Consistent Qualities In The Equity Theory Commerce Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

A cognitive theory of motivation based on the work of J. Stacey Adams (1963, 1965). Adams proposed his equity theory which stated that, a person evaluates his or her outcomes and inputs by comparing them with those of others. The two important factors in equity theory are inputs and outcomes.

Inputs are defined as those things a person contributes to an exchange in the work place, an employee`s input would be experience, education, efforts, skills and abilities.

Outcomes are those things that result from the exchange such as salary, bonuses, promotions, recognition etc.


Equity Theory consists of following four propositions:

Individuals tried to maximize their outcomes. i-e incentives commissions, bonuses .

Groups can achieve collective goals and rewards by developing equity among themselves

This system can only become effective if all the members of group encourage this system among themselves and employes can only be encouraged to stick to equity if they are aware of its benefits and there must be a system of rewards for those who stick to equity and punishment for those who persuade inequity to keep the system more effective and result oriented.

Groups can maximize collective rewards by developing accepted systems for equitably apportioning rewards and costs among members. Systems of equity will evolve within groups, and members will attempt to induce other members to accept and adhere to these systems. The only way groups can induce members to equitably behave is by making it more profitable to behave equitably than inequitably. Thus, groups will generally reward members who treat others equitably and generally punish (increase the cost for) members who treat others inequitably.

Equity theory explains that employees get de-motivated and become upset in inequitable environment.Inequity has direct relation with employees concerns, employee who get too much rewards feel same distress like the employee who gets very little the distinguishing feature between two feelings is guilty or shame and humiliation for the later case.

When individuals find themselves participating in inequitable relationships, they become distressed. The more inequitable the relationship, the more distress individuals feel. According to equity theory, both the person who gets "too much" and the person who gets "too little" feel distressed. The person who gets too much may feel guilt or shame. The person who gets too little may feel angry or humiliated.

Employes who recognise inequitable relation they try hard to restore equity and remove their agony . greater the realisation of inequity more the employes feels distress and more they try to get rid of inequity by restoring equity because both goes vice versa.

Individuals who perceive that they are in an inequitable relationship attempt to eliminate their distress by restoring equity. The greater the inequity, the more distress people feel and the more they try to restore equity.

It is a perception of an individual of input and outcomes, which may or may not be reality. Inequity will not exists if the person has high inputs and low outputs as long as the others person has the similar ratio. Inequity occurs due to lacking of fairness. The feeling of inequity is creating pressure or tension inside people which therefore motivates them to restore equity by bringing the two ratios back into balance. (Walster, Traupmann and Walster, 1978)

And to restore the inequity employees may:

Change inputs -employees can put more or less effort into the work.

Change outcomes-employees can push for wage increases and other benefits without any corresponding increases in inputs.

Psychologically rationalise inputs or outcomes-rather than actually changing inputs or outcomes, employees change their perception of what they are putting or getting out.

Leave -employees can transfer to another job simply quit the organisation.

Psychologically distort the inputs or outcomes of others-employees may come to believe that others work harder than they do and thus deserves greater rewards.

Change the comparison-an employee may decide that a particular person is no longer appropriate for comparison and selects another, which yields a more favourable outcome.


The expectancy theory of motivation was proposed by Victor Vroom of Yale School of Management in 1964. Vroom mainly focuses on outcomes, not on need. The theory states that

`The intensity of a tendency to perform in a particular manner is dependent on the intensity of an expectation that the performance will be followed by a definite outcome and on the appeal of the outcome to the individual`

The expectancy theory of motivation describes the relationship between the attitudes of the employees, their observation about the achievability of targets and the rewards they expected to receive as a result of their performance. Every individual have certain kind of expectations and set goals, they can be motivated on these goals and expectations. Vroom realised that employee's performance is based on individual factors such as personality, skill knowledge, experience and abilities. The number of thing can add to employee expectancy perception. The level of confidence and skill required for task completion. The support from superiors and sub-coordinators and the desire information required. Vroom expectancy theory based on three beliefs, Valence, Expectancy, instrumentality. Expectancy Theory is also called Valence-Instrumentality-Expectancy Theory or VIE Theory


The value of the perceived outcome (What's in it for me?). It concern with the emotional orientations which people hold with regards to outcome.


It is the belief that if I complete certain actions then I will achieve the outcome. It is the trust that if you performed well the outcome will be desired. Expectancy theory consists on three following relationships.

Effort-performance relationship: What is the probability that the individual's effort be documented in his performance appraisal?

Performance-reward relationship: It is about the point to which the employee believes that by getting a good performance they will get good organizational rewards.

Rewards-personal goals relationship: It is all about the attractiveness of the possible reward to the individual.


It is about the belief that I am able to complete the actions. It is about the individual's capabilities of completing the task or job. It is the faith that better efforts results in better performance

A motivated employee is thus the result of the supposed level of satisfaction, the assurance to achieve and the rewards that the employee hopes to get on achieving the set goals. In other words, valence * expectancy * instrumentality = motivation.

In 1960's, Edwin Locke purposed the Goal-setting theory of motivation. This theory states that

"The goals to be achieved are set at a higher standard than in that case employees are motivated to perform better and put in maximum effort"

To set proper goals and tasks are very important for the growth of company because if employees Have clear understandings of their goals then they put all their efforts in achievement of those goals and their work will be more result oriented.

