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Equity Theory: Definition, Origins, Components and Examples

In any managerial role, understanding what drives employee motivation is crucial for success. Equity theory offers valuable insights into this aspect, focusing on how perceptions of fairness can significantly impact workplace enthusiasm and efficiency. This article delves into the history, fundamental principles, and components that make up this important theory. It also provides actionable strategies for managers to maintain a balanced and motivated workforce by applying equity theory.

See also: Alderfer’s ERG Theory

What is the equity theory of motivation?

Equity theory is central to understanding how employees’ motivation in the workplace is influenced by their perception of fairness . According to this theory, employees maintain a mental record, akin to a ‘ledger,’ that keeps track of what they contribute to their job and what they receive in return. These contributions or ‘ inputs ‘ could range from the amount of effort they put into tasks, their skill level, educational background, and overall work experience. In contrast, ‘ outputs ‘ or rewards can include things like salary, additional benefits, and opportunities for career advancement (1).

When it comes to gauging their level of motivation and job satisfaction, employees often compare their own input-output balance to that of their co-workers. If an employee feels that this balance is skewed in comparison to others, there’s a high chance they’ll become less enthusiastic and content with their job role. This could, in turn, affect their performance and overall productivity.

See also: Expectancy Theory Of Motivation

However, if an employee thinks that their contributions and rewards are on par or better than their colleagues, they are likely to feel a higher sense of motivation and job satisfaction. This insight, grounded in equity theory , can be a useful tool for managers and business owners to ensure a motivated and content workforce.

A figure showing Inputs and Outcomes

The origins of equity theory

Equity theory came into prominence in 1963 through the work of John Stacey Adams , a behavioural and workplace psychologist. The theory aims to provide insights into relational satisfaction based on the concept of perceived fairness. Adams developed this theory as a way to fill a noticeable gap in the psychological understanding of how individuals perceive inequities, a concern that has been particularly significant for employers and governmental bodies, as it directly influences employee attitudes and behaviours towards their organisations (2).

A photo of John Adams

Drawing on pre-existing research in both sociology and psychology, Adams reasoned that the concept of equity goes beyond the simple economic measurements of being overpaid or underpaid. Instead, it involves intricate cognitive and psychological processes that are influenced by social context. This means that the assessment of what is deemed ‘ fair ‘ or ‘ unfair ‘ is socially constructed and is more nuanced than straightforward financial calculations.

See also: Theory X And Theory Y, Douglas McGregor

The significance of equity theory is two-fold. On an organisational level , understanding these principles can help mitigate financial repercussions that arise from negative employee behaviour, such as decreased productivity or higher turnover rates. Concurrently, the theory holds broader social importance , as it offers a framework for promoting fairness and justice in interpersonal interactions and relationships. By doing so, it aims to guide the regulation of both organisational outcomes and social justice (3).

Theoretical Foundations

As mentioned, Equity Theory is a construct that draws its foundational principles from three key theories within the realms of social science and psychology.

Social Exchange Theory

The Social Exchange Theory serves as one pillar, suggesting that the essence of social interactions is based on individual assessments of the pros and cons associated with a given relationship. It maintains that people remain in relationships as long as they perceive the benefits to outweigh the costs.

Social Comparison Theory

Another cornerstone is the Social Comparison Theory. This theory details the cognitive processes people employ to gauge whether the distribution of rewards and penalties in a relationship is equitable. It was incorporated into Equity Theory based on earlier evidence which revealed that employees tend to perceive a distribution of rewards as unfair if they find that their contributions surpass those of their peers within the same organisational division.

Cognitive Dissonance Theory

Lastly, the Cognitive Dissonance Theory plays an instrumental role in understanding how individuals cope with the emotional turmoil triggered by incongruent beliefs or cognitions. This theory further clarifies how people are motivated to relieve this tension either through passive acceptance or proactive steps to alter the situation.

By synthesising elements from these three core theories, Equity Theory offers a holistic explanation that encompasses the nature of human relationships, the cognitive evaluation mechanisms at play, and the ensuing emotional and behavioural reactions to these evaluations. This combination allows for the development of strategies to manage interpersonal relationships effectively, both within and outside organisational settings (4).

See also: Herzberg’s Motivation-Hygiene Theory: Two-Factor

Components of the equity theory of motivation

The equity theory of motivation fundamentally rests on two core concepts: the effort a person invests, often called ‘inputs’, and the rewards a person receives, known as ‘outcomes’. These two components play a critical role in shaping an employee’s level of motivation.

Inputs, they can be broadly defined as the contributions an individual makes to secure some form of reward. This can range from the hours spent working and the responsibilities taken on, to the level of loyalty exhibited toward an organisation and the overall enthusiasm for the job at hand. Employees often make a distinction between elements they can control, such as punctuality and communication skills, and those that are beyond their control, like the level of training provided by the employer or their years of service in the company.

Outcomes – Outputs

Outcomes are the compensations or benefits received in exchange for these contributions. Sometimes these rewards can be easily quantifiable, like a paycheck, job stability, or fringe benefits like healthcare packages and time off. However, not all outcomes can be measured in concrete terms. Some are more elusive but equally significant, like gaining respect from colleagues, building a solid professional reputation, or deriving a sense of satisfaction and pride from your own work.

It’s essential that the worth assigned to the outcomes should, in an ideal world, mirror the significance of the inputs. For example, someone who has invested in higher education might anticipate that their advanced qualifications will lead to superior job prospects.

See also: McClelland’s Three Needs Theory: Power, Achievement, And Affiliation

Factors that affect equity theory

The concept of equity theory incorporates two key elements known as ‘ referents ’ and ‘ moderating variables ’. These components can shape how a worker views fairness.

Referent groups

In the workplace, employees tend to form judgments about the fairness of their treatment by drawing up a range of comparisons, often referred to as referent groups. These referent groups come in four distinct categories.

  • Self-inside: An employee may use a ‘Self-inside’ benchmark, drawing on their own previous experiences within the same organisation.
  • Self-outside: the ‘Self-outside’ referent is used when an employee compares their current situation with their own experiences in other organisations.
  • Other-inside: An employee might employ the ‘Other-inside’ referent, where they assess their own inputs and outcomes against those of another colleague within the same company.
  • Other-outside: Lastly, the ‘Other-outside’ referent involves measuring one’s own situation against that of individuals in comparable positions but in different organisations.

By employing one or more of these referent types, either consciously or unconsciously, employees form a nuanced view of how equitably they are being treated. For example, an individual who previously felt underappreciated at another company might find themselves more acknowledged in their current role. In this instance, they are likely to use a ‘Self-outside’ comparison, leading them to the conclusion that they are currently in a more equitable employment situation. This understanding not only informs the employee but also offers actionable insights for management to maintain a balanced and motivating work environment (5).

Moderating variables

Moderating variables like educational background and years of experience play a crucial role in shaping an employee’s view of fairness in their work setting. For instance, individuals with advanced education are often inclined to draw upon their broader industry network when making comparisons about fairness, looking beyond their current organisation. Conversely, those who have built up a longer tenure either in their role or within the same company tend to use internal benchmarks or colleague comparisons as their measure for fairness. Employees with less experience, however, are likely to rely on their own personal knowledge and understanding when assessing what is fair.

Five Key Principles

Now that we have looked at the main components of Equity Theory, let’s examine the five key principles that explain the dynamics of equity in interpersonal relations:

  • According to the theory, human interactions operate on an equity norm, meaning people inherently seek a fair exchange where their contributions are adequately rewarded. Within a collective setting, this principle implies that group members who abide by this equity norm are positively reinforced, while those violating it face consequences.
  • The second principle revolves around the mechanism for assessing equity, which involves comparing one’s own contributions and benefits to those of another individual. People may either compare themselves to a specific individual, or to a broader societal measurement, which could include universally accepted standards or pre-established social norms. A person may even use their own past experiences as a point of reference to evaluate current rewards and contributions.
  • Thirdly, the theory addresses the conditions under which perceptions of inequity arise. For example, in a work setting, if employees perceive a disconnect between their professional credentials, like education and responsibilities, and the rewards they receive, such as pay or job security, they will likely experience a sense of inequity, especially when comparing their gains to what they believe others are receiving.
  • The fourth key principle illustrates that perceptions of inequity can result in psychological dissonance that may manifest as emotional distress. The disparity between one’s own outcomes and that of another can evoke negative emotions like anger when the individual perceives they are receiving less, or guilt when they feel they are getting more than their due. This emotional dissonance is amplified depending on the level of perceived inequity and is not limited to professional settings but also extends to familial and other personal relationships.
  • Lastly, the fifth principle posits that individuals will naturally attempt to restore a sense of equity to relieve the emotional strain caused by perceived inequity. The theory enumerates seven distinct coping strategies, ranging from actively altering the distribution of rewards and contributions to more psychological approaches like altering one’s own perception of the situation. These strategies offer a blueprint for individuals to navigate the complexities of equity, whether in a work environment or in personal relations (6).

By understanding these five foundational principles, it is possible to better grasp the intricate complexities of equity and inequity in various relational contexts, and thereby gain insights into managing interpersonal dynamics more effectively.

See also: Model Of Motivation: ARCS Instructional Design

How to apply the equity theory of motivation in the workplace

Understanding your team’s motivation is crucial, and the framework provided by Equity Theory can be quite enlightening. To implement this theory effectively in your workplace, consider these three core strategies:

  • Establish fairness: If you are in a position of seniority, one of your first priorities should be to set up a fair reward system. Make it a point to offer equal rewards for equal amounts of work. Regular team meetings can be a good venue to make sure everyone feels recognised for their contributions.
  • Benchmark compensation: Salary is often at the heart of how team members judge their treatment at work. To keep your team satisfied, align your compensation packages with the market standards. Doing a bit of market research, for example, by looking at online databases to check competitive salaries, can arm you with the necessary information for defining appropriate compensation levels.
  • Understand individual preferences and emotional states: Different team members are motivated by different things. Some may put a higher value on monetary rewards, while others might be more motivated by job satisfaction or opportunities for growth. Personalised discussions can offer you a clear idea of what each team member values most, allowing you to formulate a plan that keeps everyone engaged and satisfied. Similarly, emotional factors can also come into play. If a team member feels under-rewarded, they may develop feelings of resentment that could lead to decreased performance. On the other hand, over-rewarding can cause guilt, affecting morale in a different way. Therefore, emotional considerations should not be underestimated when applying Equity Theory.

In summary, equity theory provides a comprehensive framework for understanding the complexities of motivation in the workplace. Rooted in decades of academic research, this theory explains how employees weigh their contributions against the rewards they receive, and how these perceptions influence their overall job satisfaction and productivity. Managers who make use of the insights offered by equity theory can create a more harmonious and effective work environment. By being aware of the individual needs and expectations of their team, they can create a work culture that not only values fairness but also promotes long-term engagement and success.

  • Adams, J.S. & Freedman, S. (1976). Equity Theory Revisited: Comments and Annotated Bibliography. Advances in Experimental Social Psychology, 43-90.
  • Adams, J.S. (1963). Towards an understanding of inequity. The Journal of Abnormal and Social Psychology, 67 (5), 422-436.
  • Chou, E., Lin, C. & Huang, H. (2016). Fairness and devotion go far: Integrating online justice and value co-creation in virtual communities. International Journal of Information Management, 36 (1), 60-72.
  • Lăzăroiu, G. (2015). Employee motivation and job performance. Linguistic and Philosophical Investigations, (14), 97-102.
  • Burgess, R. L., & Huston, T. L. (Eds.). (2013). Social exchange in developing relationships. Elsevier.
  • Greenberg, J., & Cohen, R. L. (Eds.). (2014). Equity and justice in social behavior. Academic Press.

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Adams’ Equity Theory of Motivation: A Simple Summary

Adams’ equity theory of motivation says that to be motivated, individuals need to perceive that the rewards they receive for their contributions are fair, and these rewards are similar to those received by their peers. If individuals perceive that their rewards are not fair, they will feel distressed and try to change things to create a sense of fairness. Summary by The World of Work Project

Adams’ Equity Theory of Motivation

J. Stacey Adams’ equity theory is a process model of motivation . It says that the level of reward we receive, compared to our own sense of our contribution, affects our motivation. The theory considers the concept of equality and fairness, as well as the importance of comparison to others.

