Equity theory

Equity theory

• Individual compare their job inputs and outcomes with those of others and then respond to eliminate any inequities.
• E.g. Suyash :
• Campus placement : 9.8 lakh/pa
• 12 months 10,000/per month increment
• New manager 11 lakh/pa
• Social comparison
• Employee make comparison of their job inputs (i.e. effort, experience, education, competence) and outcome (i.e. salary levels, raises, recognition) relative to those of others.
• We perceive what we get from a job situation (outcome) in relation to what we put into it (inputs)and then
• We compare our outcome-input ratio with the outcome-input ratio of others.
• The referent that an employee selects adds to the complexity of equity theory

• There are four referent comparisons that an employee can use:

• Self-inside: an employee’s experience in a different position inside his or her current organization
• Self-outside: an employee’s experience in situation or position outside his or her current organization.
• Others-inside: other individuals or group of individuals inside the employee’s organization
• Others outside: another individual or group of individuals outside the employee organization
• Employee might compare themselves of friends, neighbors, coworkers or colleagues in other organizations or compare their present job with past jobs.
• Both men-women prefer same-sex comparisons
• Women are typically less paid to than men are.

(Ref: Organization Behavior- S.P.Robbins)