John S. Adams developed the idea of equity theory in 1963. In its basic form, the equity theory of motivation implies that each individual is motivated by the concept of “fairness.” If there are unequal levels of input or output, either internally or within an observed group, then adjustments are made to create more fairness and equity to that situation.
This means an individual who feels that their environment is fair will be motivated to be productive. For individuals who feel that their environment is unfair, then they will be de-motivated to be productive.
One of the classic equity theory of motivation examples to look at is how employees are compensated for the same job duties. In the United States, women average about 80 cents on the dollar in salary for every $1 that men make will performing the exact same job tasks. Now in some jobs, the rate of pay is equitable, while in others, women may only make 58 cents for the same $1 a man earns.
Women can rightfully say that, on average, they earn less than men when it comes to their employment as a gender. This might cause some women to say, “A man gets paid much more than I do, but doesn’t get the same amount of work done,” or something like, “I get paid less than a man, but without me, this place would be nothing.”
These statements are a reflection of the internal values of fairness that are being experienced. This reflection then acts as a de-motivation process.
Equity Theory and How It Applies to Referent Groups
What is a referent group? In equity theory, it is a selection of people to whom an individual relates. They will use this group of people that they know to compare themselves to the rest of a general population. If you have a credit examiner who compares themselves to other credit examiners in their office, then the referent group would be the rest of the staff.
Using the equity theory of motivation as a guide, there are four basic groups that people will use for this identification process.
- Inside Self. This group uses an individual’s own experiences within a current organizational group.
- Outside Self. This group uses personal experiences that come from a similar situation that occurred to the individual in the past.
- Inside Others. This group involves other people who have similar ideas, thoughts, interests, or actions within the same organization as the individual.
- Outside Others. This group involves other people who have similar ideas, thoughts, interests, or actions, but occurs outside of the organization where an individual identifies themselves.
When we look at equity theory of motivation examples, money tends to be the most popular comparison point. Money, however, is just one way to measure the ratios of input and output.
Imagine that the credit processor earns the same amount of pay per hour as everyone else in the office. On any given day, they might be able to average the processing of 100 different applications. The person next to them might be able to average 50 applications. The office as a whole might be able to process an average of 75 applications per person.
Using the equity theory of motivation, those employees who process 76 or more applications each day are going to feel like they aren’t getting paid enough compared to those who process 74 applications or less. The person who does the most work will feel that it is unfair that they earn the same amount of money as the person who does the least amount of work.
The highly productive worker will then become de-motivated to continue at their high output levels. On the other hand, the least productive worker will be highly motivated to keep coming to work because they don’t have to work as hard to earn their paycheck. By using the comparative process, the highly productive workers will reduce their output to balance out what their input is telling them to do.
Why Recognizing Equity Theory Is So Important
Equity theory of motivation examples occur in our lives every day. Couples use it to balance out how much house work each person does. Co-workers use it to measure their total value and to determine what levels of output they should achieve. Whenever we identify ourselves with a specific group of people, we compare ourselves to other groups or other individuals within our group because we are seeking balance.
In other words, we’re not trying to keep up with the Jones’. We’re trying to stay equal with them.