At its core, Adams’ theory says that individuals want a fair relationship between inputs and outputs. What this means is that they want the benefits (rewards) they receive from work to seem fair in relation to the inputs (contribution) that they provide. Similarly, they want the rewards that others receive for their work to be similar to the rewards that they themselves would receive for the same level of contribution.

Put simply, Adams’ equity theory says that people want fair compensation for inputs across the working population of which they are members. When this is the case, individuals may remain motivated. When it ceases to be the case, individuals may cease to be motivated.

Contributions and benefits

Adams’ Equity Theory of Motivation says that the relationship between an individual’s inputs (contribution) and their benefits (reward) is important for their sense of fairness and equity, thus for their motivation. To make more sense of this though, we need to understand what types of things constitute both inputs and benefits.

Contributions (inputs or costs)

Inputs can be thought of as the things that an individual does to help an organization achieve a goal. These the the things that the individual contributes to the organization. Often the first thing that springs to mind is the time that an individual spends working. However, there is actually a lot more to it than just this.

There are many different types of factors that can be thought of as inputs. These include: time, education, prior experience, effort, loyalty, hard work, adaptability, resilience, flexibility, determination, enthusiasm, adaptability, tolerance, support of others and trust and the willingness to follow leaders. Captured in these inputs are both physical labor and a wide range of things considered to be emotional labor.

Basically, any time an individual contributes effort or exerts psychological effort to help an organization achieve a goal can be thought of as contribution.

Benefits (outputs or rewards)

Benefits are the things that an individual receives as a result of helping an organization achieve a goal. These are the things that the individual receives from the organization, or agents of the organization. Often, the first thing that springs to mind is salary, or other financial contribution for time. However, there is actually a lot more to it than simply remuneration.

There are many different types of factors that can be thought of as inputs. These include: salary, benefits, job security, structure and routine, recognition, responsibility, a sense of community, praise, thanks and recognition, stimulating work, education and development, pride, the opportunity to progress and purpose. Basically, anything that an employee receives and sees as making a positive contribution to their life is a benefit.

The things that need to be fair

Adams’ Equity Theory of Motivation introduces the idea of fairness and the idea of comparison. For a working relationship to be considered equitable it needs to pass two tests:

  • Firstly, individuals need to feel that the reward they receive for their contribution is intrinsically fair.
  • Secondly, they need to feel that the levels of rewards that they receive (relative to their contributions) are similar to those received by their peers in the organization.

If both of these tests are passed, then a fair and equitable working arrangement may exist. Consequently, individuals will probably be motivated.

Test 1: The equity of reward and input

Under Adams' Equity Theory of Motivation reward should be proportional to contribution

The first test of equity that needs to be considered is the relationship between an individual’s contributions and their rewards. For individuals to feel a sense of fairness, they need to perceive that the benefit they receive from their organization is appropriate for the level of input that they’ve contributed to their work.

The sense of what a makes a fair reward is probably shaped by societal and social norms. When individuals consider the fairness of their reward they probably make comparisons to other careers and industries. These are sensible comparrisons as these are other ways they could choose to allocate their time and effort. When an individual feels that their rewards are commensurate with their contributions, they will feel they are being fairly treated. As a result, they will probably be motivated.

Test 2: The equity of reward and peer reward

Adams' Equity Theory of Motivation is build on fair rewards

The second test of equity that needs to be considered is the relationship between an individual’s return on contribution, and that for their peer group. This process of benchmarking is knows as social comparison.

For individuals to feel that things are fair, they need to feel that the benefits they receive per unit of contribution are similar to the benefits that their peers receive for a comparable unit of contribution. When this is the case, individuals may feel that they are being treated fairly and be appropriately motivated.

What happens if things aren’t fair?

Adams’ Equity Theory of Motivation says that people experience “distress” when things are perceived as not being fair. Furthermore, the greater the level of unfairness that people perceive, the greater their levels of distress.

Generally speaking, when people find something to be unfair, they look to return it to a state of fairness. This effort to return to fairness can be achieved in two different ways. Either the actual levels of contribution can be adjusted (e.g. by changing roles or levels of effort), or the perception of of how much is being contributed can be adjusted (by adjusting the values placed on different people’s contributions). This process of adjusting perceptions is often known as cognitive distortion (you can read more about cognitive biases here).

Both of these methods of responding to distress have the same effect for the individual involved. They may, though, have different impacts on others within the peer group.

Individuals who feel over compensated

It might seem strange that individuals who perceive that they are overcompensated for their contributions feel distress, but they do. Individuals in this situation often feel a sense of shame or guilt for their circumstances and seek to reintroduce a sense of fairness.

The ways that they seek to achieve this fairness, though, differ. Some individuals may increase their effort without looking to increase their reward. If they do this they may consequently feel that they have fairly earned their reward. This approach is fairly healthy both for the individual and for their peers.

Other individuals, though, may address the same problem in a different way. Instead of changing their actual contributions, they may (unconsciously) adjust their perceptions of the relative values of the contributions that individuals are making. This is done through a process known as cognitive distortion.

They may seek fairness through the cognitive distortion route in two different way. They can either:

  • Inflate their perception of what they contribute to the organization, or
  • Deflate their perception of what others contribute to the organization.

While inflating what you think you’re worth and deflating what you think others are worth will both help resolve a sense of unfairness and the distress that comes with it, these solutions are often unhelpful in the long run. The cognitive distortions that they create will often be shattered when the inevitably move into a new peer group. In a new group they’ll need to re-baseline themselves and may learn uncomfortable truths.

Individuals who feel under compensated

Many people can relate to the feeling of being under appreciated or under valued at some point in their life. It comes as no surprise that when this happens people feel distressed. Individuals in this situation often feel a sense of humiliation, anger or injustice. When this is the case individuals are often driven to try to reintroduce a sense of fairness.

The ways that individuals seek to reintroduce this fairness, though, differ. Individuals may look to change their levels of contributions and rewards so that they are once again fair. They may increase their rewards by renegotiating within their current job or by getting a new job. Alternatively, they could reduce their contribution until it feels commensurate with the level of reward they currently receive.

Alternatively, some individuals instead change their perception of their contribution and reward, again through the process of cognitive distortion. They may inflate their perception of the contributions of others and deflate their perception of the value of their own contributions until their perceptions align with their sense of reality.

This can be an unhelpful and uncomfortable process for the individuals involved and may lead to loss of self-esteem and confidence.

What the model means for individuals

Adams’ Equity Theory of Motivation says that when individuals perceive that they are not fairly rewarded for their contributions that they will feel a sense of distress. From an individual’s perspective it’s therefore clear that equality and fairness are important.

To ensure you don’t feel a sense of distress in the workplace you need to ensure that the reward you receive feels commensurate with the contributions you make to your organization. It’s often worth taking some time to think about this and, if things don’t feel fair to you, reflecting on how you’d like them to change.

Once you’ve determined what needs to change for you to feel a sense of equity, it’s worth discussing these changes with your line manager to see what changes might be possible. Of course, if things seem too far out of kilter, it may be worth looking for a new role.

What the model means for organizations

Adams’ Equity Theory of Motivation has been popular in the world of work and adopted into the HR thinking and the decision making processes of many organizations. The underlying premise of the model, that fairness is important for motivation, helps shape how organizations think about their relationships with their employees. Many organizations believe that organizational fairness and justice in their dealings with their employees is highly important for engagement, motivation, employee retention and overall productivity.

What the model means for leaders and managers

Adams’ equity theory says that perceived fairness of rewards and contributions across peer groups affects motivation. What this means from a leadership and management perspective is that a sense of fairness should be created within a team to ensure the best levels of motivation, engagement and performance. There are two ways that this can be done. The first is by addressing the actual relationship between contribution and reward, and the second is by addressing perceptions.

To address the actual relationship between contributions and rewards, leaders and managers should work hard to ensure they are equitable in the treatment of their employees. They should avoid favorites, compare employees to benchmarks, give individuals equal opportunities to demonstrate their capabilities and share recognition fairly as merited. They should also ensure that they call out negative behaviors and address these too, as not doing so also contributes to a sense of unfairness.

To address the perceptions around the relationship between contributions and rewards, leaders and managers should strive for transparency over what each member of their team is contributing. When individuals lack this type of information, they often fill that information void with speculation that isn’t helpful. To overcome this leaders and managers should ensure their teams are kept as well informed as possible. They should also work hard to establish a culture of fairness, celebrate acts of fairness, capture values around fairness and tell stories that relate to fairness.

Learning More

We’ve written several articles on various content and process theories of motivation that you might find interesting. These include articles on Vroom’s Expectancy Theory and Herzberg’s two factor theory of motivation . We’ve also written an introductory post of Adair’s 8 basic rule of motivation and have a guest post on Reversal Theory . You can also check out our catalogue of podcasts for more helpful topics.

The World of Work Project View

Adams’ equity theory of motivation is an excellent model to have an understanding of. The concept of fairness as a motivator (or de-motivator) is important for both individuals in assessing their own motivations and for leaders in assessing the motivations of the members of their teams.

In our view some of the most interesting aspects of this model relate to the role of perceptions in defining a sense of fairness. Cognitive distortions are not uncommon in the workplace, and their impacts on perception and thus motivation are fascinating, though we don’t look at them much here. You can read more on cognitive biases and how we think in the relevant pages of this website.

Like many models, Adams’ equity theory has had some criticisms and challenges. These include challenges to its underlying assumptions (which we’ve not covered here) and to its applicability in the real world. These challenges may be valid as much of the assessment around it has been undertaken in laboratory settings. There appear to be fewer criticisms though of the equity model than of some of the earlier content based models of motivation. It seems that overall the equity model is generally well accepted.

In summary, we’re big fans of the equity model. We think it provides a simple way to think about motivation and fairness in work. It also provides some clear guidance on how individuals, leaders and organizations should behave. We think most people would benefit from reading about it and learning from it.

How We Help Organizations

We provide leadership development programmes and consulting services to clients around the world to help them become high performing organizations that are great places to work. We receive great feedback, build meaningful and lasting relationships and provide reduced cost services where price is a barrier. 

Learning more about who we are and what we do it easy: To hear from us, please join our mailing list . To ask about how we can help you or your organization, please contact us . To explore topics we care about, listen to our podcast . To attend a free seminar, please check out our eventbrite page .

We’re also considering creating a community for people interested in improving the world of work. If you’d like to be part of it, please contact us .

Sources and Feedback

Most of the original work on which this post has been based comes from J. Stacy Adams’ 1963 article, “Towards and understanding of inequity” as published in the Journal of Abnormal and Social Psychology.

We’re a small organization who know we make mistakes and want to improve them. Please contact us with any feedback you have on this post. We’ll usually reply within 72 hours. 

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Adams' Equity Theory of Employee Motivation: What Is It?

Ryan Green

November 22, 2022

adams equity theory

In the business world, employee motivation is key to maintaining a productive workforce. There are many theories out there about what motivates employees, but one of the most popular is Adams' Equity Theory.

What Is Adams' Equity Theory?

Adams' Equity Theory of Employee Motivation (also known as the Equity Theory of Motivation) posits that employees are motivated when they believe they are receiving a fair reward for their work. This theory was developed by J. Stacey Adams in 1963 and has since been used to explain employee behavior and motivation.

Adams' Equity Theory suggests that employees compare their own inputs and outputs (e.g., effort and rewards) to those of others, and when there is a perceived imbalance, they will act to restore equity. It states that employees are motivated to keep their own perceived fairness levels in balance with those around them. This means that if they feel they are being treated unfairly, they will be less motivated to work hard.

Adams' Equity Theory has been studied and researched extensively over the years, and it is generally accepted as a valid way to explain employee motivation. While there may be other factors at play, such as personality type or individual needs, the theory provides a good framework for understanding how employees react to different situations.

If you're interested in using Adams' Equity Theory to improve employee motivation in your own workplace, there are a few things you can do.

Why is Adams's Equity Theory important?

adams equity theory

Adams's Equity Theory is important because it offers a unique perspective on how employees perceive the distribution of resources within an organization.

