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COGNITIVE THEORIES: EQUITY

 

By:  Claudia Baird, Amy Ingmire, Miriam Itzkowitz, John Marra, Erin Smith, Kelli Tabit, Amanda Thomas

Origin of inequity

Equity theory (Adams, 1965) focuses primarily on "...social justice or the fairness of social exchanges" (PSU WC, L5, 2013).  Social comparison is the main measure used by individuals for perceptions of equity and perhaps more so for perceptions of inequity. Workers form an opinion about how their individual inputs and outcomes should balance out in comparison to their perception of how other peoples' input/outcomes balance out (the idea of comparison others). Inputs are the contributions an employee gives an organization, such as: education, skills, and quality/quantity of work done. Outcomes are the benefits an employee receives as a result of the work they have done, such as: monetary compensation, paid time off, bonuses, or overtime pay.

If an individual believes that their inputs are worth more than the outcomes they receive they may perceive an inequity. Two commonly perceived inequities are called overpayment/positive inequity and underpayment/negative inequity (Adams, 1965).  A person experiences underpayment/negative inequity when they feel their level of input is high, but they are not getting an outcome high enough for their level of input (when compared to others' inputs/outcomes).  If an employee feels that their input level is low but their outcome level is high (when compared to others' inputs/outcomes) they experience overpayment/positive inequity.  In either case there is a perceived imbalance in comparison with others.

Procedural justice deals with making people feel like they have a greater chance for equity (balance) by designing a transparent system that requires rules to lead to certain equal outcomes (Greenberg, 1990).  Transparent procedures enhance perceptions of fairness even if the result makes the overall outcome less desirable than when there was perceived inequity.  The circumstances that exist after procedural justice measures are implemented are perceived as fair because the rules apply to everyone equally.  An important part of the procedure is that the procedures/policies are concise and available for all to see.  This allows everyone to know whether or not the procedures/policies are being followed.

As an intervention, it could be applied in the form of the policy being introduced to the workers during meetings followed by the policy being posted in plain view on bulletin boards.  To solidify the acceptance of the new procedures each employee could sign a statement (cosigned by the management staff) to the effect that they understand and agree with the new policy.  Ambiguity would be taken out of the equation.

The following case study will examine several factors of the equity theory and will focus more on underpayment and dissatisfaction within the organization. The case study is set in the business world where an employee feels that her supervisor is being unfair and unjust. The employee focuses on the level of her inputs/outcomes related to her comparison others; overall she feels she is being treated negatively.


                       
Tabit, 2013

Case Study:

Introduction

Jane is a 28 year old sales representative. She works with three other sales representatives, each with a goal of selling 2 products per month. Each representative works 14 hours a day, 6 days a week and struggles to sell their products. They receive a base pay and commission based on the number of products they sell in a month. Jane's employer is a strong authoritarian and uses scare tactics/bullying to motivate his employees. Due to this forcefulness Jane has begun to feel an unequal input/output ratio in the relationship she shares with her employer and peers.  Jane's motivation to sell her products has decreased due to the level of input (high) she gives to her company and the level of outcome (low) she receives.

To further her feelings of inequity, one particular employee can seem to do no wrong (her comparison other).  This coworker does have the highest sales rating, but Jane does not feel this justifies the markedly superior treatment he receives from their supervisor.  He is not subjected to the same torment as the other representatives and he is singled out with positive public feedback (praise).  Jane also feels that her supervisor's forcefulness makes him appear unapproachable.  As a result, she is considering whether she should continue working or leave the organization.


Contributing behaviors and environment

One key contributor to Jane’s lack of motivation is that she is experiencing procedural injustice (unbalanced application of procedures). Procedural justice focuses on the process through which the organization determines which inputs lead to follow-on outcomes (PSU WC, L5, 2013). In this case, Jane feels that the process through which her employer attempts to motivate her is unfair due to his over assertiveness.  Jane works very hard and receives no discernible praise; for her efforts she is greeted with aggressive intimidation tactics.  Jane knows that if she is to receive payment from her company, she must endure the unjust treatment and threats given by her supervisor. This perception of procedural injustice forces Jane to re-evaluate how important payment is to her and considers a need for change.  She is put in the position to choose between her job and her feelings of well being due to her input outweighing her outcomes.

