Equity theory
Equity theory tries to explain job satisfaction, what is fair in interpersonal relations. It is a justice theory. Developed by John Stacey Adams, asserting employees look for equity between what they bring to a job and what they get from the job, compared to others.
Equity theory claims those who seem under, or, over paid will feel distressed. The assessed distress addressed to find equity. Equity is measured by comparing ratios of contributions and benefits. Partners do not need equal benefits or make equal contributions, just that ratios are similar. Subtle and variable individual factors affect perception and assessment of relations. Anger is induced by underpayment inequity, guilt is induced with overpayment equity. Common recognition or gratitude goes a long way to feel worthwhile, a more positive, likely outcome.
People are content if perceived inputs and outcomes are equivalent compared to others. All things considered, a senior official is likely to get a better compensation, his valued experience is higher. If one notices another getting more recognition, rewards for the same work, dissatisfaction is stirred up. This upsets equity theory, an organization perceived as fair, observant and appreciative when fair practice is sensed.
Equity theory in business defines inputs as employee's time, expertise, qualifications, the intangible qualites of drive and ambition, interpersonal skills. Outcomes include monetary compensation, perks, flexible work arrangements. The theory has far-reaching implications for morale, efficiency, productivity and turnover.
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