The theory has important implications for managers, who need to be aware of how their employees perceive the distribution of resources. If employees feel that they are being treated unfairly, it can lead to negative consequences such as decreased productivity and increased turnover.

Adams' Equity Theory has been found to be a powerful predictor of employee satisfaction and motivation. By taking into account the inputs and outputs of each individual worker, managers can create a more equitable workplace that leads to higher levels of employee satisfaction and productivity.

Who developed the equity theory of motivation?

The equity theory of motivation was developed by J. Stacy Adams in 1963. Adams proposed that employees seek to maintain a balance between their inputs and outputs at work.

What are the three components of Adams' Equity Theory?

The three components of Adams' Equity Theory are inputs, outputs, and comparisons.

Inputs refer to the resources that employees bring to the job, such as their education, experience, and skills.

Outputs refer to the resources that employees receive from the job, such as salary, benefits, and recognition.

Comparisons refer to the process of comparing one's own inputs and outputs to those of others.

Adams' Equity Theory is based on the premise that employees seek to maintain equity between their inputs and outputs. When there is a perceived inequity, employees will take action to restore equity.

How to apply the Adams' Equity Theory

To create a more equitable environment, employers need to be aware of the different ways that they can treat their employees fairly.

Some of these include offering competitive salaries, providing adequate benefits, and creating a positive work environment. By understanding and applying Adams' Equity Theory, employers can create a more motivating and productive workplace for their employees.

Employers can apply the theory by understanding:

  • The role of fairness
  • The role of inputs and outputs
  • The importance of ratios

Role of fairness

Employees who feel that they are being treated unfairly at work are less likely to be motivated to do their best. A feeling of fairness is essential for employee motivation.

When employees feel like they are being treated unfairly, it can lead to a decrease in motivation. This is because employees who feel unfairly treated are more likely to believe that their efforts will not be recognized or rewarded. As a result, they may not put forth the same level of effort as they would if they felt that their workplace was fair.

To create a sense of fairness in the workplace and thus improve employee motivation employers should make sure that there is transparency around expectations and performance standards . Employees should know what is expected of them and how their performance will be evaluated.

Role of inputs and outputs in Equity Theory

Employers have something that they bring to the table, whether it be time, energy, knowledge, or resources. This is what is known as an input. In contrast, output is what a person receives in return. To maintain a healthy balance between inputs and outputs, equity theory suggests that people compare their own ratio to that of others around them. If the ratio is unequal, it can lead to feelings of frustration and resentment.

There are several ways to restore equity within a relationship.

One way is for the person with the higher output to adjust their behavior accordingly. For example, if Person A notices that they have been putting in more effort than Person B, they may consciously decide to back off a bit in order to even things out. Another option is for the person with the lower output to increase their contribution in some way.

The importance of the ratio in Equity Theory

If the ratio between two employees is unfair, then it can lead to resentment and decreased productivity.

The importance of the ratio in equity theory cannot be understated. It is a key factor in determining how employees are motivated and compensated. By understanding the role of the ratio in equity theory, businesses can create a more fair and productive workplace.

Input equity examples

Output equity examples.

  • Job security
  • Responsibility

How can managers use Adams' Equity Theory to motivate employees?

Adams' Equity Theory can provide managers with a useful framework for understanding how to motivate their employees.

To use Adams' Equity Theory to your advantage as an employer, you need to be aware of how your employees might be feeling and what you can do to ensure that they feel like their efforts are being fairly rewarded.

One way to do this is by providing regular feedback and opportunities for employees to improve their skills. Additionally, offering competitive salaries and benefits can help show employees that you value their contributions.

Here are some examples:

  • 360-degree reviews
  • Yearly performance reviews
  • Salary reviews
  • Probation period review
  • Keeping an open-door policy
  • Well-being and employee satisfaction review

What are some potential drawbacks of using Adams' Equity Theory?

This theory has been used by organizations to improve employee motivation and satisfaction. However, there are some potential drawbacks to using Adams' Equity Theory.

First, the theory does not take into account an individual's ability or willingness to work. A person may perceive that they are being treated unfairly, even if they are not able or willing to do the work required.

Second, the theory does not consider an individual's personal goals and values. A person may be motivated by factors other than a sense of fairness, such as a desire to achieve their personal goals or live up to their values.

Finally, the theory does not address how an organization can create a fair and equitable environment for all employees.

Adams's equity theory of motivation examples

  • If an employee knows that another employee is getting a higher salary than them for the same amount of work, this might cause upset.
  • If an employee learns that an employee doing the same job as them is earning more money, then they may choose to do less work.
  • An employee that has come from a company that didn't recognize their work that receives consistent praise in their new employment will likely make a self-outside comparison to conclude that they are currently receiving fairer outcomes for their work.
  • A graduate may believe that their degree should return better job opportunities than someone without a degree

Conclusion: Is Adams' Equity Theory still relevant?

​​In the field of management, there are a variety of theories that help to explain employee motivation and behavior - Adam's equity theory being one of many.

Is Adams' Equity Theory still relevant?

The answer is yes and no. On one hand, the basic premise of the theory – that employees seek equity between inputs and outputs – is still widely accepted by scholars today. On the other hand, Adams' Equity Theory relies on a rational view of human behavior. This means that people are assumed to be able to accurately assess the costs and benefits of their situation and make decisions accordingly.

However, research has shown that people are often irrational when making decisions, and they may not be able to accurately assess the costs and benefits of their situation. As a result, they may make decisions that are not in their best interest.

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How Can Adams’ Equity Theory Boost Your Team’s Motivation?

  • Matthew Channell
  • June 22, 2023

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Home » The TSW Blog » Leadership and Management » How Can Adams’ Equity Theory Boost Your Team’s Motivation?

Adams’ equity theory provides valuable insights into understanding workplace motivation. This theory suggests that people are motivated when they perceive fairness and impartiality in their work relationships. In other words, when they see these relationships as being equitable.

By examining the balance between inputs ( effort, skills, experience) and outcomes ( rewards, recognition, status ), Adams’ equity theory offers a framework to identify and address imbalances that can hinder motivation.

Here we’ll look at the key principles of Adams’ equity theory, examining how it can be applied to boost motivation and improve performance in the workplace.

⏰ Key points:

  • According to Adams’ equity theory, people in the workplace provide inputs, and experience outcomes. There should be a perception of balance – by comparison with their co-workers – in order for an individual to feel their relationship with their work or employer is equitable. This has a direct effect on their motivation.
  • The perception of equity will foster work satisfaction and motivation. However, if there’s a perceived imbalance of inputs and outputs compared to others, this will cause feelings of inequity. In order to motivate this worker or workers, equity needs to be restored.
  • An equitable workplace and motivated workforce can be achieved in numerous ways: such as paying staff properly; transparent performance evaluation; equal opportunities for development and growth; recognition and reward; increased ownership, such as the ability to contribute in decision making; and a good work-life balance.

Understanding Adams’ equity theory

The theory – also known as the equity theory of motivation – was developed in 1963 by workplace and behavioural psychologist John Stacy Adams. He based it on the premise that people compare their inputs and outcomes to those of their colleagues or peers.

Inputs refer to the contributions made by an individual to their job. So this could include things like:

  • Educational qualifications

Outcomes, on the other hand, are what’s received in return for their contributions. This can encompass:

  • Recognition
  • Job security
  • Status (for example, reflected by job title)
  • Opportunities

According to the theory, people strive to maintain a sense of equity by ensuring that the ratio of their inputs to outcomes is fair – as they perceive it – in comparison to others.

⏰ Key point:  The outputs are not dissimilar to the factors for satisfaction in Halzberg’s two-factor theory of motivation .

Key principles of Adams’ equity theory

The key principles of this theory are as follows:

Perceived equity . When people in the workplace perceive a fair balance between their inputs and outcomes in comparison to others, they experience a sense of equity. This perception encourages motivation and satisfaction. In turn, it should lead to a willingness to maintain or increase their efforts.

Inequity . If people in the workplace perceive an imbalance between their inputs and outcomes in relation to others, the result is inequity. This can manifest as under-reward (where inputs exceed outcomes); for example, if someone perceives they’re being paid less for the same amount of work as their peers. Alternatively, it could manifest as over-reward (where outcomes exceed inputs); such as where an employee is tasked with a project beyond their capability. Inequity leads to feelings of dissatisfaction and demotivation. People who experience this are likely to harbour a desire to restore equity.

Restoring equity. When people perceive inequity, they’re motivated to restore equity. This might be achieved through various means, such as seeking changes in inputs or outcomes, or by altering perceptions of others’ inputs or outcomes.

Applying Adams’ equity theory to boost your team’s motivation

So how can this theory be applied in practice? There are numerous steps that can be taken to foster an equitable workplace, which should in turn boost your team’s motivation and performance.

#1. Show me the money!

It should probably go without saying, but employees should receive fair and equitable compensation for their work. This is understandably crucial in keeping staff motivated.

When it comes to pay, what a worker earns should be based on factors such as job responsibilities, skills required (and provided) and market rates. Regular evaluations and adjustments can help maintain perceived equity, motivating employees to contribute their best efforts.

#2. Transparent performance evaluation

To maintain fairness in the workplace, employers should establish transparent and fair performance evaluation systems. Providing clear criteria, regular feedback and opportunities for dialogue will let your staff understand how their efforts are being assessed. After all, if you’re being judged fairly, you’re likely to strive for higher levels of performance.

#3. Equal opportunity for development and growth

By providing equal opportunities for growth and development, you help maintain perceived equity. Staff should have access to training and mentorship programs , plus career advancement opportunities based on their potential and performance.

When people believe they have an equal chance to advance, this should have a knock-on effect for their motivation, and likewise commitment to the organisation.

#4. Recognition and reward

Recognising and rewarding staff for their contributions and achievements is essential for maintaining perceived equity, and this goes beyond their pay packet.

Establishing fair and consistent reward systems – such as bonuses, promotions, positive affirmation and public recognition – reinforces the notion that effort and performance are recognised and valued. This enhances motivation, encouraging continued high performance.

#5. Open communication and feedback

Fostering open communication and feedback channels will allow employees to express their suggestions and ideas, and likewise concerns and grievances. This creates a sense of psychological safety, demonstrating that their voices are both heard and valued.

Engaging in dialogue helps identify and address any perceived inequities, which in turn imbues a sense of fairness.

#6. Collaborative decision making

Involving employees in decision-making processes – especially those that affect them directly – can help boost motivation. When employees have a voice in decisions that impact their work, they feel a greater sense of ownership and fairness.

Feeling part of a combined effort is doubtlessly much healthier among workers than a ‘ take the money and run ’ point of view.

#7. Team building and collaboration

Probably unsurprisingly, encouraging a culture of teamwork and collaboration promotes a sense of equity among team members. When everyone feels valued and included in projects and day-to-day work, it fosters a cooperative, supportive environment. Also, being in it together can help colleagues view each other favourably – a good leveller when it comes to perception.

#8. Flexibility and work-life balance

Recognising the importance of work-life balance and providing flexible work arrangements can also contribute to perceived equity. So this could include options such as remote or hybrid work, flexible hours or allowance for parental leave. This lets employees align their work and personal responsibilities, promoting overall wellbeing and motivation.

#9. Addressing inequities and concerns

When inequities are identified or concerns arise, it’s essential to address them both promptly and transparently. You could consider providing an open-door policy to address concerns, and a mechanism which allows grievances to be expressed, and in turn considered seriously.

Resolving inequities and addressing issues promptly demonstrates a commitment to fairness. As such, you turn a negative into a positive . By handling concerns and grievances deftly, you can enhance motivation, and help bring about a positive work environment.

#10. Continual learning and skill development

Offering opportunities for developing skills and ongoing learning is another way to maintain perceived equity. This could involve signing up to training programs and workshops, and providing access to resources which enhance knowledge and skills. As such, you’re helping to enable staff to contribute at their full potential.

What are the limitations of Adams’ equity theory?

While Adams’ equity theory is a useful tool for examining and understanding workplace motivation. However, it’s not without its drawbacks and limitations.

For one, it doesn’t account for people’s ability or willingness to work. Let’s say someone isn’t willing to do the work required, or does their job poorly. They may perceive that they’re being treated unfairly in comparison to others. The theory seems to assume this perception is valid, and managers should restore equity; whereas, to put it in lay terms, the worker probably needs to pull their socks up.

