Equity Theory

A version of discrepancy theory of job satisfaction focusing on the discrepancies between what one has on the job and what one thinks is fair - what one should have
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Equity Theory
Social comparison takes place Perceived discrepancies between ratios may produce tension or dissonance Amount of discrepancy corresponds to the amount of tension the individual experiences Amount of tension corresponds to the amount of energy an individual expends to alleviate the discrepancy

Equity Theory
Inputs - factors considered by the individual that contribute to their work knowledge, skills and abilities Outcomes - factors considered by the individual to have personal value - money, promotion, praise
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Equity Theory
People strive for fairness and justice in social exchanges Cognitive perception of fairness or lack of it affects behavior Inputs education, skills, training, effort, etc. Outputs pay, fringe, security, recognition, etc.

Negative and Positive Inequity

A. An Equitable Situation
Self Other

200

= 200 per hour 1 hour

400

= 200 per hour 2 hours

Negative and Positive Inequity (cont)

B. Negative Inequity
Self Other

200

= 200 per hour 1 hour

300 1 hour

= 300 per hour

Negative and Positive Inequity (cont)

C. Positive Inequity
Self Other

300

= 300 per hour 1 hour

200

= 200 per hour 1 hours

Organizational Justice
Distributive Justice: The perceived fairness
of how resources and rewards are distributed. the process and procedures used to make allocation decisions.

Procedural Justice: The perceived fairness of Interactional Justice:

The perceived fairness of the decision makers behavior in the process of decision making.

Strengths and Weakness

Strengths - predicts behavior in underpayment conditions Weakness - does not predict overpayment conditions - does not account for individual differences impact upon equity
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Conclusion
Pay attention to what employees perceive to be fair and equitable Allow employees to have a voice Employees should have opportunity to appeal Organizational changes, promoting cooperation, etc. can come easier with equitable outcomes Failure to achieve equity could be costly Climate of justice