Equity Theory and Motivation

O/I ratio

Comparison of outcomes to inputs

Inputs

Contributions employees make to the organization

Pay secrecy

Organizational policy of keeping salary information private

Referents

People used for comparison to determine fairness

Fairness

Perceived equitable treatment in organizations

Procedural justice

Perceived fairness of decision-making processes

Distributive justice

Perceived fairness of outcome distribution

Underreward

Perceived inequity where outcomes are less than referents

Overreward

Perceived inequity where outcomes are more than referents

Rationalizing or distorting

Restoring equity by adjusting mental or emotional perceptions

Changing the referent

Restoring equity by comparing oneself to a different person

Decreasing inputs

Restoring equity by reducing effort or contributions

Increasing outcomes

Restoring equity by seeking higher rewards or benefits

Outcomes

Rewards employees receive from the organization

External organizations

Seeking help from labor unions, federal agencies, or courts to increase outcomes

Major inequities

Significant imbalances in fairness that can lead to employee actions

Extrinsic rewards

Motivators that come from external sources

Perceptions

Individual interpretations of reality

Intrinsic rewards

Motivators that come from within oneself

Equity theory

Motivation theory based on perceptions of fairness