In addition, it doesn’t take into account people’s goals and values. Somebody may be better motivated by their personal goals than by a sense of fairness, such as being driven by ambition.

As such, by not taking account of people being innately complicated, the theory is arguably too simplistic to be all-encompassing.

Is Adams’ equity theory useful for managers?

Adams’ equity theory can offer valuable insights into how perceptions of fairness and equity might impact motivation in the workplace. But, as is sometimes the case, it’s best to apply it as a rule of thumb rather than an exact science.

Nonetheless, by applying the principles of the theory, organisations can potentially enhance motivation and performance, creating an environment where workers feel valued and inspired to contribute their best efforts… So long as it’s not taken as a ‘ one size fits all ’.

*Find out more about how to motivate your team and build trust .

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What Is Adam’s Equity Theory Of Motivation In The Workplace?

equity-theory

Equity Theory helps us analyze employee motivation in terms of equality and fairness.

Workplace motivation differs from employee to employee. For some employees, motivation means money, status, etc.

For others, it is about doing their best and becoming the star performer .

Many business leaders have invested their time to understand employee perception and theories of motivation. They test these theories in the workplace to learn how it affects employee productivity and efficiency.

One such motivation theory is Equity Theory, and this article will shed some light upon it. But before we go in-depth, let’s understand:

What is Adam’s Equity Theory of Motivation?

Equity Theory, otherwise known as the Equity Theory of Motivation, was introduced in 1963 by John Stacey Adams, a workplace behavioral psychologist.

It is based on a simple idea.

A succesful workplace can enhance team motivation by treating everyone with respect and dignity.

According to Adam’s Equity Theory of motivation, employees who identify a situation of inequality between them and their peers will feel demotivated and distressed.

For example, if an employee knows that their colleague is getting a higher salary than them for the same amount of work, this might create dissatisfaction.

The theory also indicates that the higher the level of equity (fairness) amongst employees, the higher the level of motivation. Similarly, the prime reason for employee demotivation is inequity.

Also Read: Employee Motivation: A Comprehensive Guide

Understanding Adam’s Equity Theory of Motivation in the Workplace

If we were to understand Adam’s Equity Theory fully, we must know the inputs and outputs of employees first. Inputs are nothing but the things an employee does to achieve the outputs.

Inputs are nothing but every small or significant contribution employees make towards the organization. For instance:

Inputs include:

  • The number of working hours
  • The experience brought to practice
  • Personal sacrifices (if any)
  • Loyalty towards mentors, managers, and the organization
  • Job role and responsibilities
  • Flexibility to work under pressure or strict deadlines

Whereas outputs, commonly referred to as outcomes, are what the employee receives because of their inputs in the organization. Some of them are tangible benefits like salary or intangible benefits like flexible working hours and recognition .

Some of the typical outputs are:

  • Annual Holidays
  • Company travels
  • Recognition
  • Performance appraisals
  • Flexibility
  • Significant achievements
  • Learning and Development

We can clearly define equity now that we understand the basics of inputs and outputs..

The definition of equity is an employee’s outputs divided by their inputs.

But Adam’s Equity Theory is a level-up and mentions that individuals do not measure equity in isolation. Instead, they compare with their peers. If they come across an inequitable situation, they tend to adjust their inputs to maintain balance.

To maintain the balance, employees constantly regulate their inputs. Let's say X and Y have identical inputs. But, the output of Y is vastly larger than that of X. Thus, X would feel highly demotivated.

Also, employees will have to give better inputs if their outputs are more significant than their colleagues doing the same job. Employees’ perception of equity depends on how their managers treat them by giving them equal respect and opportunities.

How To Compare: Referent Groups

A referent group is a group of people a person uses for comparison. As per Adam’s Equity Theory, there are four significant referent groups people tend to compare themselves with.

  • Self-inside: An employee’s intrinsic experience in their current workplace
  • Self-outside: An employee’s experience with the industry standards
  • Others-inside: An employee comparing themselves with someone from their current workplace
  • Others-outside: An individual comparing themselves with someone outside their workplace

Let’s have a look at this with an example to understand better.

If a UX Designer compares their salary with other UX designers in the same company then the referent group is others-inside .

If the same employee compares their pay with an acquaintance from a different company, it refers to others-outside .

If they compare their pay with their previous job, it relates to self-outside .

And, when they contemplate on their performances in the same organization, it refers to self-inside .

Surprisingly, the Equity Theory of Motivation in the workplace is applicable when employees compare themselves to people in absolute opposite job roles and significant salary differences.

For instance, let’s take the example of a UX Designer. They might compare themselves to the CEO, who earns much higher than them. How can this seem fair to you?

Well, here’s the answer!

Employees determine their inputs to be very different. They will see that even though they have a lesser salary than the CEO, they have an excellent work-life balance. They might know the CEO is traveling very often for client meetings, work long hours even on weekends, and deals with tremendous stress. In such a situation, employees console themselves to see the fairness established in their minds.

As a leader or a manager, keep in mind, Equity Theory is applicable in a broad sense. Every employee responds to inequitable relationships in their unique way.

Equity Theory Examples in the Workplace

One can identify Equity Theory in the workplace by overhearing conversations among their colleagues and peers.

Generally, employees compare themselves with people who get higher salaries than them. Equity Theory comes into existence when you hear things like:

  • “Miranda earns more than me, but I don’t see her doing much work.”
  • “I get less salary compared to Miranda, but this place needs me more than her.”
  • “Hey, did you know the new guy gets paid three times more than us yet works few hours! Hows is this fair?”

With these examples, we can see employees comparing their remuneration and contribution with others. However, salary comparison is a common practice amongst employees. There are other types of comparison like learning opportunities, work from home opportunities, flexibility, etc.

Critical Points for Managers to Keep in Mind

Here are some essential things to keep in mind to understand equity theory in the workplace if you’re managing a team:

Employees measure their total inputs against all outputs. For example, a single parent will accept flexible working hours and lesser pay.

Social comparison plays a vital role while being fair to every employee. Two employees who do the same work will compare their performances with individual perceptions. As a good team leader, you must learn these expectations and influence values.

Senior employees get more salary than juniors. But, paying excessive salaries is a sign of demotivation amongst other employees. One must know to balance both.

An employee who receives higher compensation and recognition will increase their effort. Similarly, if an employee feels underpaid, their motivation level goes down.

Managers must also keep track of options available to the ti reduce inequality and partiality in the workplace. They are:

  • Change employees’ inputs or outputs
  • Change inputs or outputs of others
  • Change the perception of inputs and outputs

Equity Theory- Summary

Overall, Adam’s Equity Theory of Motivation indicates that employees can attain higher motivation when every employee gets equal and fair opportunities.

It is common for employees to compare themselves to other employees from inside and outside the organization. They compare their total of all inputs against the sum of all outputs.

If they see inequality and unfairness, they will lower their inputs to compensate. They will choose to work more or work less depending on the positivity or negativity of the situation.

This article is written by Gautam Gayan . He works as a Content Marketer at Vantage Circle . Apart from being a passionate content creator for HR services and employee engagement, Gautam is a theatre enthusiast, an avid reader and an aspiring poet. For any related queries, contact [email protected]

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An experiential exercise for teaching theories of work motivation: using a game to teach equity and expectancy theories

Organization Management Journal

ISSN : 2753-8567

Article publication date: 1 July 2020

Issue publication date: 27 November 2020

This paper aims to provide an experiential exercise for management and leadership educators to use in the course of their teaching duties.

Design/methodology/approach

The approach of this classroom teaching method uses an experiential exercise to teach Adams’ equity theory and Vroom’s expectancy theory.

This experiential exercise has proven useful in teaching two major theories of motivation and is often cited as one of the more memorable classes students experience.

Originality/value

To the best of the authors’ knowledge, this is an original experiential exercise for teaching the equity and expectancy theories of motivation.

  • Work motivation
  • Equity theory
  • Expectancy theory

Experiential exercise

Swain, J. , Kumlien, K. and Bond, A. (2020), "An experiential exercise for teaching theories of work motivation: using a game to teach equity and expectancy theories", Organization Management Journal , Vol. 17 No. 3, pp. 119-132. https://doi.org/10.1108/OMJ-06-2019-0742

Emerald Publishing Limited

Copyright © 2020, Jordon Swain, Kevin Kumlien and Andrew Bond.

Published in Organization Management Journal . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Theories of work motivation are central to the field of management and are covered in many introductory management, leadership, human resource management and organizational behavior courses ( Benson & Dresdow, 2019 ; Steers, Mowday, & Shapiro, 2004 ; Swain, Bogardus, & Lin, 2019 ). Understanding the concept of work motivation helps undergraduate students prepare for leading and managing others. Teaching these concepts in the classroom allows students to experiment and share ideas with others in a lower-stakes environment than if they were in an actual place of work with other employees. But teaching students theories of work motivation is not easy. First, there are dozens of theories ranging from Maslow’s hierarchy of needs, to self-determination theory, to goal setting theory, to Herzberg’s motivation-hygiene theory (a.k.a. two-factor theory), to job characteristics theory, just to name a few ( Anderson, 2007 ; Holbrook & Chappell, 2019 ; Latham & Pinder, 2005 ; Locke & Latham, 1990 ). Second, students tend to evaluate the explanatory power of different motivational theories based on how they relate to their work and life experiences ( Anderson, 2007 ). This tendency to view motivation theories through the lens of personal experience poses a challenge for undergraduate level students who have limited work exposure; they often lack the context to make sense of the various motivational theories ( Mills, 2017 ). Therefore, to provide a common experience through which students can understand theories of work motivation, we developed an experiential activity. Specifically, we use an in-class basketball exercise. This experiential approach not only provides a common context for students to reference in applying theories of work motivation, but also incorporates elements of fun and competition, which have been shown to help engage students more fully ( Helms & Haynes, 1990 ; Azriel, Erthal, & Starr, 2005 ).

While there are numerous theories of work motivation ( Latham & Pinder, 2005 ), like others, we have found focusing on too many of these theories during one class overwhelms students and causes them to question academics’ understanding of the topic ( Anderson, 2007 ; Holbrook & Chappell, 2019 ). However, focusing on too few theories also limits students’ education and understanding of why multiple theories of motivation exist. We find that acknowledging the existence of multiple theories is advisable, and we suggest instructors emphasize the complexity of motivation, but that they do not try to force students to learn or apply the details of a large number of theories of motivation in a single class period. Therefore, our exercise focuses on two basic theories of work motivation – Vroom’s Expectancy Theory and Adams’ Equity Theory. We chose to focus on these two theories because they are among the most influential theories of work motivation ( Anderson, 2007 ; Holbrook & Chappell, 2019 ; Miner, 2003 ) and among the most frequently included in management and organizational behavior courses and textbooks ( Miner, 2003 ; Miner, 2005 ).

Theoretical foundation

Both expectancy and equity theories of motivation have been identified as important frameworks for teaching and understanding motivation, and both emphasize the cognitive approach to motivation ( Miner, 2003 ; Stecher & Rosse, 2007 ).

Adams’ equity theory centers on the perception of fairness ( Adams, 1963 ). When people feel they have been fairly treated, they are more likely to be motivated. When they feel they have not been fairly treated, their motivation will suffer. These perceptions of equity are derived from an assessment of personal input and outputs – or what people put into a task compared to what they receive as a result ( Adams, 1963 ; Kanfer & Ryan, 2018 ). Inputs can include things like time, effort, loyalty, enthusiasm and personal sacrifice. Outputs can include but are not limited to, thing likes salary, praise, rewards, recognition, job security, etc. But the theory is more complex than simply the assessment of personal inputs weighed against outputs. Adams’ equity theory also incorporates the concept of perceived equity ( Adams, 1963 ; Kanfer & Ryan, 2018 ). People compare their inputs and outputs to others. If they feel that another person is putting in the same level of effort, but getting more outputs as a result, that person’s motivation may suffer ( Kanfer, 1990 ; Kanfer & Ryan, 2018 ; Stecher & Rosse, 2007 ). This theory can be summarized using a visual equation that highlights how perceived equity can impact motivation ( Appendix 1 ). This same visual equation can help students understand how leaders can influence motivation in their subordinates; how leaders can impact equity. For example, if inequity exists, leaders may require subordinates to reduce personal inputs, or they may adjust the outcomes. They might also counsel their subordinates to change their comparison points (e.g. a low-level worker should not compare herself to a senior VP with 12+ years of experience).

