Equity Theory – How could we motivate effectvely in an organization

Equity theory states that a person is motivated when he perceives that he is treated fairly. He usually picks a colleague who works with him, as the “referent”. He tries to equate his outcome (pay, status, job-title, job assignment) over input (education, training, intelligence, experience, number of hours worked) ratio to that of referent’s and if the ratio is same, he feels that he is treated fairly. If referent’s ratio is more, he feels that he is under-rewarded (expressed as anger and frustration) and feels over-rewarded (expressed as guilt) if it’s the other way around.

To promote motivation in such a situation, managers should try to look for and correct inequalities by making sure that their decision making process is fair by equally distributing extrinsic and intrinsic rewards and by allowing fair allocation of responsibilities. For example to motivate two team members on the same level of experience and status, the manager should assign equally challenging tasks to them.

Article Copyright – Deepesh Joseph (2003-2020)
Research Reference:

1. Williams C. (2007). Management (4th ed., ). Thomson South Western.