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Equity Theory
Process theory is a commonly used form of scientific research study in which events or occurrences are said to be the result of certain input states leading to a certain outcome stat, following a set process. Process theory holds that of an outcome is to be duplicated, so too must the process which originally created it, and that there are certain constant necessary conditions for the outcomes to be reached. When the phrase is used in connection with human motivation, process theory attempts to explain the mechanism by which human needs changes. Equity theory falls into the process theory.
John Stacey Adams, workplace and behavioral psychologist, put forward his Equity Theory on job motivation in 1963. There are similarities with Charles Handy's extension and interpretation of previous simpler theories of Maslow, Herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of their relationship with their work, and thereby their employer. Awareness and cognizance feature more strongly than in earlier models, as does the influence of colleagues and friends, etc, in forming cognizance, and in this particular model, ‘a sense of what is fair and reasonable’.
Equity or inequity is a psychological state residing within an individual. It creates a feeling of dissonance that the individual attempts to resolve in some manner. The notion of "equity" is associated with justice and fairness. The individual fundamentally believes that they are being treated fairly in comparison to what they see others receiving.
Equity is a social comparison process, resulting when individuals compare their pay to the pay of others. There is no "rational" or single "equitable pay rate" for any given job or individual. Equity is a subjective evaluation, not an objective one. Based on the comparison that individuals use, each individual is likely to develop different perceptions of equity.
The comparisons individuals use tend to fall into five classes of comparison:
1. Job Equity- Individuals compare their pay to the pay of other individuals in the same position they hold within their organization.
2. Company Equity- Individuals compare their pay to the pay of other individuals holding the different positions within their organization.
3. Occupational (Market) Equity- Individuals compare their pay to the pay of other individuals holding the same position in other
4. Cohort Equity- Individuals compare their pay to the pay of others in similar cohort groups, generally age and education.
There were a few issues of fairness presented in Michael Simpson’s case that happens in in real world work places that prevents employees from working to their full potential or causing them to leave the work place all together. In this case study Michael Simpson is faced with the dilemma of whether or not he should leave Avery McNeil, the accounting at which he is currently working at. Simpson had interviewed with many consulting firms before graduating college, and had chosen Avery McNeil because it had the potential to allow him the most rapid advancement in his career. Within two years of working their he was promoted to manager and he received a great pay raise. However, a few days later Simpson came upon a sheet with pay grades of other
It discusses how pay transparency can be used to limit the discrimination found in workplaces. Gowri believes that all discrimination troubles could be resolved by allowing everybody to see what each other’s make. He discusses the major pay gaps found between different races and different genders.
This model is where employees tend to judge fairness by comparing their inputs to the outcomes they receive, and comparing this to the output of others. (Newstrom 2015) Inputs are what an employee puts into the company and the outputs are what they expect in return. This theory says that when an employee feels that they are being rewarded on an equal level as what they are contributing, they will be more motivated in increasing their outputs. They also take into consideration the work of others. If they are working at their max capability and they see others who are not, they feel that the compensation should be different. This was seen in the employee’s issue with managements
Equity or economic equality is an idea of fairness in economics. It also refers to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to raise funds and commitment for redistribution.
“Equity considerations play a major role not only in the evolution of distributive systems but all in the emergence of supporting ideologies and the processes through which distributive systems are challenged and replaced” (Cook,K.S., & Parcel, T.L. 1997, p.2). Therefore, when the employees are rewarded for their work they will most likely work harder to restore the balance of equity. Whereas if an employee is under rewarded the employee will most likely do the opposite and not work as hard. The ongoing issue at Engstrom Auto Mirror Plant was that the employees were being under- rewarded and not appreciated by upper management, which lead to low productivity that severely impacted the companies
It is a term that is also often misunderstood. Fairness really depends on point of view. I have always thought of fairness more in terms of equal opportunity instead of equal outcome. This would mean that in a fair society that everyone has the chance to earn $100. It is up to each individual to work hard enough to earn the $100.