Another contributing factor to Jane’s issue is her focus on the comparison other (the top sales representative).  A Comparison other is someone that a person believes sets the standard by which the rest of the employees are compared (PSU WC, L5, 2013).  The top sales representative is singled out for praise and he is not subjected to the inflated aggression to which the rest of the employees are subjected.  He experiences an entirely different input/outcome experience, which to Jane registers as unfair.   This preferential treatment comes in the form of him not being subjected to the supervisor's aggression.

Reducing Inequity:  Behavioral

One behavioral way for Jane to reduce her feeling of inequity would be to change her inputs so it matches her outcomes (PSU WC, L5, 2013). If she feels she is putting in too much work to be treated this badly, she can always work on changing her input and work less (underpayment inequity).  She could also increase her inputs (sell more) to get more money in commissions to (cognitively) counter the abuse.   Another way would be for her to change her outcomes (influence the behaviors of the supervisor). Changing the the behavior of the supervisor is harder than changing her input because it involves her supervisor’s behavior (he is not likely to be open to change).  She could go the upper management of the company in an attempt to affect change (another way to influence the current abusive outcome).

Another behavioral route of reducing inequity would be instead of altering her own input/outcome ratio she could convince the top seller to reduce his input.  Sometimes, when one employee stands out for their above average achievements, the other employees try to make them come back down to average achievement level (PSU WC, L5, 2013).  If all else fails, she could also withdraw from the situation; quitting and finding another job.  These, though, are usually left for a last resort.  

The downside to these behavioral avenues is that they do involve some risk to Jane (PSU WC, L5, 2013).  Putting in less effort, convincing others to do the same, or removing herself from the situation can cause irreparable damage to her already taxing situation.  Another way to remedy the situation is through cognitive approaches that focus on cognitive processes like changing her underlying thought process rather than doing something behaviorally.  

Cognitive

One cognitive option for Jane is to distort her view of her inputs or outcomes to restore her perceptions of equity (PSU WC, L5, 2013). Jane’s view of the individual who receives preferential treatment is causing her to rethink how she does her job.  One way that Jane could use the cognitive approach would be to change her thinking towards herself.  Jane’s feeling about her supervisor being un-approachable is making her feel less motivated to work.  Perhaps if Jane could find common ground with him she would be able to see her employer in a different light, and maybe find a reason for why he is behaving in an authoritarian way.            

In addition, Jane could change the way she thinks about her comparison other (the top representative). She could stop comparing herself to her other co-workers and trust her capacity to perform.  Instead of looking at the co-worker who can do no wrong, Jane could try to learn from that him  to see how he is achieving his goals. By limiting negative thoughts, Jane may be able to find motivation within her to succeed at this job.

Underpayment equity

Jane recently discovered that the sales representative who her employer praises often was receiving a higher base salary.  She tried to improve her relationship with her employer by trying to increase her input and reaching/exceeding her sales quota for the month, but that did not change how she was treated.  She knows she needs to increase her motivation regardless of the negativity from her employer, but she is finding that hard to do because she is so upset.  She feels unsatisfied with her job because of her supervisor’s scare tactics. She also discovered through office gossip that he (her comparison other) was not the only sales representative receiving preferential treatment and that is really making her struggle with her motivational levels and self-esteem.  

Jane’s initial feelings that others in the organization were receiving a more favorable outcome (pay scale) made her feel undervalued and the negative treatment from her employer is making her question whether she wants to continue working in this organization.  The procedural guidelines that are posted state specific timelines for pay scale advances and requirements for bonuses.  When Jane discovered discrepancies between her salary and time in the organization compared with other employees, she became angry.  She felt that her supervisor was not recognizing her input increases and the efforts she has made to become a valued sales representative.  This led to a further deterioration of her motivation levels and therefore affecting her ability to reach her optimum input level, which is an example of an “employee underpayment negatively related to changes in performance.”  (Werner, Neal 1999). She felt that if she tried to increase her sales to a level of the employer’s favorite sales representative he might treat her better.  

