Question

Briefly describe the main concept behind "equity theory".

Answer 1

Equity theory was first developed in early 1960s by John Stacy Adams, who was a workplace and behavioral psychologist. Equity theory focuses on determining as to whether the distribution of resources is fair or not to both the partners. Equity is therefore, measured by comparing the contributions and benefits for each person/individual. In other words, equity theory is a concept where people expect or want their outcome to be equivalent or nearly same as to that of the other person, who is contributing the same ratio.

Equity theory is basically concerned with defining and measuring the relational satisfaction of each person/individual. According to Adam, a person tries to maintain a balance between what he gives to the organization against what he receives. In other words, every person tries to bring out a balance between the amount of efforts he puts in with the amount of compensation he receives in return.

This theory is based is on the principle that actions and motivations of every individual are based or are guided by the principle of fairness. And any discrepancy in this fairness will ultimately affect the ratio of contribution of that person/individual.

As per Adam’s, theory when the ratio of output and input one person is similar to that of the other, both of them feels motivated and this is what is called the Perfect Equity. Hence, the core behind the equity theory is the principle of balance or equity. And the main concept behind the Equity theory is the input-output ratio, that is to say the ratio of contribution to reward. This input-output ratio is what makes one person compare himself to the immediate referent person or group. as per this theory, humans derive motivation and job satisfaction by comparing their contribution and reward to that of the other immediate person.

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