Equity Theory
The Basic Idea
What are the characteristics you look for when choosing a job? Whether it’s dependent on geographic proximity, work hours, the type of work you’ll be doing, or the company, you likely want to work somewhere that is fair. Would you be satisfied at a job where you felt like all your efforts were going unnoticed and you were poorly compensated?
Equity theory focuses on whether there is a fair balance between an employee’s inputs (such as hard work, enthusiasm, and skills) and their outcomes (such as recognition, salary, and benefits).1 According to the theory, striking this balance is necessary for a strong and productive work relationship. In order to maximize individuals’ rewards, organizations strive to create systems that fairly distribute resources across members of a group. Otherwise, inequalities will result in levels of unhappiness proportional to the amount of inequality.
In moving toward an understanding of inequity, we increase our knowledge of our most basic productive resource, the human organism.
– John Stacy Adams in his seminal paper, “Toward an understanding of inequity”