Expectancy : Is the individual properly trained and do they possess the necessary resources to effectively do the job?

Instrumentality : Does the individual trust that they’ll receive what they were promised if they do what they were asked?

Valence : Does the individual value the reward they were promised ( Kanfer & Ryan, 2018 )?

In this exercise, we use a mini basketball game in class to teach students about both Adams’ equity theory and Vroom’s expectancy theory. Using the game in class ensures students have a common context through which to apply and understand these two theories of work motivation. As noted by Stecher & Rosse (2007) , both theories offer compatible frameworks for understanding work motivation, yet they are most often taught as distinct non-related theories. We find that teaching these two theories using the same experiential exercise helps students understand the complexities of motivation. Specifically, this exercise helps students understand how multiple theories can explain motivation issues for the same situation.

Learning objectives

understand the complexity of motivation and its impact on performance;

explain differences in an individual’s motivation and behavior as a function of common psychological forces experienced by people; and

apply knowledge of work motivation theories to address issues of motivation.

Target audience.

This exercise is designed for undergraduate students in introductory courses in leadership, management, human resource management or organizational behavior – wherever theories of work motivation are covered. This approach has been used for over a decade teaching college juniors and seniors in a leadership course. While the approach has not been used to teach graduate students, there is no reason to believe it would not be an effective means for teaching those enrolled in an MBA program.

Class size.

The exercise has been used in classes ranging from 15 to 36 students. As participation by multiple students positively impacts the class, it is recommended the exercise be used for smaller classes. Time could become a factor in larger classes. Furthermore, space could prove a limiting factor in larger classes as some room is needed to set up the game.

Supplies needed.

mini basketball hoop and mini basketball (a trash can and wadded up paper can work if you do not have access to a small hoop and ball);

means for keeping time (stopwatch, wristwatch or wall clock with a second hand);

painter’s tape or note cards to annotate shot positions on the floor in the classroom;

one bag of miniature candy bars; and

slides of equity and expectancy theory to assist in de-brief ( Appendix 1 ).

This exercise as described can be completed in a single 75-min class session. If less time is available, we recommend instructors teach only one of the theories as outlined in this article (conduct only one of the two rounds of the game), covering the other theory during another class period.

a brief overview of work motivation by the instructor (via short lecture or through soliciting input from students to gauge the level of preparation) (10 min);

the first round of the game (10 min);

de-brief and application of equity theory (10 min);

the second round of the game (10 min);

de-brief and application of expectancy theory (10 min);

small group discussion on the future application of theories (15 min); and

structured de-brief of group discussions (10 min).

Student preparation before class.

It is recommended that instructors assign students readings focused on work motivation in advance of the class. A large number of organizational behavior or management textbooks contain chapters on this topic. At a minimum, the assigned reading should cover equity and expectancy theories.

Instructor preparation and classroom setup.

Instructors should set up the classroom with supplies they obtained before beginning class. A visual example of the classroom setup for Rounds 1 and 2 of the exercise can be found in Appendix 2 . The mini-basketball hoop should be located in front of the classroom where all the students can see it. Depending on the size/shape of the classroom, the shooting positions for Rounds 1 and 2 of the exercise can be placed in any location. The shooting position for Round 1 should be a moderately difficult shot, perhaps two to three steps away from the basket. Mark the position with tape or a notecard.

Round 2 requires three different shooting positions. Each position should be marked with tape or a notecard. The first position is the “easy” shot. It should be very close to the basket (1-2 steps in front of the basket). The purpose of this first position is to create the opportunity for a shot that the average person would have lots of confidence in making (high expectancy). The second position should be further away (six to eight steps away from the basket) and potentially behind a row of desks for some added difficulty. The purpose of this second position is to create a shot of medium level difficulty where students are not completely confident (lower expectancy) that they will be able to make it. The third position should be the hardest shot that you can create while still leaving a very small possibility of the shot being made (lowest expectancy). It is recommended you make the student stand outside of a doorway so that they have to shoot a strange trajectory. If your classroom space is not big enough to support making a shot position that is far away from the basket, you can instead add difficulty by requiring the student to wear a blindfold or to shoot backwards. For the positions needed for Round 2 of the exercise, instructors should test the positions and ensure the three different locations are of varying difficulty and that the third position is an extremely difficult (almost impossible) shot to make.

Running the exercise

Introduction to motivational theories (10 min).

Given the number of motivational theories that exist in the academic world, we find it helpful to acknowledge this initially with students to highlight the overall complexity of the topic. In this introduction, instructors can briefly highlight the variety of motivational theories that exist (e.g. expectancy, equity, Maslow’s hierarchy of needs, self-determination theory, goal setting theory, Herzberg’s motivation-hygiene theory, job characteristics theory, etc.). This can be done in any number of ways – asking students to list and/or briefly describe the various theories covered in their assigned reading, etc. Teachers should tailor this introduction based on their specific situation (e.g. the content of assigned reading, length of class, etc.). After talking through the variety of theories that exist, it is important to highlight to students that these theories should be viewed more as a conceptual toolbox for them to use in different situations as opposed to viewing all of these theories as a group of non-congruent viewpoints all competing to be the truest ( Anderson, 2007 ).

After a brief review of the assigned reading(s), instructors can tell students that they are going to play a game to apply what they have learned.

Round 1 of the game (10 min)

Ask all of the students to stand up and tell them to stretch out, limber up, and get prepared for a mini-basketball competition. During this session, the instructor will provide students with an exciting and competitive experience to which they can apply the concepts of Adams’ Equity Theory.

Divide students into four even teams. Have students move around and sit with their team as a group. Explain that Team 1 will compete against Team 2 in a basketball shootout. Establish an incentive of your choice – candy often works well. Show this incentive to the students. Now call Team 1 and Team 2 up to the front of the class and instruct them that:

[…] you can take as many shots as you want at the hoop in 60 seconds, but everybody in your team needs to shoot at least once. The team that ends up with the most baskets made will win. Team 1, you will go first.

Use a stopwatch or watch with a second hand to keep time and instruct members of the opposing team to keep score.

Once Team 1 completes their turn, record their score and call Team 2 forward. Before allowing Team 2 to start their turn, move the shooting spot three paces further away from the basket (move the tape or notecard back three paces).

You will likely experience negative feedback from Team 2 after moving the basket. Common responses include, “this isn’t fair.” Pay close attention to the complaints that they use, these are often very useful to bring up during the discussion portion of the exercise. You might respond lightheartedly with “life isn’t fair” or “what, are you scared?” Allow Team 2 to complete their turn, paying close attention to their affect and comments. If done correctly, Team 2 should lose to Team 1. Congratulate Team 1 on their excellent performance and give each member of Team 1 their prize (a small candy bar works well) and have both Teams 1 and 2 return to their seats.

Now call Team 3 forward. Instruct them that will have 60 s to shoot from the same spot that Team 2 shot from. Keep time and have a member from Team 4 count the baskets. When time is up, record the score. Now call Team 4 forward. Have them shoot from the same spot Team 3 did. Start the clock. However, do not stop the team from shooting after 60 s. Let them continue to shoot for an additional 30 s – or longer – until you hear the members of Teams 1, 2 and 3 start questioning how much time Team 4 is getting to shoot. Record the number of shots made. Team 4 should beat Team 3. Congratulate team 4. Do NOT give Team 4 any candy for winning. Have Teams 3 and 4 return to their seats.

Round 1 de-brief and application of equity theory (10 min)

This is where the instructor begins to apply Adams’ equity theory to the scenario. Ask students if anyone is feeling unsatisfied or unmotivated. You should have several hands go up. If not, remind them of the negative comments you heard during the game – calling on students by name if necessary. Now start to inquire as to why people said what they did.

At this point, the instructor should put up the slide with Adams’ equity theory on it ( Appendix 1 ) and ask students to explain what happened using the equation on the slide. The class should point out several areas where “the equation does not balance.” For example, the inputs for Team 1 were less than the input for Team 2. Team 2 had a harder shot and, therefore, had to provide more inputs (work harder). Students should also point out that the outputs were not even. Team 4 beat Team 3 (just as Team 1 beat Team 2), but Team 4 did not receive the same outcome/reward. Less clear is the factor of Team 4 having more time than Team 3. Ask students how this factor impacts motivation using equity theory.

Pass out candy to all members of the class – to reduce feelings of inequity. Keep three pieces of candy for Round 2.

Round 2 of the game (10 min)

Now tell the class that you are going to ask for three volunteers. Inform the class that if they volunteer and are selected, they have a choice to make – they must choose one of three shooting/prize positions.

Shooting Position #1. Tell the students that if they choose shooting position #1, they get to shoot from the closest spot (and show them where it is). Let them know that they can take three practice shots and that for making a basket, they will receive a piece of candy.

Shooting Position #2. Tell students if they choose this option, they get to shoot from the spot of moderate difficulty and show them where it is. Let them know they get one practice shot and that their prize for making the basket is something of medium desirability – perhaps lunch paid for by the instructor at a local moderately priced restaurant of the student’s choice.

Shooting Position #3. Tell students that if they choose this option, they get to shoot from the most difficult spot and show them where it is. Tell them that they do not get any practice shots from this location. Promise an extremely desirable reward (high valence) and also something that the students may question whether you have the power to give it to them (low instrumentality). A great example is offering them the ability to get out of having to do a major course requirement such as a capstone project or thesis paper. You could also offer something like getting to park in the Dean’s parking spot for the rest of the semester. The creativity behind choosing this third reward is that you want to find the balance of a reward that is extremely high in desirability, but also something that in hindsight students should realize was probably outside of your ability to deliver on that reward (low instrumentality). By creating a reward that is somewhat unrealistic for shooting position #3, the instructor will allow for a follow-on discussion about the power of instrumentality in Vroom’s expectancy theory. If a student questions whether or not they will receive the reward by meeting the performance outcome (making the shot), then their instrumentality will be lower which may alter the position they select to shoot from.

Now that all three shooting positions have been described, pick three volunteers at random and have them come to the front of the room. Ask the first student what option she would like to choose and have her take the shot. Repeat for the second and third students (students can all shoot from the same spot if they desire). After the final volunteer chooses the shooting position and takes the shot, have students return to their seats and prepare for the de-brief.

Round 2 de-brief and application of expectancy theory (10 min).

After the volunteers have returned to their seats, the instructor can display the Vroom’s expectancy theory slide ( Appendix 1 ) to begin shaping the class conversation in terms of Vroom’s expectancy theory.

Individual behavior = the physical act of shooting the basketball;

Performance outcome = making the basketball in the hoop; and

Reward outcome = the prize received based on making the shot from the shooting position the student chose.

Next, ask the students to break down each of the three options in terms of expectancy, instrumentality and valence . The following should come out in the discussion:

Expectancy – Shooting position #1 has the highest expectancy of all three positions. Self-efficacy is increased through multiple practice shots and the close distance makes the shot seem achievable.

Instrumentality – Shooting position #1 should have a high level of instrumentality. Students know you have the candy bar and that you delivered on what you promised during round 1. Therefore, it is likely they trust and believe they will receive the reward candy bar for achieving the performance outcome of making the shot.

Valence – Shooting position #1 likely has the lowest valence of all three positions in terms of overall value. However, valence could run from low to high depending on individual preference. The candy bar may have lower valence if students do not like the particular candy bar.

Expectancy – Lower than shooting position #1 because the shot is more difficult, and the student only gets one practice shot. However, the expectancy of shooting position #2 is still greater than shooting position #3 because the shot is easier and the student still receives a practice shot which raises the student’s confidence in their ability to achieve the performance outcome of making the shot.

Instrumentality – Lower than shooting position #1, but higher than shooting position #3. There might be some trust issues related to whether the students will receive the lunch. As the student does not immediately get the reward of the free lunch by achieving the performance outcome of making the shot, the instrumentality may be low. The instrumentality should still be higher than shooting position #3 because the student should have more trust that the instructor will buy them lunch as compared to not having to write the final paper for the class.

