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Equity Theory

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					        EQUITY THEORY
• This process theory focuses on workers'
  perceptions of the fairness of their work
  outcomes and inputs. Specifically they
  strive to maintain ratios of their own
  rewards to contributions which are equal
  to others' ratios .




     EQUITY EQUATIONS
• Equity
  – Outcomes (self)       =   Outcomes (other)
     Inputs    (self)         Inputs (other)

 •Underpayment Inequity
    Outcomes (self)            Outcomes (other)
                          <
     Inputs (self)             Inputs (other)

  •Overpayment Inequity
    Outcomes (self)            Outcomes (other)
                          >     Inputs (other)
    Inputs (self)
 BALANCING THE SCALES
• Workers can change their inputs
• Workers can change their outcomes
• Workers can try to change others
  outcomes and inputs
• Workers can change their perceptions
• Workers can change their reference
  person
• Workers can change jobs




IMPLICATIONS OF EQUITY
       THEORY
• Avoid underpayment
• Avoid overpayment
• Be sensitive to inequity perceptions
• Monitor regularly for creeping inequity
• When sacrifices are needed distribute
  equally from top to bottom
   PROCEDURAL JUSTICE
• A process theory about motivation that
  focuses on workers perceptions of the
  fairness of the procedures used to
  determine outcomes. It deals with how
  performance is evaluated and how pay
  scales are determined and how
  grievances are handled.




 BUILDING PROCEDURAL
        JUSTICE
• Treat workers with respect
• Give workers a voice in decisions
  concerning them
• Explain decisions to workers
    ETHICAL ISSUES AND
       PROCEDURES
• Conflict of interest
• Nepotism
• Equal employment opportunity
• Intellectual property rights
• Whistle blowing




   EXPECTANCY THEORY
• A process theory that states motivation is
  determined by the outcomes people
  expect as a result of their actions on the
  job. Essentially it holds that people will
  be motivated when expect that they will
  be able to achieve what they want from
  their jobs
            EXPECTANCY
            COMPONENTS
  • Expectancy — the belief that efforts will
    influence performance. Ex. If I study
    hard, I'll be able to answer exam
    questions.
  • Instrumentality — Belief that
    performance leads to a specific outcome.
    If I answer that questions, I can get an A.
  • Valence — The value attached to a
    reward or outcome.




    EXPECTANCY EQUATION

Effort
               Expectancy
                    X
Perfor-
mance          Instrument        MOTIVATION
               ality
 Rewards             X
 Rewards
                Valence
     IMPLICATIONS OF
   EXPECTANCY THEORY
• Clarify expectancies about effort and
  levels of performance
• Help employees attain desired level of
  performance, be a coach
• Clearly link rewards and performance
• Know what types of rewards are desired.
• Be sensitive to workers perceptions of
  expectancy




       COMPARING THE
         THEORIES
• Need theory -- works well when the focus
  is one outcomes and you have control
  over the outcomes
• Equity theory -- salient when appraisals
  are done, increases are given
• Expectancy theory -- salient at times of
  goal setting and performance appraisal,
  and salary increases, and promotions.
          BACKWARDS &
           FORWARDS
• Summing up: How fairness in the work place
  can motivate to a change in performance when
  we looked at equity theory. The importance of
  tying performance to outcomes was the heart of
  expectancy theory.
• Next time we look at some common
  applications of motivational theory to the
  workplace: job design, goals setting and pay.

				
DOCUMENT INFO
Description: This is an example of equity theory. This document is useful for conducting equity theory.
Richard Cataman Richard Cataman
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