Adams’ Equity Theory

PSYCH-105 Industrial Psychology

Chapter 5: Motivation

Unit 1

Unit 2

Unit 3

Unit 4


Adams Equity Theory

John Stacey Adams (1965)

The core of the equity theory (also known as Social Comparison Theory or Inequity Theory) is the principle of balance or equity. The notion of equity stipulates that justice and fairness should prevail in the reward system. Employees often compare their efforts and rewards with others in similar work situations. Individuals are motivated by a desire to be equitably treated.

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.

Four important terms in this theory are:

    1. Person: Individual for whom equity or inequity is perceived.
    2. Comparison other: Any person or any group used by person to compare the ratio or inputs and outcomes.
    3. Inputs: Individual efforts that are based on individual skills, experiences, learning, age.
    4. Outcomes: What person received from job (recognition, pay, fringe benefits)

In an organizational context, outcomes may refer to salary, career opportunities, extra-legal benefits, and even to psychological rewards such as feedback and support from colleagues or a supervisor. Inputs, in turn, refer to work effort and commitment, but also to factors such as age and educational level.

When the ratios differ, inequity is experienced, which in turn causes a conflict situation that elicits stress. Moreover, Adams (1965) argues that the larger the inequity, the larger the stress is, and that with higher stress, the individual experiences a stronger need to reduce this stress by eliminating the experienced inequity.

Equity theory contains three main premises (hypothesis):

  1. The theory demonstrates that the individuals are concerned both with their own rewards and also with what others get in their comparison.
  2. Employees should sense that their contributions are returned in a fair and equitable manner.
  3. The concept of social comparison. Social comparison is how employees believe their outcomes should be returned based on their inputs. Inputs consist of skills, education, and effort and outcomes consist of compensation, fringe benefits, promotion, and job status (Adams, 1963).
  4. If an employee senses themselves in an inequitable situation, they will seek to reduce the inequity. The individual may attempt to resolve the inequity by cognitive dissonance (conflict) or alteration of inputs and outcomes, or by leaving the organization.

However, if people perceive that they are well rewarded they may be motivated to work harder.

Evidence suggests that the referent with which an individual compares himself or herself is an important variable in equity theory. There are four referent comparisons an employee can use:

  1. Self-inside – An employee’s experiences in a different position inside his or her current organization.
  2. Self-outside – An employee’s experiences in a situation or position outside his or her current organization.
  3. Other-inside – Another individual or group of individuals inside the employee’s organization.
  4. Other-outside – Another individual or group of individuals outside the employee’s organization.

Compare self with other employee in similar work

1\frac{₹ 10 (outcome)}{1 hour (input)} = ₹ 10/hr \frac{₹ 10 (outcome)}{2 hour (input)} = ₹ 20/hrEquitable Situation
2 \frac{₹ 10}{1 hour} = ₹ 10/hr \frac{₹ 15}{1 hour (input)} = ₹ 15/hrNegative Inequity
3 \frac{₹ 15}{1 hour} = ₹ 15/hr \frac{₹ 10}{1 hour} = ₹ 10/hrPositive Inequity

So, if the inequity (either +ve or –ve) perceived by person then person may feel unhappy, restless and agitated which may propel the person to take any action, means this feeling of inequity will as a motivator among employees which may lead to the following consequences:

  1. Person can alter inputs (efforts)
  2. Person can try to alter rewards (outcomes) by talking to proper authorities and asking for pay raise.

Advantages / Merits / Pro’s

  1. The theory acknowledges the human tendency of comparing oneself to others and these social comparisons influences their output
  2. Compared to content theories, equity theory adopts a realistic approach. The theory proposes that major share of motivational behaviour depends on perceived situation rather than actual circumstances.
  3. The theory has generated a lot or research and most of the results are supportive.

Disadvantages / Limitations / Demerits / Con’s

  1. The theory doesn’t clearly bifurcate the input and output. For example, responsibility can be an input or an output?
  2. There are some questions need to be answered 
      • a. What is the relationship between input and output?
      • b. How does the person choose the comparison with other and outside?
      • c. Though the method is a success in lab experiments, is it practically fair enough on ground?

Author – Dr. Niyati Garg

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