance
Managerial on Expectancy Theory and
managerial Implications