case study on equity theory of motivation

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Equity theory

What symptom(s) In this case suggest that something has gone wrong? A men’ retail clothing store In Quebec called Veterans Late which Introduced new Incentive systems, which are salary with commission based on several performance measurements.

The goal of the new Incentive systems are that encouraging either store managers or employees to serve customers better in order to improve sales volume.

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Actually, this new incentive systems are not very efficient due to the allowing two problems: one is sales staffs are over “ownership”, this aggressive behavior will intimidated customers and the lack of inventory duties in result of stock shortage. Even managers reacted the problems that caused by the new incentive systems, then the managers assigned employees to inventory duty and specific areas, threaded stuff with dismissals. Somewhat these were effective, but staffs continued to complain a lot because of inequity between their contributions and payments to coworkers. 2.

What are the main causes of these symptoms?

In terms of Equity Theory, the employees of Veterans Late who hold their own beliefs about their inputs and outcomes, then compared themselves to reference other (the other coworkers in this company) and they found their input/outcome ratio is lower than some other coworkers. The perception would motivated employees to complain about their work, lower their inputs (for example, time and effort), or require higher a salary. So, the perception of inequity motivate the employees’ behavior to restore equity. 3. What action should Veterans executive take to correct these problems?

The Veterans executive can do these kinds of things to correct these problems.

Firstly, they can modify the new Incentive systems, the scale standard should measure whole team during a period Instead of a specific person, for example, If the sales volume Improve a lot In past period, the reward can distribute averagely for every employee. Secondly, the executive should emphasize team split In employees’ training, and give the employees feedback periodically.

A men’ retail clothing store in Quebec called Veterans Late which introduced new incentive systems, which are salary with commission based on several performance measurements. The goal of the new incentive systems are that encouraging either they can modify the new incentive systems, the scale standard should measure whole team during a period instead of a specific person, for example, if the sales volume improve a lot in past period, the reward can distribute averagely for every employee. Secondly, the executive should emphasize team spirit in employees’

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Adams' Equity Theory on Job Motivation

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What is Equity Theory of Job Motivation?

John Stacey Adams , a workplace and behavioural psychologist, put forward his Equity Theory on job motivation in 1963. 

There are similarities with Charles Handy's extension and interpretation  of previous simpler theories of Maslow , Herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of their relationship with their work, and thereby their employer. 

However, awareness and cognizance of the wider situation - and crucially comparison - feature more strongly in Equity Theory than in many other earlier motivational models.

  • The Adams' Equity Theory model, therefore, extends beyond the individual self and incorporates influence and comparison of other people's situations - for example, colleagues and friends - in forming a comparative view and awareness of Equity, which commonly manifests as a sense of what is fair.

The Role of Fairness in Motivation

When people feel fairly or advantageously treated they are more likely to be motivated; when they feel unfairly treated they are highly prone to feelings of disaffection and demotivation. The way that people measure this sense of fairness is at the heart of Equity Theory .

  • Equity, and therefore the motivational situation we aim to assess using the model, is not dependent on the extent to which a person believes reward exceeds effort, nor even necessarily on the belief that reward exceeds effort at all. 
  • Rather, Equity, and the sense of fairness which commonly underpins motivation are dependent on the comparison a person makes between his or her reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar situation.

The Role of Inputs and Outputs in Equity Theory

Adams called personal efforts and rewards and other similar 'give and take' issues at work respectively  'inputs'  and  'outputs' .

  • Inputs are logically what we give or put into our work. 
  • Outputs are everything we take out in return.

These terms help emphasise that what people put into their work includes many factors besides working hours and that what people receive from their work includes many things aside from money.

Adams used the term  'referent' others  to describe the reference points or people with whom we compare our own situation, which is the pivotal part of the theory.

  • Adams Equity Theory goes beyond - and is quite different from merely assessing effort and reward. Equity Theory adds a crucial additional perspective of comparison with 'referent' others (people we consider in a similar situation).

Practical Application of Equity Theory

Equity theory thus helps explain why pay and conditions alone do not determine motivation.

In terms of how the theory applies to work and management, we each seek a fair balance between what we put into our job and what we get out of it. But how do we decide what a fair   balance is?

  • The answer lies in Equity Theory. Importantly we arrive at our measure of fairness - Equity - by comparing our balance of effort and reward, and other factors of give and take - the ratio of input and output - with the balance or ratio enjoyed by other people , whom we deem to be relevant reference points or examples ('referent' others).

Crucially this means that Equity does not depend on our input-to-output ratio alone - it depends on our comparison between our ratio and the ratio of others.

  • In practice, this helps to explain why people are so strongly affected by the situations (and views and gossip) of colleagues, friends, partners etc., in establishing their own personal sense of fairness or equity in their work situations.

Adams' Equity Theory is, therefore, a far more complex and sophisticated motivational model than merely assessing effort (inputs) and reward (outputs).

  • The actual sense of equity or fairness (or inequity or unfairness) within Equity Theory is arrived at only after incorporating a comparison between our own input and output ratio with the input and output ratios that we see or believe to be experienced or enjoyed by others in similar situations.
  • For example, Equity Theory explains why people can be happy and motivated by their situation one day, and yet with no change to their terms and working conditions can be made very unhappy and demotivated, if they learn for example that a colleague (or worse an entire group) is enjoying a better reward-to-effort ratio.
  • It also explains why giving one person a promotion or a pay rise can have a demotivating effect on others.

The Importance of the Ratio in Equity Theory

Note also, importantly, that what matters is the ratio, not the amount of effort or reward per see. 

  • This explains for example why and how full-time employees will compare their situations and input-to-output ratios with part-time colleagues, who very probably earn less, however, it is the ratio of input-to-output - reward-to-effort - which counts, and if the part-timer is perceived to enjoy a more advantageous ratio, then so this will have a negative effect on the full-timer's sense of Equity, and with it, their personal motivation.

Remember also that words like efforts and rewards, or work and pay, are an over-simplification - hence Adams' use of the terms inputs and outputs, which more aptly cover all aspects of what a person gives, sacrifices, tolerates, invests, etc., into their work situation, and all aspects of what a person receives and benefits from in their work and wider career, as they see it.

  • If we feel that inputs are  fairly  rewarded by outputs (the  fairness  benchmark being subjectively perceived from market norms and other comparable references) then generally we are happier in our work and more motivated t o continue inputting at the same level.
  • If we feel that our ratio of inputs to outputs is less beneficial than the ratio enjoyed by referent others, then we become demotivated in relation to our job and employer.

People respond to a feeling of inequity in different ways. Generally, the extent of demotivation is proportional to the perceived disparity with other people or inequity , but for some people, just the smallest indication of negative disparity between their situation and other people's is enough to cause massive disappointment and a feeling of considerable injustice, resulting in demotivation, or worse, open hostility.

Some people reduce effort and application and become inwardly disgruntled, or outwardly difficult, or even disruptive. Other people seek to improve the outputs by making claims or demands for more rewards or seeking an alternative job.

  • Understanding Equity Theory - and especially its pivotal comparative aspect - helps managers and policy-makers to appreciate that while improving one person's terms and conditions can resolve that individual's demands (for a while), if the change is perceived by other people to upset the Equity of their own situations then the solution can easily generate far more problems than it attempted to fix.
  • Equity Theory reminds us that people see themselves and crucially the way they are treated in terms of their surrounding environment, team, system, etc. - not in isolation - and so they must be managed and treated accordingly.

A Pdf diagram of Adam's Equity Theory can be found and downloaded  here .


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