It is very important for the managers to brief the employees about his expectations from them what he wants and what should be the focus of employees. If employee does not have a clear understanding of what his manager expects from him these thing really affects his performance. Employee can think that he is not performing well and can be de moralised.

. A survey involving over 1000 Australian managers revealed that:

21 percent did not know or were unsure of the goals they were expected to achieve

15 per cent did not know or were unsure of what was expected of them in their jobs

37 per cent had received no specific suggestions on performance improvement

34 per cent received little or no assistance in improving their performance

According to the survey

It is not surprising that Australian managers rated 'lack of objectives' as the major waste of time. This is not true according to the facts goals are strong motivating force they can affect employees performance both ways if employees have clear understanding he/she work according to managers requirements and if their is a lack of communication between manager and employee and he/she is unsure about what outcome is expected from them their energies would be wasted in wrong directions.

Research suggests the following conditions are required for goal setting to be an useful motivator.

Managers should be clear and precise about selecting goals for employees .managers must avoid statements like do your best because these statements are unclear and don't give employees appropriate direction towards their goals.

Employee's participation in the goal setting process is also very important because if employees are involved in goal setting process then they will have clear understanding about their job perspectives and can plan their performance to achieve expected outcomes.

And also they will be much more motivated and satisfied if their participations is involved in goal setting process.

Managers must set challenging goals for employees so that they put more efforts in achieving those goals but managers must not set very aggressive or impossible goals because this can lead to de-motivation and disappointment. Managers should gradually increase the difficulty level so that employee's motivation and eagerness for outcome would be maintained.

Feedback on performance is the key to employees motivation and succefull approach for goals achievement . Managers must always give proper feedback to employees on what they have achieved and motivate employee by telling him that expectations are now higher from him/her.


Goal setting theory depends on 2 factors

Employees self confidence-

Employees self-confidence and faith that he/she can perform according to what is expected from them . Higher the level of self-confidence, greater will be the efforts by the individual when they face challenging tasks.

Employee commitment- 

Goal setting theory assumes that the individual is committed to the goal and will not leave the goal. The employees commitment is dependent on the following factors:

Goals are clear and realistic.

Goals should be set with employee's participation in goal setting process.

Advantages of Goal Setting Theory

Goal setting theory is a technique used to give employees direction towards their goals and direct their energies to what is expected from them.

Goal setting is key to increase motivation among employees but it also depends on proper feedback on employee's performance.

Limitations of Goal Setting Theory

At times, the organizational goals are in conflict with the managerial goals. Goal conflict has a detrimental effect on the performance if it motivates incompatible action drift.

Unrealistic goals could become a reason of employees de-motivation.

It is difficult sometimes to set appropriate goals according to employee's abilities and to what extent he/she is capable off.

To maintain employee's satisfaction and interest is difficult throughout the goal-setting process.


Reinforcement theory of motivation was proposed by BF Skinner and his associates. It states that individual's behaviour is a function of its consequences. It is based on "law of effect", i.e, individual's behaviour with positive consequences tends to be repeated, but individual's behaviour with negative consequences tends not to be repeated.

Reinforcement theory of motivation just focuses on external factors like organisational environment as a motivational factors. Skinner ignored the internal feelings and causes thay affects employees behaviour. This theory focuses on employees actions and descions but not on the root cause of that actions hence skinner just relates effective external environment of organisation as a motivational tool for employees.

This theory is a strong tool for analyzing controlling mechanism for individual's behaviour. However, it does not focus on the causes of individual's behaviour.

The managers use the following methods for controlling the behaviour of the employees:


Positive Reinforcement- positive reinforcement is giving positive feedback when employee performs according with the managers expectations and organisational rules e.g if employees is very punctual and commited to his job praise him/her straight away this will increase employees morale and motivate them to show more commitment and professionalism.

Reawards and incentives are also positive reinforcers if and only these things improves employees behaviour as well.rewards and incentives can be positive reinforcers if they are given regularly to attract employees attentions .understanding and identification of employees needs are also an important factor and can be a positive reinforcement factor.


Negative Reinforcement- This implies rewarding an employee by removing negative / undesirable consequences. Both positive and negative reinforcement can be used for increasing desirable / required behaviour.


Punishment- punishment is also a very important factor fear of punishment restricts employees carelessness and unprofessionalism at other words employees can face worst consequences if they show undesireable behaviour that;s not in line with organisation managers expectations. Removing suspending employees for breaking rules but punishment should reflect employees undesireable behaviour and and managers must keep in their mind that punishment is to correct employees bad behaviour and it must never show any personal anguish.Punishment can be secure by positive reinforcement from other source.


Extinction. extinction implies lowering the prospect of undesired behaviour by removing reward for that kind of behaviour. For instance - if an employee no longer receives praise and admiration for his good work, he may feel that his behaviour is generating no fruitful outcome. Extinction may unintentionally lower desirable behaviour.

Implications of Reinforcement Theory

Reinforcement theory explains in detail how an individual learns behaviour. Managers are the key members of organisation and their action and descions affect the overall environment. Managers should adopt appropriate method of appraising employees e.g giving employees rewards and incentives is a positive reinforcer but they should also explain emolpyees about their mistakes. Managers can implement this theory efficiently if they explain their expectations to employees and must make it clear for the employees what kind of behaviour is expecting from them . employees behaviour reflects their satisfaction interest and commitment to their job so to achieve that desired behaviour managers should follow positive reinforcement .