Equity theory proposes that all individuals compare their level of job inputs and outcomes with those of others and then actively seek to eliminate any inequities. In other words if we believe that we are being correctly rewarded for our efforts in relation to others a state of justice exists, however if we perceive ourselves as being unjustly treated in relation to others we experience ‘equity tension’.
The benchmark that is chosen by each individual is important for the leader/manger if he or she is to uncover an individual’s motivation. These benchmarks or ‘referent comparisons’ are:
Self-inside, experiences in other positions inside the organization
Self-outside, experiences in other positions outside the organization
Other-inside, other employees within the organization
Other-outside, other employees outside the organization
Another interesting aspect of this theory is that comparisons can be made on the employees past treatment in relation to another’s current treatment. This particularly comes into play when you are hiring new staff. If the entry-level wage for an existing employee hired two years ago was $1,000.00 per month and today you offer the same position at $1,200.00 per month it is likely that existing employees will see this as inequitable. This situation will occur, even if the existing employees are paid in excess of the $1,200.00 you are now offering.
IT IS HUMAN TO COMPARE OUSELVES WITH OTHERS SO BEWARE OF PERCEIVED INEQUITIES
If our staff perceive themselves as being unjustly or inequitably treated in relation to others and they experience equity tension there are a number of possible courses of action they are likely to choose from:
Change their level of input – reduce their level of effort
Change their outcomes, where reward is linked to output – reduce quality to improve quantity
Change their self-perception (of worth) – maybe I really am a workaholic
Distort their perception of others – that guys got a hard job
Change their referent – I’m doing better than my sister is
or last but not least… Quit the job
Factors that may be used by individuals judging their input levels include, effort, experience, education, time, perceived competence, skills and knowledge. Factors that may be seen as outcomes include, salary, prospects of increasing financial rewards, promotion prospects, levels of praise and levels of public recognition.
BEST PLAN WELL ON HOW TO JUSTIFY DIFFERENT REWARD LEVELS WITHIN THE ORGANIZATION OR ITS… “I’M THE CHEAPEST LABOUR HERE” & ITS OUT THE DOOR THEY GO
To prove to followers that “equity” exists leader/managers must openly share the reward decision-making process. If it is not an acceptable option, then at least an open sharing on how decisions where made must be offered. The process must also be seen as being consistent and in line with unbiased practices. The object of this approach is to prove:
Procedural Justice, i.e. a decision process that is perceived as fair and…
Distributive Justice, i.e. there is a fair allocation of available rewards.
Experience shows that employees will devise any manner of measurements to test the justice of relative staff situations. For example I once had a colleague who was displeased with a $4,600.00 salary increase because staff in more junior positions where given a $ 2,100.00 increase which represented 12% over their previous pay levels. The cause of the discomfort was that the colleague had only received an 8% increase hence the gap between the two positions had narrowed causing a perception of an inequitable margin between the two jobs or a perceived diminution in his relative importance, which he saw as unjust.
The validity of this theory really becomes obvious and proven when we are engaged in something as mundane as allocating new company car parks or redesigning office layouts. The tension, bickering and office politics that grows from this type of activity can be truly amazing.
INEQUITY CAN TURN ADULTS INTO CHILDREN OR EVEN WORSE, POWERFUL ADULTS CAN TURN INTO DEMANDING PARENTS.
Not getting your fair share? To get a better job you need an outstanding resume.
