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 Introduction



Is what I get for my work fair in comparison to others?

Have you ever been in situation where you felt you should have earned more because of your hard efforts? Have you felt that you should have received higher pay than your co-workers because of your experience and education? The equity theory was created to address these kinds of situations.

The equity theory was developed by J. Stacey Adams, and the basic idea behind this theory is that how hard a person is willing to work is determined, in part, by thoughts about what is fair or just as in comparison to others (PSU WC L.5. p.2).  Beliefs about fairness then affect motivation, attitudes, and beliefs (PSU WC L.5. p.2).  There are two important key terms that are used with the equity theory: inputs and outcomes.

Inputs refer to anything of value a person believes they bring to the table such as work experience, education, leadership abilities, motivation and etc. 

Outcomes refer to the compensation or rewards an individual feels they are receiving from their job. Examples of outcomes can be pay, promotion, benefits, job security or feelings of achievement. (PSU WC L.5. p.3). 

Examples For The Inputs and Outcomes In The Equity Theory. (2011).


 

Where does perceived equity or inequity come from?

 

           An individual will form a ratio of their inputs and outcomes and compare it to another, also known as “ comparison other” (PSU WC L.5. p.4).  If the individual perceives that their ratio of inputs to outcomes differs from their comparison other’s in any way, inequity occurs. That feeling of perceived inequity is what motivates someone to change something about the situation so that they can restore a state of equity.

R., Roger. (2013). Equity Theory

For example, Kerry was assigned to file cases and had to work an extra fifteen hours, but her co-worker Sarah was not assigned any extra work and both received the same amount of pay. At this time Kerry would compare her inputs (working late hours and filing cases) to Sarah’s inputs (not having to do anything extra) and then comparing their outcomes (same salary pay). This creates inequity and is eventually going to cause Kerry not to be motivated because she is feeling taken for granted. If both Kerry and Sarah were pulling equal weight, both working extra hours and putting away cases, there would be no comparison of others, or inequity.


There are two types of inequity, underpayment and overpayment equity:


Benegal, S. (2013). Adams Theory of Inequity.


 

  •  Underpayment, also known as negative inequity, is the most common form of inequity. Underpayment occurs when an individual feels that their own ratio of inputs to outcomes is somehow not as good as the comparison other’s ratio. This occurs in two ways:

  1. One type of underpayment occurs when an individual feels that they are contributing more inputs then their comparison other, but they both are receiving the same outcomes. For example, the compared employees are getting paid the same amount but not everyone is contributing the same amount of inputs.

  2. Underpayment can also occur if another employee feels that although they and the comparison other are putting in the same amount of inputs, the comparison other is receiving better outcomes in some way. For example, the other employee is getting paid more when they are both performing the same amount of work. This creates a sense of unfairness because both people are receiving the same outcomes but not contributing the same amount of inputs.


  •   Overpayment, also referred to as positive inequity, is when an individual feels they are putting in equal inputs as their counterparts but receiving greater outcomes (PSU WC L.5. p.4). A person will be receiving more outcomes for their work when their inputs do not match up to the outcome. For example 50/75, the employee would be giving 50% of inputs but receiving 75% of outcomes, leading them to be overcompensated (PSU WC L.5. p.4).


     

    What are the consequences of equity or inequity?


    The consequences of equity are that individuals will feel satisfied with their current situation and continue to perform as they have been. On the other hand, inequity causes tension and dissatisfaction. People are motivated to reduce these negative feelings and restore balance. (PSU WC L.5. p.6).  Perceived underpayment can cause feelings of anger and perceived overpayment can cause feelings of guilt. It is the desire to reconcile these negative emotions that will motivate someone to change something about their situation. Inequity is necessary to motivate change, as the state of equilibrium that equity causes will not motivate behavior. (PSU WC L.5 p 6). There are both behavioral and cognitive approaches to resolving inequity, which are discussed below.

 

The Equity Comparison: Perceived Inequity as a Motivating State
 

 

 
The idea that individuals differ in how they react to inequity is called equity sensitivity. The basic idea behind this concept is that some people handle inequity better than others and are willing to accept their current situation (Huseman, Hatfield, & Miles, 1987). There are three types of people in accordance to the equity theory:


  • Benevolents take on a more altruistic approach; these individuals are more willing to accept under-rewards and are willing to give more inputs even if that means their outcomes are not an equal ratio or others are not putting in the same amount for the same outcome.

  • Entitleds are just the opposite. They are more willing to accept overpayment because they feel they are worth the extra rewards and believe it is owed to them.

  • Equity Sensitives are people who desire the ratios to be balanced and everything be fair. They do not like the feeling of inequity and it will motivate them to change the situation as equity theory discusses.

 

 

 

Equity Sensitivity Continuum (1987).