Valence – Should be higher than position 1 since lunch is more expensive than just a candy bar. However, individual preferences again may vary depending on if the students have free time in their schedule or if they would even like to have lunch with their professor.

Expectancy – The lowest of all three positions as there is no practice shot and the difficulty of the shot is so high that students do not really believe that they will be able to make the shot.

Instrumentality – Should be the lowest of all three positions as the reward may seem so great that some students will doubt if the instructor will follow through on giving the reward, or if they even have the power to give out the reward. But this may not be rated by students as low initially.

Valence – The highest of all three positions. The reward of not having to write a final paper, or some other exclusive reward (parking in the Dean’s parking spot) should be viewed as extremely appealing to most students given the high value they place on their time in a busy college schedule.

After going through each of the shooting positions, have the non-participating students in the classroom evaluate the multiplicative factors for each shooting position and ask them if it makes sense why each student chose to shoot from where they did.

Small group discussion on the future application of theories (15 min)

After students have had a chance to run through both games as well as the de-brief for each exercise, it is now time to turn the discussion toward an application of both theories to future leadership situations. Break students back out into the teams they were on for the Adams’ equity theory portion of the class. Instruct the groups they will have 15 min to talk amongst themselves to brainstorm examples of personal experiences or potential future scenarios where they can apply Adams’ equity theory and Vroom’s expectancy theory. Examples that often come up range from peers on group projects receiving the same reward/recognition even though they contributed less, gender discrepancies in pay or promotion, poor incentive systems, etc.

Structured de-brief of group discussion (10 min)

Spend the last 10 min of this class asking each group of the teams to share an example they discussed within their small group. Ensure that you press the students to use the correct terminology when talking about their examples through the lens of either Adams’ equity theory or Vroom’s expectancy theory and ask them how they might positively impact motivation in the scenario they discussed.

Potential challenges.

Challenge : The instructor does not properly manage time for a thorough debrief of each exercise

09:30-09:40. A brief overview of work motivation theories;

09:40-09:50. The first round of the game (Adams’ equity theory);

09:50-10:00. De-brief round one exercise and apply Adams’ equity theory;

10:00-10:10. The second round of the game (Vroom’s expectancy theory);

10:10-10:20. De-brief round two exercise and apply Vroom-s expectancy theory;

10:20-10:35. Small group discussion on the future application of theories; and

10:35-10:45. Structured de-brief of group discussions.

Challenge: A student manages to make the impossible shot

Solution: In the event that a student does make the nearly impossible shot from shooting position #3 (this did happen in one instance and it turned into a viral Instagram video with over 20,000 views) then the instructor needs to be prepared to not follow through on the reward. Instead, the instructor should discuss the concept of instrumentality and how the trust between a leader and their direct reports is essential to ensuring positive motivation in the workplace. This is why it is important that the reward for shooting position #3 is somewhat unbelievable in the first place because it will allow for a great discussion on instrumentality and the belief that achieving a performance outcome will lead to a given reward. The instructor can begin by polling the students to see how many of them completely believed that the reward for shooting position #3 was realistic and attainable. Through this discussion, the instructor can highlight what happens to motivation when managers create extremely difficult goals (low expectancy) with extremely valuable rewards (high valence) to try and motivate their workers. This also provides a strong example to the students of what happens to trust when a leader fails to follow through on a promised reward and how that will impact instrumentality and thus motivation in the future.

Challenge: Students may not have real-life examples to discuss in their groups.

Solution. If group discussion is lagging, the teacher can suggest situations that students may have experienced or direct them to use the internet to find examples and to discuss those instances.

This experiential exercise has proven useful over the past 10 years in providing an introductory look at the complexity of workplace theories of motivation. In semester-end student feedback, this class has been mentioned numerous times as one of the most impactful lessons of the course. Multiple students have commented on the effectiveness of the hands-on exercise in creating a memorable point of reference that makes it easier to retain class learning concepts. In fact, the most recent end of course feedback over one-third of students cited this lesson as the most memorable of the 30-lesson course. Additionally, the in-class exercise provides a common context for students with varying experiences to engage with and allows for the introduction and application of two of the major theories of motivation. Furthermore, the fun, competitive format generates interest and excitement. Note, we have also used miniature golf instead of basketball to teach each theory – having students putt with different equipment, from different distances, and for different prizes. For a brief overview on the setup using mini-golf, please see Appendix 3 . We encourage faculty to have fun with the exercise – it is not just for the students!

case study on equity theory of motivation

Adams’ equity theory

case study on equity theory of motivation

Vroom’s expectancy theory

case study on equity theory of motivation

Setup for Round #1 – Adams’ equity theory

case study on equity theory of motivation

Setup for Round #2 – Vroom’s expectancy theory

case study on equity theory of motivation

Setup for Vroom’s expectancy theory using mini-golf

Appendix 1. Sample slides for use in de-briefing

Appendix 2. sample classroom setups for rounds 1 and 2, appendix 3. instructions for use of mini-golf instead of basketball.

If the classroom does not allow for the setup of the three different shooting positions for the basketball exercise, then it is easy to replace the basketball exercise with a mini-golf option. Below is a brief highlight of the differences in classroom setup for the golf exercise.

putter, golf ball and plastic solo cup;

painter’s tape or note cards to annotate shot positions on the floor in the classroom; and

bag of miniature candy bars.

Round 1 Exercise (Adams’ equity theory)

There are no major changes needed for this round. Simply follow the same instructions for Round 1 of the basketball exercise, except instead of basketball shots replace that with made putts into the solo cup. This will still allow for the same comparison and perceived inequities amongst the four teams that will create a rich discussion on Adams’ equity theory.

Round 2 Exercise (Vroom’s expectancy theory)

Again, there are no major changes needed for this round, other than just replacing the concept of a made basketball shot with a made putt. Below is an example of the three putting positions and how you can still create a similar scenario to the basketball exercise in terms of expectancy , instrumentality and valence for each putting position.

Putting Position #1: Create a short two-foot putt that is fairly easy to make. Allow the student to have three practice putts. This creates an option with high expectancy (an easy putt with practice shots), high instrumentality (the student believes that if they make the putt, they will receive the candy) and low valence (candy is not as valuable as lunch or getting out of writing a final paper).

Putting Position #2: Create a six-foot putt that is not straight on but instead is at a slight angle to the cup so that it is more difficult to make. Allow the student to have only one practice putt. This creates an option with a medium level of expectancy (a slightly more difficult putt), a medium level of instrumentality (the student has to trust that you will actually buy them lunch at some point in the future) and a medium level of valence (the lunch is greater than the candy bar, but most likely not as valuable as not writing the final paper).

Putting Position #3: Create the longest most difficult putt that your classroom will allow. Additionally, tell the students they will receive no practice putts and they will have to putt with the handle end of the putter. This creates an option with a very low level of expectancy (students will have a very low level of belief that they can make the putt given both the distance and the fact that they have to putt with the handle), a low level of instrumentality (again the reward should be so valuable that some students will doubt the reality of actually receiving the reward) and a very high level of valence (the reward should be extremely desirable).

Adams , J. S. ( 1963 ), Toward an understanding of inequity . The Journal of Abnormal and Social Psychology , 67 ( 5 ), 422 – 436 . doi: 10.1037/h0040968 .

Anderson , M. H. ( 2007 ). Why are there so many theories? A classroom exercise to help students appreciate the need for multiple theories of a management domain . Journal of Management Education , 31 ( 6 ), 757 – 776 . doi: 10.1177/1052562906297705 .

Azriel , J. A. , Erthal , M. J. , & Starr , E. ( 2005 ). Answers, questions, and deceptions: what is the role of games in business education? Journal of Education for Business , 81 ( 1 ), 9 – 13 . doi: 10.3200/JOEB.81.1.9-14 .

Benson , J. , & Dresdow , S. ( 2019 ). Delight and frustration: using personal messages to understand motivation . Management Teaching Review , available at: https://doi.org/10.1177/2379298119851249 doi: 10.1177/2379298119851249 .

Helms , M. , & Haynes , P. J. ( 1990 ). Using a “contest” to foster class participation and motivation . Journal of Management Education , 14 ( 2 ), 117 – 119 . doi: 10.1177/105256298901400212 .

Holbrook , R. L. Jr. , & Chappell , D. ( 2019 ). Sweet rewards: an exercise to demonstrate process theories of motivation . Management Teaching Review , 4 ( 1 ), 49 – 62 . doi: 10.1177/2379298118806632 .

Kanfer , R. ( 1990 ). Motivation theory and industrial and organizational psychology . In Dunnell , M.D. and Hough , L.M. (Eds), Handbook of industrial and organizational psychology , 1 , Consulting Psychologists Press , 75 – 170 .

Kanfer , R. , & Cornwell , J. F. ( 2018 ). Work motivation I: definitions, diagnosis, and content theories . In Smith , S. , Cornwell , B. , Britt , B. and Eslinger , E. (Eds), West point leadership , Rowan Technology Solutions .

Kanfer , R. , & Ryan , D. M. ( 2018 ). Work motivation II: situational and process theories . In Smith , S. , Cornwell , B. , Britt , B. , & Eslinger , E. (Eds), West point leadership , Rowan Technology Solutions .

Locke , E. A. , & Latham , G. P. ( 1990 ). Work motivation and satisfaction: light at the end of the tunnel . Psychological Science , 1 ( 4 ), 240 – 246 . doi: 10.1111/j.1467-9280.1990.tb00207.x .

Latham , G. P. , & Pinder , C. C. ( 2005 ). Work motivation theory and research at the dawn of the twenty-first century . Annual Review of Psychology , 56 , 485 – 516 . doi: 10.1146/annurev.psych.55.090902.142105 .

Mills , M. J. ( 2017 ). Incentivizing around the globe: educating for the challenge of developing culturally considerate work motivation strategies . Management Teaching Review , 2 ( 3 ), 193 – 201 . doi: 10.1177/2379298117709454 .

Miner , J. B. ( 2003 ), The rated importance, scientific validity, and practical usefulness of organizational behavior theories: a quantitative review . Academy of Management Learning and Education , 2 , 250 – 268 . doi: 10.5465/amle.2003.10932132 .

Miner , J. B. ( 2005 ). Organizational behavior 1: Essential theories of motivation and leadership , M.E. Sharpe .

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 ( 6 ), 777 – 796 . doi: 10.1177/1052562906293504 .

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  • Organizational Behaviour
  • Equity Theory of Motivation

The core of the equity theory is the principle of balance or equity. As per this motivation theory, an individual’s motivation level is correlated to his perception of equity, fairness and justice practiced by the management.

Higher is individual’s perception of fairness, greater is the motivation level and vice versa. While evaluating fairness, employee compares the job input (in terms of contribution) to outcome (in terms of compensation) and also compares the same with that of another peer of equal cadre/category. D/I ratio (output-input ratio) is used to make such a comparison.

O/I a
O/I a = O/I b Equity
O/I a > O/I b Over-rewarded (Equity Tension)

Negative Tension state: Equity is perceived when this ratio is equal. While if this ratio is unequal, it leads to “equity tension”. J.Stacy Adams called this a negative tension state which motivates him to do something right to relieve this tension. A comparison has been made between 2 workers A and B to understand this point.

Referents: The four comparisons an employee can make have been termed as “referents” according to Goodman. The referent chosen is a significant variable in equity theory. These referents are as follows:

Self-inside: An employee’s experience in a different position inside his present organization.
Self-outside: An employee’s experience in a situation outside the present organization.
Other-inside: Another employee or group of employees inside the employee’s present organization.
Other-outside: Another employee or employees outside the employee’s present organization.

An employee might compare himself with his peer within the present job in the current organization or with his friend/peer working in some other organization or with the past jobs held by him with others. An employee’s choice of the referent will be influenced by the appeal of the referent and the employee’s knowledge about the referent.

Moderating Variables: The gender, salary, education and the experience level are moderating variables. Individuals with greater and higher education are more informed. Thus, they are likely to compare themselves with the outsiders.

Males and females prefer same sex comparison. It has been observed that females are paid typically less than males in comparable jobs and have less salary expectations than male for the same work. Thus, a women employee that uses another women employee as a referent tends to lead to a lower comparative standard.

