Lesson 14-2. Use equity theory to explain how employees' perceptions of fairness affect motivation.

Equity theory

People will be motivated at work when they perceive that they are being treated fairly relative to others.

Procedural justice

The fairness of the procedures used to make reward allocation decisions

Inequity forms

Under-reward Over-reward

Reaction to over-reward

Guilt

Steps of equity theory

employees determine an outcome/input (O/I) ratio They compare their O/I ratio with a coworkers Perceive whether they are being treated fairly

rationalizing inputs or outcomes

making mental or emotional adjustments to their O/I ratios

Slight inequity

may not be strong enough to motivate an employee to take immediate action.

Over-reward

occurs when your O/I ratio is better than your referent's O/I ratio

Under-reward

occurs when your O/I ratio is worse than your referent's O/I ratio.

Who can referents be

one other individual or a generalized other oneself over time

Types of action to combat inequity

reducing inputs increasing outcomes rationalizing inputs or outcomes changing the referent simply leaving

How to motivate using equity theory

start by looking for and correcting major inequities. reduce employees' inputs. make sure that decision- making processes are fair.

Persistent inequity or there are multiple inequities

tension may build over time until a point of intolerance is reached, and the person is energized to take action.

Inputs

the contributions that employees make to the organization

Distributive justice

the degree to which outcomes and rewards are fairly distributed or allocated.

Outcomes

what employees receive in exchange for their contributions to the organization

Referents

Are those others with whom people compare themselves when determining whether they are being treated fairly

Components of equity theory

Inputs Outcomes Referents

Reaction to under-reward

frustration or anger