John Stacey Adams developed the theory of motivation already in the 1960s. It somewhat resembled the philosophy of Charles Handy and was based on the opinions of Maslow, Herzberg and other corporate psychologists. It stated that small and minuscule factors affect each worker in the company and thus consequently affect all organizational levels.
The theory attempted to explore in great detail the interaction between employees and employers paying attention to another set of factors that affects the individual assessment and perception of the relationship between their work and their employer. Awareness and inter-company influences as well as a sense of what is right and reasonable are the things the equity theory concentrates on.
At the workplace, people strive to find a fair and equal balance of what they put into the job and what they get in return. The equity theory would call these the inputs and the outputs. People form perceptions of what the fair balance between the data and the outputs mean via comparison of their situations with the situations of other people employed in the same and different organizations.
These other people are called the referents who provide each other with the information about the inputs and the outputs in the marketplace. The referents are represented by their coworkers, friends, partners, and competitors. With these external influences, they develop our unique input-output ratio and form unique opinions. Please refer to the description of the inputs and the outputs:
Data are represented by personal efforts, loyalty, hard work, skills, tolerance and working abilities. Other things like staying overtime, personal sacrifice, the trust of coworkers and the boss, adaptability are among inputs, too.
Outputs initially are represented by financial rewards such as salary, bonus, compensation, fringe benefits, and perks. Outputs comprise the intangible factors such as company-wide respect, recognition, verbal and written thanks, and the reputation.
To achieve the highest motivation of the employees, they should feel that the balance between the outputs and the inputs is reached. If people believe that the outputs match the contributions in a fair way, then they would be more than happy to work hard and input at the same level. If they feel that the inputs outweigh the outputs, then they would be disgruntled and dissatisfied with both the job and the employer. The dissatisfaction will be expressed in the following ways.
Some employees would just reduce the effort and application of personal skills efficiently. They would only pretend to be working, yet in reality, would spend their time unproductively. Others might be outwardly disgruntled, demanding to speak, and disruptive to the point of leaving the organization.
Some people would openly object the status quo and demand higher salaries, bonuses, perks or search for alternative jobs.
Practical application of the Equity theory to the workplace requires a proper understanding of the positions in the company.
In our hypothetical organizations, some salespeople make the sales, the marketing and the managerial job and some computer technicians who keep the system running. The first thing to do is to distribute the questionnaires to the employees inquiring about what they like and what they do not like about the organization. The employees should anonymously fill them out and note what they would like to see changed in the team. The top management should read each copy, obtain the general opinion from the workforce and then think of solutions. The best thing would be to run a public meeting where the most pending problems can be discussed. The employees will be informed of the existing corporate resources and corporate abilities to change certain things. Such employee involvement will improve the morale and make them understand that the company cares about them. If possible, the company will develop the solutions to satisfy fully entirely every employee.