Employees with greater experience know their organization very well and compare themselves with their own colleagues, while employees with less experience rely on their personal experiences and knowledge for making comparisons.

Choices: The employees who perceive inequity and are under negative tension can make the following choices:

Change in input (e.g. Don’t overexert)
Change their outcome (Produce quantity output and increasing earning by sacrificing quality when piece rate incentive system exist)
Choose a different referent
Quit the job
Change self perception (For instance - I know that I’ve performed better and harder than everyone else.)
Change perception of others (For instance - Jack’s job is not as desirable as I earlier thought it was.)

Assumptions of the Equity Theory

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  • McClelland’s Theory of Needs
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  • Motivation - Introduction
  • Maslow’s Need Hierarchy Model
  • Motivation Incentives
  • Importance of Motivation
  • Motivation and Morale
  • Employee/Staff Motivation
  • Workplace Motivation
  • Self Motivation at Work
  • Team Motivation
  • Role of Motivation in OB
  • Motivational Challenges
  • Good Motivation System
  • Classical Theories of Motivation
  • Maslow’s Hierarchy of Needs Theory
  • Herzberg’s Theory of Motivation
  • Theory X and Theory Y
  • Modern Theories of Motivation
  • How the Movie Yuva Explains The Need Theory of Motivation and What Motivates Us
  • Why Intrinsic Motivation Matters More Now In the Times of the Great Resignation
  • How Motivation Can Help Millennials/Gen Zers Avoid Burnout in the Post Pandemic Age

BUS101: Introduction to Business

case study on equity theory of motivation

Drawing on older theories of motivation such as Maslow's Hierarchy of Needs and Herzberg's two-factor theory, and newer theories such as expectancy and equity theories, HR managers can gain insight into what might motivate employees to do their best work. Read this section to see how these theories can be used.

Equity Theory

What if you spent thirty hours working on a class report, did everything you were supposed to do, and handed in an excellent assignment (in your opinion). Your roommate, on the other hand, spent about five hours and put everything together at the last minute. You know, moreover, that he ignored half the requirements and never even ran his assignment through a spell-checker. A week later, your teacher returns the reports. You get a C and your roommate gets a B+. In all likelihood, you'll feel that you've been treated unfairly relative to your roommate.

Your reaction makes sense according to the equity theory of motivation, which focuses on our perceptions of how fairly we're treated relative to others . Applied to the work environment, this theory proposes that employees analyze their contributions or job inputs (hours worked, education, experience, work performance) and their rewards or job outcomes (salary, benefits, recognition). Then they create a contributions/rewards ratio and compare it to those of other people. The basis of comparison can be any one of the following:

  • Someone in a similar position
  • Someone holding a different position in the same organization
  • Someone with a similar occupation
  • Someone who shares certain characteristics (such as age, education, or level of experience)
  • Oneself at another point in time

What will an employee do if he or she perceives an inequity? The individual might try to bring the ratio into balance, either by decreasing inputs (working fewer hours, refusing to take on additional tasks) or by increasing outputs (asking for a raise). If this strategy fails, an employee might complain to a supervisor, transfer to another job, leave the organization, or rationalize the situation (perhaps deciding that the situation isn't so bad after all). Equity theory advises managers to focus on treating workers fairly, especially in determining compensation, which is, naturally, a common basis of comparison.

case study on equity theory of motivation

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The Equity Theory of Motivation for People, Teams & Managers

case study on equity theory of motivation

The equity theory of motivation states a person's motivation is directly related to their perception of equity or level of fairness. This theory shows that you become more motivated when your perceived fairness is high and demotivated when you perceive unfairness. People therefore expect things like effort to result in achievements like higher salary.

The equity theory of motivation is typically used in the workplace as a management technique. However, the same theory is also applicable to an individual's self-motivation, even outside the work environment. In this article, we discuss how the equity theory of motivation works, what inputs increase or decrease equity, as well as how to use the theory to your advantage .

How The Equity Theory of Motivation Works

The equity theory of motivation directly relates a person's motivation to their perception of fairness, known as "equity." This means that your motivation is highly correlated to fairness and justice, both in the workplace as well as in the outside world. The higher the fairness and justice, the more motivated a person typically becomes.

People motivated by equity typically evaluate their level of fairness by comparing specific inputs like effort and enthusiasm to desired outcomes like compensation or self-worth. If the chosen inputs result in the expected or desired outcomes, things are perceived to be fair and a person is more motivated. Alternatively, if the inputs don't result in the expected outcome, it's possible to become demotivated.

Further, people will also usually compare their perception of equity to their perception of other people's equity.  This means that people often compare themselves to others and can become demotivated if they believe they're not only under-rewarded but also over-rewarded in relation to others. People need to feel that both themselves as well as those around them are treated fairly to become motivated.

When measuring fairness, a person almost always perceives using one of four references or "referents." The specific type of reference you measure yourself against is key to motivation. If you're able to figure out what referent you or another person is using, you can work to create more fairness and increase motivation.

The four types of referents include the following:

  • Self-inside:  Compare current experiences to past experiences inside the same organization or group
  • Self-outside:  Compare current experiences to past experiences outside the organization or group
  • Other-inside: Compare current experiences to the experiences of another person inside the same organization or group
  • Other-outside: Compare current experiences to the experiences of another person outside the organization or group

Understanding these reference experiences is key to understanding how a person perceives fairness. Once you identify which of the four referents you or another person uses to judge fairness, you can use this motivational theory to focus on the right inputs and outputs that increase motivation.

Common Inputs & Outputs That Affect Equity

An "input" is a thing a person does in order to achieve a specific outcome. Inputs are typically contributions a person makes to themselves, other people, or larger organization. In return for these inputs, people expect to earn a desired outcome or output. For example, someone might put in something like effort and expect an output like higher salary.

If the chosen inputs result in the desired outcome, and if the experience is positive, then a person is motivated. However, if the chosen input does not result in the expected outcome it can become demotivating. This is why it's important to understand the inputs yourself or another person is focused on and the expected outputs.

Inputs That Affect Equity & Motivation

Common inputs that result in fairness and motivation include:

  • Effort: The amount of time you invest in a person, project, or organization
  • Commitment: The level of engagement you show to people, projects, or organizations
  • Enthusiasm: The excitement you or others show towards people, projects, or organizations
  • Experience: The amount of experience that you bring to a project or role
  • Personal sacrifice: Selflessness by putting the priorities of others over your own
  • Loyalty: The demonstrated level of allegiance one shows towards other people or organizations
  • Flexibility: The ability of the individual to take things in stride and adapt in light of new situations

These inputs are the things you and others invest into your life and your work. You can invest one or many of these inputs. Regardless, at the end of the day, you expect to be fairly compensated for the investment of these inputs in the form of salary, satisfaction, and more.

Outputs That Affect Equity & Motivation

Common outputs that result in fairness and motivation include:

  • Monetary compensation:  Salary, bonus, pension, stock options, increased revenue, and more
  • Increase in free time: The ability to spend your time as you see fit, such as creating a lifestyle business or getting extra vacation days at work
  • Recognition and accomplishment: The feeling of self-worth and that your work is meaningful
  • Learning: The chance to learn new skills and gain greater life experiences

If the inputs a person invests doesn't result in the outputs the expect, a person will feel that they're being treated unfairly and their motivation will wane. If you can identify what you or another person is investing in and what you or they expect to earn in return, you'll be able to self-motivate as well as motivate the others around you.

The Optimal Ratio of Equity for Motivation

While it might seem natural to think that higher equity or perceived fairness results in higher motivation, but this isn't exactly true. While a person always wants to be treated fairly and increase their personal equity, they also want to ensure that they're not being unfairly compensated in relation to others around them.

This is where the four referents we discussed above come into play. If a person believes that they have either more or less equity  in relation to their chosen reference, they will feel that things are unfair and lose motivation. This is known as "equity tension." If you think you're under-rewarded and have less equity in relation to your reference, you become less motivated. Conversely, if you think you're over-rewarded and have more equity, you also become less motivated.

For this reason, it's extremely important to treat others as you would treat yourself so that no one feels over- or under-appreciated. To help ensure you don't create equity tension, make sure you refer to the following ratio:

  • Under-rewarded (equity tension):  When the input/output of a person results in less fairness than the input/output of their reference
  • Optimal ratio of equity: When the input/output of a person results in equal fairness than the input/output of their reference
  • Over-rewarded (equity tension):  When the input/output of a person results in more fairness than the input/output of their reference

Therefore, it's important than when you're trying to motivate yourself or others, you try to create equal fairness across the board. This will motivate people because they'll know that the effort they put in will bear the fruits of their labor.

How to Use the Equity Theory of Motivation

Now that we understand what the equity theory of motivation is and how it works, the next logical step is to understand how to use it to your advantage. Remember that while the equity theory of motivation was originally geared towards business, it can also be used for your personal life. Regardless, the approach is to identify the inputs and desired outputs, and figure out what references people are using to gauge fairness.

The Equity Theory of Motivation in Business

In business, the equity theory of motivation is typically used as a management technique. Rather than worrying about your own motivation, you worry about the motivation of others in your organization - specifically the people who you work with and who work for you. When this is the case, it's important to identify your subordinates' inputs, desired outputs, and references before they become demotivated, so that you can accelerate their growth within your company.

When looking to motivate people in your organization, you should take the following 3 steps:

  • Define peoples' outputs: This may seem backward, but it's important to first understand what the people in your organization want. What are their goals and what do they hope to get out of their time working for you? This will help you motivate them by rewarding them with the things they actually want, such as growth or freedom.
  • Celebrate peoples' inputs:  Once you know what people want, it's time to show them how to get there, and celebrate them when they display the right input. For example, if someone in your organization needs to show greater effort in order to achieve their desired goal, point out times when they display positive effort and reward them for it.
  • Understand how they compare themselves: This is extremely important because while you may judge yourself based on your past experiences, someone else might judge themselves against their current peers. If you don't understand how the people in your organization perceive fairness or unfairness, you'll never be able to motivate them.

The Equity Theory of Motivation for Personal Use

The equity theory of motivation can be used personally in a number of ways. If you're demotivated because you don't have a firm goal in mind, then refer to the strategy above by trying to first define your outputs, inputs, and referents.

If you have a goal but aren't able to achieve it, your current hard work (and other inputs) aren't resulting in your desired outputs. When this happens, you can do one of three things. You can either change your inputs, alter your desired outputs, or adjust the reference you're using to compare your fairness to others.

If you find that your motivation is waning, the 3 steps you should take include:

  • Change your inputs: If what you're currently doing isn't resulting in the life you want, change your approach! Look at your current plan of attack and how you expect it to achieve your goals. How can you adjust your course so even though your inputs change, your desired outputs remain the same?
  • Change your outputs: If, after you change your inputs, you still aren't achieving your outputs and you're feeling unmotivated, it's time to change your outputs. Maybe the thing you thought you wanted isn't what you want anymore. Maybe your goals aren't realistic given your resources. Changing your outputs, even by a small amount, can help increase your motivation.
  • Change your references: Finally, if you're still feeling unmotivated, maybe you're judging yourself against the wrong references. For example, rather than comparing yourself to others you compare your current self to your past self. This might help you gain back some of that motivation you're missing.

Equity Theory of Motivation Examples

The most common example of the equity theory is with hard work and salary. Employees often percieve that if they work hard they will eventually deserve a raise. If a person believe's they're putting in the effort needed to get a raise, they will become motivated if their salary increases or demotivated if it doesn't.

However, you also have to understand the employee's reference. For example, some people might be judging their level of fairness on their past salary growth. If their salary isn't growing at the speed they expect based on their effort, they'll become demotivated. Other people may be judging fairness on the salary growth of others. If their effort results in higher salary  in relation to someone else's salary then the person is motivated.

Limitations on the Equity Theory of Motivation

While the equity theory sounds great, it does have its limitations. For example, life isn't all that fair. Rather than becoming demotivated when we feel like we're dealt a bad hand, we should instead focus on the things in life we appreciate. This helps put things in perspective so we never feel slighted by life or by someone else.