In addition, Jane feels under-appreciated when she thinks about the way she is treated and feels threatened by the scare tactics her supervisor has been using on only the sales representatives he does not favor.  Even though her input levels have increased and she has tried to act respectfully to him, she continues to be one of the sales representatives that are mistreated.  She is making an effort to improve her relationship with her employer so that he will treat her better, but so far, there has been no improvement.  She is thinking about seeking employment with another organization.  The poor prospects on the job market leave her struggling to deal with the injustice of underpayment equity that she is facing.

Distributive Justice

The current inequitable distribution justice that Jane is facing is adversely affecting her motivation and causing her to be uncomfortable in the workplace.  She feels that all employees should be treated with equal respect.  This is related to the scare tactics that their supervisor has been using on the employees except for the one to whom he shows favoritism.  She wants to be treated with the same respect the supervisor shows him and she feels that outcomes (as per distributive justice) should be “spread evenly and fairly throughout an organization” (Stecher & Rosse, 2007).  Jane feels it unfair that some employees are treated horribly and made to feel uncomfortable at work while other employees are treated fairly.

Recommended interventions      

Fairness in the workplace takes the form of distributive justice, fairness of the outcome on the reward distribution system, and procedural justice, fairness of the process in which the rewards are distributed, (Folger & Cropanzano, 1998). The procedural justice originated from the legal domain, where the notion of procedures used in trials needs to be acceptable in order for the outcome to be fair. Greenberg (1990) argues that procedural justice holds regard to system satisfaction while distributive justice addresses outcome satisfaction.

When it comes to inequity in the workplace, there is a difference in how men and women recognize justice. Sweeney and McFarlin (1997) found that women favor procedural justice while men favor distributive justice.  With this in mind, Jane’s employer needs to establish several organizational interventions that are sensitive to these gender differences. It is essential to inform the employer on this issue in order to correct the supervisor's behavior.  Not only because it affects the emotional well-being of the workforce, but also because ignoring such behavior can be considered a violation of employment laws (such as Equal Opportunity).
       
Jane may have different options to balance her feelings of unfair procedural/distributive justice. One approach is to try to change her levels of inputs, or ask the other employees to change their levels of inputs. The second option is to talk with the HR manager of the organization and expose the supervisor’s behavior and express her feelings of unequal treatment. The first options may not yield any positive results so perhaps Jane may just want maintain the status quo.  The second option may yield positive results because the employer will be forced to evaluate the fairness of their remunerations practice and the supervisor’s treatment of all employees. One negative aspect is that this option could lead to retaliation from the supervisor, and result in Jane’s termination from the job; however, she will have the option of filing a discrimination report it to the corresponding authorities in charge of evaluating discrimination claims (PSU WC, L5, 2013).

 It is in the best interest of Jane’s employer to develop a plan in which fair employment practices are established, implemented, and free of discrimination. The company needs to educate and train all the employees in terms of what is considered to be discrimination. The company also needs to review periodically the remuneration schedules with the purpose of ensuring proper and fair remuneration in accordance with the external economic market influences. In addition, the company needs to ensure that benchmarks are reasonable and achievable. The company may implement a pay secrecy policy; however, often employees violate it (by telling each other what they are paid). The problem is that even if the company does implement all those changes, Jane may still feel procedural injustice (PSU WC, L5, 2013).

Procedural justice does not deal with the equity theory; however, company's plan should include a transparent process in which employees are given the opportunity to have a voice, participate in the decision-making process, provide many opportunities for errors to be corrected, apply rules consistently and make impartial decisions.  In general, people are more likely to perceive fairness if they have participated in the decision-making process. The Greenberg (1990) study that found that even when the decision of involved making pay cuts employees will better accept that decision if they have a better understanding of the process involved in reaching those decisions (PSU WC, L5, 2013).

