What is equity theory?

Equity theory suggests that employees’ motivation is deeply rooted in their perception of fairness at work. They weigh their contributions, such as effort and skills, against the rewards they receive, like pay and promotions. When they compare this balance to that of their peers and notice discrepancies, it can result in feelings of demotivation and dissatisfaction. Essentially, how they perceive fairness impacts their overall job satisfaction, motivation, and performance.

Stages of equity

The process of equity in the workplace is a journey through which employees assess and react to their perceived fairness in relation to their peers. This process is crucial as it directly affects their motivation, satisfaction, and performance. By understanding the different stages of this equity journey, employers can better address and manage employee perceptions and concerns. Here are the key stages:

• Sensing Inequity: This initial stage involves employees comparing their input-to-output ratio with that of their peers. If they detect an imbalance, feelings of dissatisfaction may arise.

• Evaluation: Upon sensing a discrepancy, employees weigh its significance. They determine whether the perceived inequity is substantial enough to elicit a reaction.

• Reaction Formation: Based on their evaluation, employees decide on a course of action. This can range from voicing concerns to adjusting their work efforts.

• Restoration Attempt: In this stage, employees make efforts to regain a sense of balance. This might involve seeking a pay raise, discussing their role and responsibilities, or internally adjusting their perceptions to reconcile the imbalance.

• Resolution or Resignation: At this concluding stage, employees either find a solution that reinstates their sense of equity or they resign themselves to the imbalance. This resignation can result in demotivation, decreased productivity, or even searching for opportunities elsewhere.

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