Substantive equality is referred to as equity in the sense that equality also involves recognizing differences when they are becoming disadvantages (Cheyne, O’Brien, Grave, 2008). Substantive equality looks at the roots of inequality and identifies them, even if this involves removing the barriers that disadvantage individuals. There is no guarantee of the outcome that may be produced, but individuals do have the equality of opportunity.
An employee’s productivity and motivation derives from many different aspects. Some individuals have a higher productivity in the work place simply because they are motivated by the place itself, probably they feel comfortable in the place of work or they are treated with the upmost respect and love their jobs. Others in the other hand are more influenced by the liquid compensation, these will perform a better role and become more productive when there is more money involved. In this research paper we will learn whether employees are motivated by appraisals or by money, I will research if an employee works harder when there is a bonus or a raise at hand, or if the dedication and the hard work that they bring into the company is because they love what they do and they just need to be recognized, perhaps they just need the push and the motivation from their employers to become more
Employees desire compensation systems that they perceive as being fair and commensurate with their skills and expecta¬tions. Pay, therefore, is a major consideration in HRM because it provides employees with a tangible reward for their services. A significant interaction occurs between compensation management and the other functions of the HR program. For instance, in the recruitment of new em¬ployees, the rate of pay for jobs can increase or limit the supply of applicants. Compensation objectives should facilitate the effective utilization and manage¬ment of an organization’s human resources, while also contributing to the overall objectives of the organization (www.indiana.edu/~busx420/Book.../chap09.doc). Providing a first-rate benefits package for employees can be an important part of the recruitment and retention puzzle (studymode.com).
According to the equity theory people (employees) subjectively determine the attitude of the consideration received for their efforts and then relate it to the remuneration of other people doing similar work. If this comparison indicates imbalance and injustice, a person believes that his colleague for the same work received a greater award. As a result, it is necessary to motivate the employee to ...
If a couple is looking for equity, they will be more likely to perceive inequity because they will be watching out closely for the costs and rewards they get out of the relationship. When comparing the two, they may realize the differences in each, causing their perception to change about their partner and their relationship. Comparing the ratio of cost and reward side by side could also provide problems if communication is not there. It needs to be understood that if a certain situation has a higher cost than reward to one partner, but the other partner views the reward higher than the cost then there needs to be a compromise between the
Equity speaks to fairness as people’s ability to access things and when talking fairly it is the ability to access things fairly. In other words, if one group has access say to education, then all groups should have access to the same education, the same quality of education (Kranich, 2005).
The main purpose of this project is to uncover factors responsible for causing a 36% decrease in employee satisfaction for the department of EHS over a 5-year period (2005-2010) reported in EHS’s 2010 employee satisfaction survey (EHS, 2005; EHS, 2010). With over 64,000 full-time employees making up the State of Colorado’s workforce it is imperative to determine how best to improve employee satisfaction and morale as these directly affect job performance and workplace safety (Barling, Kelloway, & Iverson, 2003; STAR, 2009). The objective of Chapter two is to provide information regarding employee satisfaction and the examination of the capstone’s project theoretical framework. Having a clear understanding of the motivation of employees is tremendously significant to managers as well as the supervisors, particularly in the industries today where the limited budgets make it complicated to reward workers monetarily. In order to analyze the effect of the long-term reductions in employee compensation, benefits, and incentives directly affecting the State of Colorado workers’ motivation, job satisfaction, and morale, it is important to include the two well-known motivational theories i.e. Herzberg’s Two-Factor Theory (1959) as well as Adam’s Equity Theory (1963), into the project’s theoretical framework (Gibson, et al., 2009).
I think this is important part in the future employment as it results in equality between the workers, which would indicate that organisation is secure. By comparing each other we could improve higher level of determination and work harder which would also result in secured job placement and financial reward. Motivation has enormous impact in successfully accomplishing your goals. Personally what would motivate me is flexible working, holiday benefits, but as for rewards it would be increase in salary, but as not many companies tend to do that, then recognition for the hard work would also be