Further, outputs or rewards are seldom highly correlated with inputs. For example, your hard work might make you feel like you deserve a raise, but the company you work for might be strapped for cash. What do you do? Should you become demotivated and quit, or should you stick it out and further invest in the company, hoping that you (or the company) can turn it around. This might cause you to feel depressed and demotivated.

Assumptions of the Equity Theory of Motivation

The equity theory of motivation has to make key assumptions. If the assumptions hold true then the equity theory can help you increase motivation. If not, then it fails and should be discarded for another theory or approach.

The key assumptions of the equity theory of motivation include:

  • Inputs and outputs are highly correlated
  • People have the capability to achieve their desired outputs
  • People are rewarded for good performance on a regular basis
  • Reward systems are fair and just across people and organizations
  • People assess their motivation continuously and course correct when necessary

Frequently Asked Questions (FAQ)

Who is john stacey adams.

John Stacey Adams is a workplace, social, and behavioral psychologist who came up with the equity theory of motivation in 1963.

What is Herzberg's Two-Factor Theory of Motivation?

Herzberg's two-factor theory of motivation is opposite to the equity theory of motivation in that employee attitude and workplace motivation are not correlated. In fact, equity does not motivate people. However, while these two factors don't motivate people, the absence of these factors, other things known as "hygiene factors" like compensation or job security can cause dissatisfaction in the workplace.

Other theories that may relate include:

  • Arousal theory of motivation
  • Expectancy theory of motivation

What Are the Strengths & Weaknesses of the Equity Theory?

Research shows  there are many pros and cons of the equity theory. Strengths include the ability to motivate a team through fair and equitable treatment. However, there are weaknesses, such as a person feeling slighted even through their being treated fairly, resulting in decreased motivation.

The equity theory of motivation is great for understanding what goals motivate you and the people around you. It's a great theory when used correctly, but it's definitely not the only theory. In fact, there are many other ways to motivate yourself and others. Ultimately, it takes a blended approach of understanding key inputs and outputs in order to drive towards your ultimate goals.

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Motivated employees high-fiving in an office setting.

What Is Adam’s Equity Theory of Motivation?

  • Examples of Equity Theory of Motivation
  • Why Is the Equity Theory of Motivation Important?
  • Advantages and Disadvantages of Equity Theory

Criticism of Equity Theory of Motivation

Final words.

Motivation gets you up in the morning, regardless of how you feel. It is an essential part of our lives, but we all experience it differently. 

As individuals, each person is motivated by different things, and understanding what we are motivated by is an incredible way to improve motivation and inspire others.

The equity theory of motivation is one way to think about motivation, and it can be a helpful tool for individuals looking to understand themselves and others better. Please keep reading to learn more about this influential theory and how it potentially impacts your intrinsic motivation.

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Equity theory states that individuals are motivated by their perception of fairness. In other words, we are motivated when we feel that we are being treated fairly compared to others. Our motivation decreases when we don’t feel like our jobs treat us fairly.

John Stacey Adams

John Stacey Adams developed his theory back in the 1960s. Adams worked as a workplace behavioral psychologist, and many consider him to be one of the most influential psychologists of his time.

When our perception of perceived fairness is low, so is our motivation. When our perception of fairness is high, our motivation is also high.

Adam's equity theory suggests that people are motivated to maintain equity between the inputs they put into a situation and the outcomes they receive from it. Inputs are the things we put into our jobs, such as time, energy, and effort. Outputs are the things we get from our position, such as pay, vacation days, and recognition.

The Importance of Fairness

This theory of motivation suggests that employees who feel like they are putting more into their job than they are receiving will be less motivated. On the other hand, employees who feel like they are getting more out of their career than they are putting in will be more motivated.

It’s important to remember that everyone has different standards for what they consider fair. What one person decides is acceptable, another person may not. 

That’s why it’s so important to maintain open communication with the people you work with. Communicating with your coworkers allows you to understand better what they perceive as fair and adjust your behavior accordingly.

How To Use This Theory

The equity theory of motivation can be a helpful tool for individuals looking to improve their intrinsic motivation.

Extrinsic motivation – doing something in order to receive a reward or avoid punishment – is fairly common in the workplace. Many businesses implement rewards for their best employees, for example. Intrinsic motivation, in contrast, is the desire to accomplish something because we enjoy it or think it’s important, not because of external factors.

If you’re looking to increase your intrinsic motivation, it’s essential to ensure that you feel like you are treated with fairness. Adam's equity theory of motivation can help you identify when you feel undervalued or overworked. Once you’ve identified these feelings, you can take steps to address them.

It’s also critical to recall this is just one of many theories of motivation . This postulation focuses on the idea of fairness, but others, like the ERG theory of motivation, focus on different aspects of motivation. They usually complement one another.

Four Employees high-fiving in a meeting room.

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Examples of Equity Theory of Motivation in the Workplace

There are many ways to put this theory into practice in the workplace. Some equity theory examples are:

  • Openly communicate with your boss or supervisor about your workload. If your boss is asking you to do too much, voice your concerns. By doing so, you can mutually agree on what is fair.
  • Keep track of the hours you work. Talk to your boss if you feel you are putting in more hours than your coworkers. Again, open communication is critical.
  • If you’re in a management position, take the time to get to know your employees. Ask them how they’re doing and if there’s anything you can do to help. By building a relationship with your employees, you can better understand their needs and ensure that they feel valued.

These are just a few examples of how to identify equity theory. A good way of applying equity theory is to think about fairness. Speak up if your boss mistreats you. The goal is to maintain equity in the workplace so that everyone feels motivated and valued.

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Why Is the Equity Theory of Motivation Important for Leaders?

This theory is critical for leaders because it can help them create a work environment that is fair and motivating for their employees.

Employees who feel like their jobs treat them fairly are more likely to be intrinsically motivated . Intrinsic motivation is important because it leads to employees who are passionate and engaged in their work.

Leaders who let employees determine what is fair compensation can help reduce equity tension in the workplace. It also promotes a sense of job security.

A great way a leader can implement this motivation theory is to accept flexible working hours (if the company allows for it), consider employee perception, and define equity in the workplace and within the team.

Leaders who create a fair and motivating work environment are likelier to have invested employees who care about the organization’s success. Invested employees, in turn, lead to a more prosperous and productive organization and are more likely to stay in the same organization.

Adams' equity theory is just one tool leaders can use to create a fair and motivating work environment. However, it’s a vital tool because it helps leaders understand the importance of fairness in the workplace. It is often a topic of executive coaching for leadership development , which approaches leadership training with a focus on self-awareness.

Two executives working together in an office setting.

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Advantages and Disadvantages of Equity Theory of Motivation

Although this theory of motivation may seem like a beautiful concept, it does have its advantages and disadvantages.

Advantages of Equity Theory:

  • It helps individuals assess if their bosses treat them fairly 
  • Encourages individuals to communicate openly about their workload
  • Builds relationships between employees and managers

Disadvantages of Equity Theory:

  • It can be time-consuming for leaders to build relationships with each employee
  • It may lead to conflict if employees have different concepts of fairness and do not agree with each other

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John Adams is not the only workplace behavioral psychologist who studied workplace motivation. Although many respect his work and the workplace equity theory of motivation, it is not perfect.

Motivations Other than Fairness

One of the main criticisms of this theory of employee motivation is that it doesn’t account for different types of motivation. For example, some people may be motivated by more than just fairness. They may also be motivated by recognition or a sense of accomplishment.

Another criticism of this theory is that it doesn’t always lead to the most productive work environment. For example, if employees are constantly focused on whether or not they are being treated fairly, they may spend less time working.

One of the other significant criticisms is that it assumes that people are rational beings , which may not always be the case. People are often driven by emotions, leading them to make decisions that are not always rational.

Despite these criticisms, this theory is still widely accepted. It can be useful for leaders and managers who want to create a just and motivating work environment.

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Overall, the equity theory of motivation is helpful for leaders and employees. It can help individuals assess whether or not they are being treated fairly and encourages communication about workloads. Although it has its criticisms, this theory of motivation is still widely accepted.

By understanding the theory, individuals can assess if they are being treated with fairness and take steps to address any concerns. Adams' theory of motivation can help create a fair and motivating work environment for all.

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  • DOI: 10.1080/2331186x.2024.2371169
  • Corpus ID: 270989189

A multi-approach formative assessment practice and its potential for enhancing student motivation: a case study

  • B. Palmberg , C. Granberg , +1 author Torulf Palm
  • Published in Cogent Education 4 July 2024
  • Education, Psychology

36 References

A classification system for teachers’ motivational behaviours recommended in self-determination theory interventions, using scaffolding strategies to improve formative assessment practice in higher education, changes in student motivation and teacher decision making when implementing a formative assessment practice, co-constructed rubrics and assessment for learning: the impact on middle school students’ attitudes and writing skills, intrinsic and extrinsic motivation from a self-determination theory perspective: definitions, theory, practices, and future directions, understanding classroom assessment practices and learning motivation in secondary efl students, formative assessment and intrinsic motivation: the mediating role of perceived competence, relationships between epistemic beliefs and achievement goals: developmental trends over grades 5–11, reaping the benefits of assessment for learning: achievement, identity, and equity, students' agentic engagement predicts longitudinal increases in perceived autonomy-supportive teaching: the squeaky wheel gets the grease, related papers.

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    Components of the equity theory of motivation. The equity theory of motivation fundamentally rests on two core concepts: the effort a person invests, often called 'inputs', and the rewards a person receives, known as 'outcomes'. These two components play a critical role in shaping an employee's level of motivation. Inputs

  3. Adams' Equity Theory of Motivation: A Simple Summary

    J. Stacey Adams' equity theory is a process model of motivation. It says that the level of reward we receive, compared to our own sense of our contribution, affects our motivation. The theory considers the concept of equality and fairness, as well as the importance of comparison to others. At its core, Adams' theory says that individuals ...

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  6. Factors in Employee Motivation: Expectancy and Equity Theories

    O RIGINAL RESEARCH. Factors in Employee Motivation: Expectancy and Equity Theories. Eric R. Watters, PhD. ewatter [email protected]. Colorado Mesa University. Motivating employees to produce is a ...

  7. Adams' Equity Theory of Employee Motivation: What Is It?

    This theory was developed by J. Stacey Adams in 1963 and has since been used to explain employee behavior and motivation. Adams' Equity Theory suggests that employees compare their own inputs and outputs (e.g., effort and rewards) to those of others, and when there is a perceived imbalance, they will act to restore equity.

  8. How Can Adams' Equity Theory Boost Your Team's Motivation?

    The theory - also known as the equity theory of motivation - was developed in 1963 by workplace and behavioural psychologist John Stacy Adams. He based it on the premise that people compare their inputs and outcomes to those of their colleagues or peers. Inputs refer to the contributions made by an individual to their job.

  9. What Is Adam's Equity Theory Of Motivation In The Workplace?

    The definition of equity is an employee's outputs divided by their inputs. But Adam's Equity Theory is a level-up and mentions that individuals do not measure equity in isolation. Instead, they compare with their peers. If they come across an inequitable situation, they tend to adjust their inputs to maintain balance.

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    Adams' Equity Theory is, therefore, a far more complex and sophisticated motivational model than merely assessing effort (inputs) and reward (outputs). The actual sense of equity or fairness (or inequity or unfairness) within Equity Theory is arrived at only after incorporating a comparison between our own input and output ratio with the input ...

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    Equity Theory of Motivation. The core of the equity theory is the principle of balance or equity. As per this motivation theory, an individual's motivation level is correlated to his perception of equity, fairness and justice practiced by the management. Higher is individual's perception of fairness, greater is the motivation level and vice ...

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    The equity theory of motivation directly relates a person's motivation to their perception of fairness, known as "equity." This means that your motivation is highly correlated to fairness and justice, both in the workplace as well as in the outside world. The higher the fairness and justice, the more motivated a person typically becomes.

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    DOI: 10.1080/2331186x.2024.2371169 Corpus ID: 270989189; A multi-approach formative assessment practice and its potential for enhancing student motivation: a case study @article{Palmberg2024AMF, title={A multi-approach formative assessment practice and its potential for enhancing student motivation: a case study}, author={Bj{\"o}rn Palmberg and Carina Granberg and Catarina Andersson and Torulf ...