Self-inside: An employee’s experiences in a different position inside his or her current organization.There are four referent comparisons that an employee can use: Additionally, the referent that an employee selects adds to the complexity of equity theory.When we see the ratio as unequal, we experience equity tension.If we perceive our ratio to be equal to that of the relevant others with whom we compare ourselves, a state of equity is said to exist.Employees make comparisons between their job inputs and outcomes relative to those of others.Roles played by the equity in motivation The three situations of equity theory are illustrated in the following figure:Īn employee with several years’ experience can be frustrated to find out that a recent college grad hired at a salary level higher than he or she is current earnings, causing motivation levels to drop. If the person feels that he/she is inequitably rewarded, he/she may be dissatisfied, reduce the quantity or quality of output, or even leave the organization. If the person perceives the rewards as equitable, he/she probably will continue at the same level of output. If the person thinks that the rewards are greater than what is considered, he/she may work harder. There should be a balance of the outcomes/inputs relationship for one person in comparison with that for another person. The essential aspects of the equity theory may be shown by an equation Equity exists when an individual concludes that his/her own outcome/input ratio is equal to that of other people. Individuals decide whether or not a particular exchange is satisfactory, by comparing their inputs and outcomes to those of others, in the form of a ratio.Outcomes include pay, recognition, promotion, prestige, fringe benefits, etc. Inputs include such things as the person’s past training and experience, special knowledge, personal characteristics, etc. Individuals make contributions (inputs) for which they expect certain outcomes (rewards).This theory is based on the following two assumptions about human behavior: Unrewarded: unrewarded who feel they have been unrewarded and seek to reduce their feeling inequity through the same types of strategies but the same of this specific action is now reverse.Equity: if employees perceive equity then they will be motivated to continue to contribute act about the same level.

Overrewarded: if employees fell over-rewarded equity theory predicts then they will feel an imbalance in their relationship with their employee and seek to restore that balance.

Outcomes: Outcomes are rewards they perceive they get from their jobs and employers’ outcomes include- direct pay and bonuses, fringe benefit, job security, social rewards and psychological.

Inputs: Inputs include all the rich and diverse elements that employees believe they bring or contribute to the job – their education, experience, effort, loyalty, commitment.

John stacey adams equity theory