 

 

 

   Altruism? Why? Part II (2009).                                     You Are Entitled to NOTHING! (2014.)  



         

 

Behavioral ways employees try to reduce their perceptions of inequity


 

1)    Changing input levels to match outcomes (PSU WC, L5 P7). If someone believes he or she isn't pulling their weight and doesn’t deserve the wage they are being paid (overpayment inequality), the employee may become motivated to ask their supervisor for more input to match outcome (daily wage). Someone feeling underpayment inequity may also lower their inputs to make things feel more even.

2)    Changing (or attempting to change) outcomes to match inputs (PSU WC, L5 P7). An employee may do this by attempting to ask for a raise or other change in outcomes that the employer could provide. Usually this change is attempted when an employee feels underpaid for the work they are doing. Another action that the employee might take to reduce their feelings of inequality for underpayment, would be stealing. Stealing is a common occurrence in jobs where employees feel like they are being underpaid (PSU WC, L5 P7). By stealing from their employer, the employee feels like they are increasing their outcomes and “evening the score.

3)    A third behavioral way to deal with inequality is to persuade the comparison other (co-workers mainly) to change their inputs (PSU WC, L5, P7). To reference the above example of extra hours, the employee could try to convince their co-workers to stay longer at work (very unlikely). The employee would then feel more equal because everyone is working the same amount of hours for the same pay.

4)    The last behavior is withdrawing, which can mean quitting the job (PSU WC, L5 P7). Withdrawing can also be merely showing up to work and doing very little/less than other coworkers.

 

All of these behavioral changes involve some risk. These changes don’t always result in the outcome the employee wants.  For example, an employee may become the outcast by encouraging others to change their input. The co-workers might like things the way they are and resent the employee for trying to change things. Another example is if a person withdraws on the job, they may get fired.



Cognitive Ways to Reduce Inequality



Valdevieso, F. (2009). Change My Mind

 

Cognitive ways to change feelings of inequality have to do with changing thoughts, or changing one’s mental process.


1)      One option is to “distort the view of one’s own inputs and/or outcomes to restore equity” (PSU, L5, p. 8). These thoughts may include things like, “My job isn’t that hard, so I shouldn’t be making that much.” (changing thoughts about input) or “The money I make is pretty good in this economy”.

2)      Another option is to “distort the comparisons others’ inputs or outcomes in order to balance the two ratios “(PSU, L5, p. 8). Examples of these thoughts are “She works harder than I do”, “Her job is more difficult than mine”. It makes the person feel better about their situation and more equal compared to others.

3)      The last option is to change the person(s) that is (are) the comparison other(s) (PSU, L5 p 8). For example, an IT person who lives in a small town compares his salary with an IT person living in a big city (big cities on average pay a lot more), he may feel inequity. If that person decides to look at what other IT people are making in his area, he might find their salaries are more similar to his.

In comparison to behavioral changes, cognitive changes are easier to accomplish and there is less risk involved in making the change (PSU, L5 p8).


 

Case Study


Don was recently hired as an agreement student electrician at R&R Manufacturing Corporation, a unionized shop specializing in the remanufacturing of school buses.  Having only completing his GED, he felt very fortunate to land a position with R&R, as it was a high paying hourly job in comparison to similar positions in the area, and for his education level.  As a student electrician, Don’s seniority, or lack thereof, prohibited him from bidding on posted job advertisements during his student training period which, per his craft’s collective bargaining agreement, was equal to 732 days of credible service to the company.  During his student training period Don could expect to be assigned to different work areas in the shop at the discretion of supervision with the purpose of gaining experience in the numerous work tasks performed by electricians at the facility.

 Don’s first work assignment was to work the five day bulletin period on the “Cable Job” in the “Component Shop.”  He was to inspect, repair, and test used electrical cable assemblies that were used to transmit power from the main engine compartment to the roof mounted air conditioning unit of a particular model of school bus that R&R was in the process of remanufacturing.  The cable assemblies consisted of one ½” diameter main cable, approximately four feet in length, with a female connector on each end of the main cable; the entire cable assembly weighing approximately three pounds.  Don’s job assignment was located in the “Component Shop” which was considered to be the “retirement village” of the facility, or the location where the most senior employees bid to be due to the nature of the work scope (i.e. clean, light duty work, air conditioned building, easy going foreman).

 On his first day assigned to the cable assembly job, Don was provided training by one of the senior electricians assigned to the Component Shop and was taught how to inspect, repair, and test the used cable assemblies.  The job basically consisted of visually inspecting the cable for signs of damage and excessive wear, cleaning each of the female connectors with a wire drill brush, and plugging each end of the cable into a test device to check the cable for continuity and proper operation.  After being taught how to perform the task and after a day of on the job training, Don could easily inspect, repair, and test a cable assembly in approximately twenty minutes.

