What is Adam’s Equity Theory? definition and meaning - Business Jargons
Motivation (two factor theory, expectancy theory, equity theory) Vroom's Expectancy Theory Herzberg Two Factor Theory John Adam's Equity Theory; 4. There is a positive correlation between efforts and performance. The Adam's Equity Theory posits that people maintain a fair relationship between the performance and rewards in comparison to others. In other words, an. Whereas Maslow and Herzberg look at the relationship between internal needs There is a useful link between Vroom's expectancy theory and Adam's Equity.
With so many graduates, it is important that whilst distinguishing between all of them, that none are overlooked and all feel equal to one another. As a graduate, inequity is likely to occur when an individual believes they are receiving more or less than they think they deserve.
In an instance where they may be being better rewarded than their counterparts it may not be of concern to them, but when their counterparts are receiving higher benefits than the individual there will be a great feeling of inequity and maybe inadequacy. If the graduate feels that their peers are receiving a higher token in any of these output areas, they are likely to experience inequity. Their inputs will be things such as effort, commitment, time, reliability and loyalty.
They will try to correct the inequity as quickly as possible and this may involve lowering productivity, increased absenteeism or a reduced quality of the work produced. However, the limitation with this model is that it leaves inputs and outputs open to interpretation according to individual differences. For example, whilst one graduate might place large value on pay rises, another may think that these are negligible and that promotion and climbing the corporate ladder is more important.
Obviously, there will be certain individuals who perform better than others and will deserve higher outputs. This will actually have a positive effect on the company in that the other graduates in the company will want to achieve a similar output benefit and therefore be motivated to work harder and in turn their inputs will increase.
This will have a spiralling effect which will increase productivity and therefore in turn have a positive effect on the company. Both theories can be used to ensure that the graduates are happy and feel aptly rewarded in their jobs.
Expectancy Theory and Equity Theory both take into account the costs to the individual and the rewards that are ultimately expected. It is important for an organisation not to pass these theories by because it may ultimately have a detrimental effect to the reputation of the company. By ensuring that those at the bottom of the firm are enjoying their work and feel aptly rewarded, it will create a positive atmosphere that will ensure that the graduates remain loyal to the organisation and are more likely to stay with them rather than defect to a rival firm.
How to cite this page Choose cite format: Different employees ascribe personal values to inputs and outcomes.
Adam’s Equity Theory
Thus, two employees of equal experience and qualification performing the same work for the same pay may have quite different perceptions of the fairness of the deal. Employees are able to adjust for purchasing power and local market conditions.
Thus a teacher from Alberta may accept lower compensation than his colleague in Toronto if his cost of living is different, while a teacher in a remote African village may accept a totally different pay structure. Although it may be acceptable for more senior staff to receive higher compensation, there are limits to the balance of the scales of equity and employees can find excessive executive pay demotivating. Staff perceptions of inputs and outcomes of themselves and others may be incorrect, and perceptions need to be managed effectively.
An employee who believes he is overcompensated may increase his effort.
Equity theory - Wikipedia
However he may also adjust the values that he ascribes to his own personal inputs. It may be that he or she internalizes a sense of superiority and actually decrease his efforts. Criticisms and related theories[ edit ] Criticism has been directed toward both the assumptions and practical application of equity theory. Scholars have questioned the simplicity of the model, arguing that a number of demographic and psychological variables affect people's perceptions of fairness and interactions with others.
Thus, in a business setting, one might feel that his or her compensation is equitable to other employees', but one might view the entire compensation system as unfair Carrell and Dittrich, Researchers have offered numerous magnifying and competing perspectives: Equity sensitivity construct[ edit ] The Equity Sensitivity Construct proposes that individuals have different preferences for equity and thus react in different ways to perceived equity and inequity.
Preferences can be expressed on a continuum from preferences for extreme under-benefit to preferences for extreme over-benefit. Three archetypal classes are as follows: In other words, the benevolent prefers to be under-benefitted.
In other words, the entitled prefers to be over-benefitted. According to the Fairness Model, an individual judges the overall "fairness" of a relationship by comparing their inputs and outcomes with an internally derived standard. Game theory[ edit ] Behavioral economics has recently started to apply game theory to the study of equity theory. For instance, Gill and Stone analyze how considerations of equity influence behavior in strategic settings in which people compete and develop the implications for optimal labor contracts.