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Equity and its impact on employee motivation

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Comparison

In the workplace, the concept of equity refers to comparisons employees make between themselves, their co-workers, and also people from other firms, in terms of inputs and outcomes.

Many studies emphasized the importance of equity in the workplace, starting with the Equity Theory fathered by John Stacy Adams in 1963. The essence of this theory is related to the principle of fairness and balance. Regarding the former principle, employees’ motivation is strongly correlated to their perception of equity practiced by their managers and / or immediate supervisors. How many times haven’t we compared our job inputs (e.g. efforts, intelligence, experience) for the organization we work for, and also our outcomes from the organization (e.g. pay, rewards, and satisfying supervision)?

When it comes to the latter principle, that of balance, employees also compare their job inputs and outcomes with the comparable (or not) co-workers’ job inputs and outcomes – Adams calls them reference person or group. An important aspect to outline here is that equity does not depend solely on our input to output ratio, but always comes along with comparing our ratio to the ratio of other colleagues. To be noted that it is more about the ratio, and not the amount of efforts or rewards in itself.

This explains why some employees compare their situation with that of their colleagues who work in totally different departments; or why full-time employees compare their situation with employees who work part-time even though they earn less. However, it is the ratio of reward to effort which matters. If a part-time employee is perceived to enjoy a fairer reward to effort ratio, then this will have a direct effect on the full-time employee’s perception of equity, motivation and will lead to distress.

Consequences of inequity

  • According to Adams’ theory, inequity will eventually lead to dissatisfaction, either in the form of anger (when the employee is under-rewarded), or guilt (when the employee is over-rewarded). If the employee finds himself in the first situation, he or she might reduce efforts or will start to complain. Higher levels of absenteeism might also occur, alongside tardiness;
  • Perceived inequality can also lead to lower productivity or reduced quality of work;
  • In the face of injustice, an employee may influence in a negative way other co-workers’ inputs and outcomes. For instance, an experienced employee might take advantage of less experienced employees and, instead of helping them learn and perform better, they can alter their whole working experience;
  • Finally, employees perceiving inequity might quit their jobs with hopes for a healthier working environment, where their efforts are better rewarded.

Respecting equity in the workplace is far from being an easy goal to achieve, but all the efforts are worthy. Many worldwide companies invested time and efforts into creating equitable environments, such as the Cornell University, or the Government of Ontario.

What makes it difficult?

An unfair system, where arbitrary reward decisions are made on a regular basis, and employees believe that efforts will result in unfair outcomes. The organizational maturity level and its capability to implement efficient equity programs, transparent, and easy to understand by all employees is also a factor with importance.

The HR maturity level is also influential during the reward decision making process, as it is based on clear evaluation systems that ensure employees are paid accordingly with their contribution. It is necessary to let all employees acknowledge who their referents are within the company and what criteria they based this decision on, as people’s perceptions differ at various perception degrees and some of them might not be able to be objective when evaluating who is the right co-worker to compare themselves with.

What makes it worth?

All of the above mentioned consequences triggered by inequity will be part of the past, and will no longer impact employees’ motivation when carrying out their jobs. Along with other important factors identified over time as being key aspects in ensuring a healthy working environment, equity is a step closer to creating an authentizotic company, as described by Manfred Kets de Vries.

Consequently, it should be easy for all managers and HR professionals to realize that equity and fairness are two of the most vital aspects that ensure the success of a company. If these are not respected, then low levels of employees’ motivation should not be a matter of surprise.

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