 On his second day on the job, at the start of his eight hour shift (7:00am-3:00pm), his foreman, also an electrician by craft, brought Don a pallet with ten cable assemblies on it for him to work.  Eager to please his foreman and his new company, he worked diligently and was able to finish all ten cable assemblies in a safe and quality manner by 10:00am that morning.  Upon finishing the pallet of cable assemblies, Don approached the foreman and politely asked him to get him another pallet to work on as he still had approximately five hours remaining in his shift.  The foreman advised Don that he was done for the day, explaining that his shop is only expected to get ten cable assemblies completed per shift. Explaining that if he allowed Don to complete more than ten, the company would expect more from the other electricians.  The foreman commented to Don that he was going to make the other electricians look bad if he continued to work at that pace.  The foreman told Don to “go watch one of the other electrician’s work for the rest of the day; you’re done working for today. You need to slow down or else you’re going to work yourself out of a job.”

 Being privy to similar “you’re going to work yourself out of a job” situations, Don decided it best to move on from his electrician position and pursue a non-agreement supervisory position with R&R where he felt he would be better served to give an honest day’s work for an honest day’s pay.


  

Application of Theory to Case Study

 

 

How does the theory apply to this case?

Don is the perfect complex example of perceived overpayment inequity, or positive inequity. Although appreciative, he realizes that he has landed a “good job.” Because he only has his GED and less seniority, he realizes that the pay he is receiving in comparison to similar positions in the area and in comparison to the seniority of his peers, is fairly high. He also feels that he should contribute more due to his high pay and is considered the “normbuster” of his position. Don realizes his input in this situation is his lack of experience, although that does not necessarily mean that he feels he has no value and brings nothing to the table. His outcome, or the benefit that he feels he is receiving from this job (PSU WC, L. 5. P. 3), is that he is able to work with electricians of more tenure while receiving a great pay. The comparison other in this study are his peers with more seniority.

 


Equity Theory [Online Graphic]. (2013).

 

How does Don resolve his perceived inequity?

Due to his feeling of overpayment inequity, Don feels guilt as he feels overpaid. As a result, he makes two behavioral changes to help balance this inequity: changing his input and withdrawal.

 

Changing his input:

The equity theory predicts that if “employees believe that they are getting more outcomes from the job than co-workers for the same level of inputs, they may be motivated to make this situation fairer by increasing inputs” (PSU WC, L.4. P.7). As a result of this, Don decides to change his behavior by exerting more effort with his position. Instead of working at a slow or normal pace, he decides to work at a faster pace, to make sure that he is getting the job done and “prove himself,” so to speak. The issue with this is that he is now working to an extent where his foreman feels he will make the other employees look bad.


Withdrawal:

Don does not want to adjust his input to work any slower and decides that this position is not the best fit for him. As a result, he withdraws from this job to find another where the feelings of inequity are not present. He is able to gain a supervisory position with the same company. This job will allow him to feel more balance in equity as he is now able to work a position that shows the value of his skills, vs his lack of education, while getting an accurate pay for the amount of effort he puts into it.

 

Alternative resolutions:


What else could Don have done in this situation? Don’s case is a real life example in which there are many overlapping elements that can affect one’s decisions, perceptions, and behaviors. Although Don lacked experience, he still had a great skill set. This may not be the case with others in similar situations. Let’s say that Don did not have the knowledge and skills to effectively be a supervisor, what would have been his option?  According to the lesson commentary, there are also cognitive options in which one can distort the view of their inputs and outcomes to restore equity (PSU WC L. 4 P. 8). Someone in a similar position to Don’s, but lacking the knowledge and skills to change positions, could have reevaluated their situation to realize that for lack of education, they were truly in a great position. As stated in the case study, there were many similar positions with lower pay in the area, especially with lack of GED. Don could have distorted his view by simply realizing that he truly did have a great job for the pay and focus on this until he was perhaps able to gain education to further his career.


 

Empirical Support for Equity Theory:

 

As we can see from Don’s case, equity theory has some merit when applied to the workplace. The situation that he found himself in was a true case of overpayment inequity. However, how much support does the theory have in the study literature? How common is Don’s reaction to his situation?

  There have been a large number of studies to test the predictions made by equity theory. Most of the research has been done in laboratory settings. In these studies, the subjects are usually asked to complete a task for a reward, and equity and inequity is manipulated. Some groups are made to feel overpaid or underpaid, and others are made to feel equitably paid. In other experiments, the reward structure is also manipulated. (PSU WC, L.5, p.8)

  Most experiments on equity theory have supported the predictions made by equity theory. However, the empirical support seems to be mixed. Stronger support has been found for underpayment inequity than has for overpayment inequity. This means that underpayment inequity usually leads to lowered performance. However, overpayment inequity does not necessarily lead to increased performance as it did for Don. (PSU WC, L.5, p.8-9)

 While overpayment has been induced in laboratory settings, there seem to be few instances of this effect in organizations. Overpayment perceptions may have a very short lifespan due to the individual’s cognitive rationalizations. The individual can often quickly adjust their perceptions to ease the guilty feelings caused by overpayment equity. (PSU WC, L.5, p.8-9) In the case, Don seemed to be unable to reconcile these feelings, which lead to his withdrawal from the field.