Conclusion

Jane realizes that she can not control the way her supervisor treats her or how the company will deal with the supervisor. Nevertheless, she can control what she decides to do about it. After much thought, Jane starts to take action in hopes of bettering her work environment. Jane decides that the best option is to talk with her HR department regarding the unfair way she has been treated by her supervisor.  She explains the situation to her HR manager and the HR manager assures Jane that an investigation will take place. She also explains to Jane that everything will remain confidential to decrease the likelihood of retaliation.

Jane is starting to feel better knowing that her HR department showed concern for her situation.  She hopes that the company will make changes to ensure better treatment of their employees in the future. In the meantime, Jane realizes that she can make changes within herself as well. She has noticed that her attitude and her thoughts have become very negative. Jane makes a promise to herself to start thinking more positively no matter how negative the environment might be around her. She starts writing a daily gratitude list, which will help her stay focused on positive aspects of her life.  Jane is seeking alternative employment, but she is more satisfied knowing that she did something to improve the environment. 

The conflict that Jane experienced throughout this case study can be explained using equity theory. Jane perceived inequity in several social areas of her work environment. She felt belittled by her supervisor because he treated other co-workers with more respect. She also experienced underpayment equity when she found out that a co-worker who makes more  commissions is being treated better than the rest of the employees.  In both of these situations, Jane perceived that the amount of her inputs did not equal the outcome. These perceptions of inequity led Jane to experience feelings of anger, resentment and low self-esteem. These feelings caused Jane’s work motivation to decrease. If these aspects of her employment remain unchanged, then the situation will most likely get worse. For example, her decreased motivation could negatively affect other employee’s morale, and job performance for all employees could potentially reduce. This would most likely cause a severe loss in sales for the company.  For these reasons, it is important for organizations to understand equity theory and ways of avoiding feelings of inequity in their employees.

Reducing the perception of inequity will move the worker back to being able to focus on valence, instrumentality, and expectancy (Vroom, 1964, 1965).  The possible outcomes have to be valued, the performance options available to the employee have to seem like they will lead to the valuable outcome, and the employee has to feel that their efforts will allow them the chance to perform within the constraints of the environment.  Procedural justice (Greenberg, 1990) has the highest likelihood of fostering a climate where people will expect balanced, equitable outcomes.

 

 

 

References

Adams, J. S. (1965). Inequity in social exchange. In L. Berkowitz (Ed.), Advances in experimental

and social psychology (pp. 276-299). New York: Academic Press.

Folger, R., & Cropanzano, R. (1998). Organizational Justice and Human Resource management. Thousand Oaks, CA: Sage.

Greenberg, J. (1990). Employee theft as a reaction to underpayment inequity: The hidden cost of pay cuts. Journal of Applied Psychology, 5, 561-568.

Pennsylvania State University. (2013). PSYCH 484: Work Attitudes and Motivation. Retrieved from ANGEL.

Stecher, M.D., & Rosse, J.G. (2007). Understanding reactions to workplace injustice through process theories of Motivation: A teaching module and simulation. Journal of Management

         Education, 31, 777-796.

Sweeney, P. D., & McFarlin, D. B. (1997). Process and outcome: Gender differences in the assessment of justice. Journal of Organizational Behavior, 18, 83-98.

Tabit, K. Input Outputs. Pennsylvania State University World Campus.

Vroom, V. H. (1964). Work and motivation. New York: Wiley.

Vroom, V. H. (1995). Work and motivation (2nd ed.). New York: Wiley.

Werner, S., & Neal, P. M. (1999). Fair or foul?: The effects of external, internal, and employee equity on changes in performance of major league baseball players. Human Relations,     

          52(10), 1291-1311. Retrieved from http://search.proquest.com/docview/231476488?accountid=13158

 

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