Equity Theory and Employee Motivation - Coursework Example

Name: Student Number: Tutorial: Tutor: Word Count: 1441words Equity theory is a motivational theory. “It describes the relationship between how fairly an employee perceives he is treated and how hard he is motivated to work”. (Cory, 2006) This theory explains the relationship. When an employee gets satisfaction he is better able to motivate himself. Every human crave for some basic necessities like food and shelter. When the employee those needs are satisfied the employee wants that there is fairness. Recognising an employee who has performed well satisfies him internally. This brings the best of him. It motivates him. He is thus better able to perform. Thus having equity gives satisfaction. Literature Review Equity theory motivates people. Even a research conducted shows that “when an employee is compensated according to the efforts put by him he is satisfied and helps to motivate him”. (Gardner & Charles, 1998) This thus helps to bring equality. Employees get satisfied and then he is able to perform better. Another research carried out suggested that “interpersonal relation also plays a big role in determining whether there is equity when employees are not paid equally”. (Vecchio, Robert, Rodger & James, 1989) This study carried out on employees was made. They were difference in what the employees were paid. There was no equality. Due to personal interaction between the employees they came to know about it. This resulted in inequity. Thus showing that interpersonal relation helps to determine whether there is equity. According to Lively, Powell, Claudia & Carr “when there is inequity among inmates it gets reflected in the family environment as productivity gets hampered”. (Lively, Powell, Claudia & Carr, 2008) The study finds that when as employee does not perceive equity it gets reflected elsewhere also. When the inmates don’t perceive equity performance gets affected. This decreases productivity. As a result even family environment gets affected. A more through details says that this theory also can be applied to family life. Thus this theory helps to highlight the input and output. According to James Stacey Adams, when there is equality in input and output there is fairness. This results to equity. The ratio looks as below The further development shows that the inputs when matched with output helps. The inputs are what the employee does. It is the effort he puts in. Some of the inputs which employee does are time, effort, loyalty, hard work, commitment, enthusiasm and a few more. This is what the employee has to do. This input needs to match what the company gives back. It depends on the company. Some of the outputs are job security, salary, recognition, esteem, reputation to name a few. Thus it depends how the company takes in the input. Here the efficiency depends upon both. To achieve both there has to be a match between the employees input and the companies output. This will help the company. It will build confidence. As a result better efforts can be made. “This will help to achieve the individual goal and organisation goal”. (Alexander, Page & Wentling, 2003) Another study reveals that “when there is inequity it leads to public distress as employees who contribute more than the others feel that they have given a higher share to public good and it leads to unrest”. (Kenneth, Chan, Rob, Stuart & Muller, 1998) It states that when the contribution is not equal it leads to inequity. So, to perceive equity it is important that distress is removed. Example I had also experienced the equity theory in my work place. I have also experienced this theory myself. In my organisation there was inequity. I was in the sales department. The company had a policy to compensate the employee who performed well. There was no transparency in it though. Even after performing well i was not compensated accordingly. There was a mismatch between the two. The inputs and the output didn’t match. Other employees who didn’t perform well were paid more. There job was better recognised. This was due to the fact that they were well known by the higher authorities. Any good work was credited to them. The entire sales force suffered. When there was a task which was not performed according to the requirements it was attributed to the sales force. This resulted in inequity. The motivation started to fall. Employees didn’t recognise themselves as part of the company. Slowly, sales fell. The performance dipped. This caught the managers’ notice. Employees were de-motivated to such an extent that people were starting to leave the company. The turnover rate got affected. When the management took notice of it measures were taken. They brought some new managers and devised better compensation policies. This resulted in a match. Inputs were against the output. Employees were recognised. They were paid according to their efforts. The sale started to grow. This created a positive impact. Motivation level also grew. Productivity increased. Employees including myself started to believe a part of the company. This resulted in the force being more satisfied. As a result we were able to motivate our self internally. This brought equity. The effect of this was also reflected in the society. People started to give respect. There was recognition. It started to create a good feeling. Society started to recognise us. This motivated us more to perform well. It just followed a chain reaction and helps to satisfy us. This also helped to improve the family surroundings. When there was inequity it affected the family relation. But when the system improved things improved. This created a better working environment. We were better able to devote time and were able to concentrate harder. Thus, equity helped to improve motivation. It gave me sense of satisfaction. It resulted in improving my performance. When the input matched the output there was equity. Productivity improved. This helped the company and also helped in self development. Recommendation Firstly, it is important that there is equity. “When there is equity then the organisation can expect higher productivity and motivation”. (Fowler, 2006) The employees feel a part of the organisation. They realise that their efforts are bearing fruits. When they are compensated for it, it helps to satisfy their needs. This result is higher production. The performance of our sale force also increased due to this. When we saw that there was equity we got a sense of satisfaction. We were able to motivate our self. This resulted to improving the sales target. Thus, equity helped us to improve and it brought fairness. Secondly, since employees talk with each other it is important that there is transparency. When an employee is paid according to his efforts it is important that the process used is not ambiguous. Since, there is interpersonal reaction so the organisation cannot hide anything. When there is transparency employees know that the efforts are being paid. Since, employees know the process is clear it motivates him. These result to improve the quality of work. Thirdly, since “people perceive the fairness by matching it with the individual in the organisation and also employees from other organisation so it is important that the equity considers all this factors”. (Chapman, 2006) Since employees are in continuous interaction with others so the compensation and output should consider it. When the human resource drafts the output it needs to look into all this factors. It will help to come with better policies and it will develop the employee. This was also the case with me working in the organisation. We used to compare the compensation with others in the organisation. We also used to compare it with the industry. I also used to compare it with other companies. When i found that we were paid on the same lines it improved the fairness. It helped thus to improve the performance. We were better able to motivate our self and this reflected on the sales we were able to achieve. Fourthly, deciding on what is fair is a personal judgement. A thing might be fair for one but unfair for the other. So, while deciding the fairness it is important that the management considers it prom a neutral perspective. Any biasness should not be involved. It will help to improve the transparency. It will also help to come with ways. Thus we see that equity theory has its importance. It helps to motivate. Every organisation knowingly or unknowingly uses it. It helps to improve the performance. An employee who is motivated is more satisfied. It helps to put in better efforts. This results in improved performance. This theory has its relevance to every sector. Its presence has grown with the world becoming more globalised. This has made the usage of it more widely. It thus helps to motivate an employee. Reference Alexander A, Page V & Wentling T, 2003, “motivation & barriers to participation in virtual knowledge sharing”, Volume 7, Issue 1, MCB UP Ltd Chapman C, 2006, “equity theory on job motivation”, Adams original equity theory concept, UK Cory C, 2006, “equity theory and employee motivation”, Buzzle, US Fowler K, 2006, “balancing employee input and output”, Time analyzer, Boss Eye Inc Gardner & Charles E, 1998, “equity theory: perception is reality”, High Beam Research, the Gale Group Inc Kenneth S, Chan, Rob G, Stuart M & Muller A, 1998, “equity theory and voluntary provision of public goods”, Volume 32, Issue 3, Journal of Economic behaviour and organisation, McMaster University, Canada Lively J, Powell B, Claudia G & Carr L, 2008, “Inequity among inmates: applying equity theory to family”, Volume 25, page 87-115, Emerald Group Publishing Limited Vecchio, Robert, Rodger P & James W Jr., 1989, “equity theory and interpersonal attraction”, Journal of Applied Psychology, American Psychological Association Inc Read More