 As we know there are differences among individuals in regards to equity sensitivity. The studies show that the threshold for overpayment inequity is higher than that for underpayment inequity. The point where a person will feel overpayment inequity is higher than the point where the same person will feel underpayment inequity. (PSU WC, L.5, p.9)

This seems reasonable to believe in most instances. One can imagine a person would react to a situation that was unfair to them in a negative way much faster than they would to one that affected them positively. Don was just the opposite. He reacted to his feelings of overpayment inequity in a rapid manner. According to the research, Don is definitely against the norm.

 As noted above, equity theory has a good deal of research support. This support for equity theory may be a result of the fact that it makes sense to people intuitively because people do consider their input and outputs compared to others. Equity theory emphasizes the social component of motivation. Individuals are affected by those around them, both in how they behave and how they think. These are all strengths of equity theory. (PSU WC, L.5, p.12-13)

 However, it is not without its weaknesses. The theory does not specify who the comparison other will be and what will be done to reduce inequity. We could even be using ourselves in a different situation as our comparison other, such as comparing our inputs/outcomes are our old job to our new one. Since we don’t know the comparative standard, it is problematic to predict how employees will perceive events. This makes equity theory better for predicting past behavior rather than future behavior. (PSU WC, L.5, p.13)

 The concept of overpayment is also very questionable. How many people will actually feel overpaid in the long term? According to the research overpayment has less support empirically than underpayment. These facts have lead equity theory to lose favor with most I/O psychologists. (PSU WC, L.5, p.13)

Conclusion


       While no longer favored, equity theory is still applicable in many cases. Equity theory emphasizes the effects of thoughts, perceptions, and judgments based on social comparisons. (PSU WC, L.5, p.3) Equity theory is based on the idea that we compare our input/outcome ratio to others’ input/outcome ratios to see if they are the same or differ. If they differ in some way, inequity exists which causes motivation to alter the ratios in some way to make them equal. In Don’s case, he felt inequity, specifically overpayment inequity, because he felt like his inputs were not substantial enough to warrant his outcomes. He sought a remedy for those feelings by withdrawing from the situation and finding a job that provided him with more equity.


References

Alturisim? Why? Part II [Comic Image]. (2009). Retrieved from: https://afeatheradrift.wordpress.com/2009/08/07/ 

Behavior Instruction [Online Graphic].  Retrieved from: http://www.modelprogram.com/index.html 

Benegal, S. (2013). Adams Theory of Inequity. [Chart]. Retrieved from: http://somanagement.blogspot.jp/2013/12/adams-theory-of-inequity-3.html 

Equity Theory [Online Graphic]. (2013).  Retrieved from: http://www.academic-capital.net/2013/05/equity-theory-and-employee-perception.html 

Examples for the inputs and outcomes in the equity theory [Online Image]. (2011).  Retrieved from:  http://www.tankonyvtar.hu/hu/tartalom/tamop412A/2011-0023_Psychology/030300.scorml 

Huseman, R., Hatfield, J., & Miles, E. (1987, p. 224). Equity sensitivity continuum [Online Image]. Retrieved from: http://istheory.byu.edu/wiki/Equity_theory 

Huseman, R., Hatfield, J., & Miles, E. (1987). “A New Perspective on Equity Theory: The Equity Sensitivity Construct.” Academy of MAnagement Review. 12 (2). pp 232-234.

Pennsylvania State World Campus (2014). Lesson 5 EquityTheory: Is what I get for my work fair compared to others? Retrieved from https://courses.worldcampus.psu.edu/fa14/psych484/001/content/lesson05/lesson05_01.html

R., Roger. (2013). Equity Theory [Online Image]. Retrieved from: http://www.studyblue.com/notes/note/n/motivation-theories/deck/5805153 

The Equity Comparison: Perceived Inequity as a Motivating State [Online Image].  Retrieved from: http://www.assignmentpoint.com/science/pharmacy/internship-report-on-financial-backup-of-glaxosmithkline-bangladesh-ltd.html 

Valdevieso, F. (2009). Change My Mind [Online Image].   Retrieved from: http://healmyptsd.com/treatment/cognitive-behavior-therapy 

You Are Entitled To NOTHING! [Online Graphic]. (2014).  Retrieved from: http://ineverbehave.com/entitled-nothing/ 


 


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