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Adam’s Equity Theory

Equity theory, most popularly known as equity theory of motivation, was first developed by John Stacey Adams, a workplace. Equity theory is simple and almost instinctual. Adams‘ Equity Theory calls for a fair balance to be struck between an employee’s inputs (hard work, skill level, tolerance, enthusiasm, and so on) and an employee’s outputs (salary, benefits, intangibles such as recognition, and so on).

Adam’s Equity Theory

Understanding How Employee Input and Output Impact the Work Place.

Suppose you are given a job to do. Your expectation would be that whatever you will be paid for performing the task will be commensurate to the time, skill or effort you put to get it done right? If you are paid less than what you expect you are like to feel angry, disappointed, used and demotivated to perform another task for the person who hired you.

Adam’s Equity Theory strives to create a balance between an employee’s input and output in the workplace. The theory developed in 1963 by John Stacey Adams says if an employee finds his/her balance between what they put in and what they get in return for their work it would make them motivated and help develop a more productive relationship with the management. To better understand the equity theory we need to understand what inputs and outputs are.

Inputs basically refer to what an employee gives or brings to the job and typically include effort, loyalty, hard work, commitment, skill set, determination, support of colleagues, adaptability, enthusiasm, personal sacrifice, flexibility, trust in superiors, time, etc.

The output is what the employer gives you for doing a job. This can be tangible or intangible. Tangible could be financial rewards such as the salary you earn, benefits and perks. Intangible are the recognition given, praise, job security, reputation, responsibility, sense of achievement, sense of advancement/growth and so on.

According to this theory, managers should ensure they find a balance between their staffs’ input and the output received. When this is achieved employees will be content. For employees to see that they are being treated in a fair and equitable manner and the output given by their employer is what they deserve they look at their colleague’s input and output to see if they are equally treated.

If they have no colleagues to compare with they judge with employees from other organizations at a similar level to theirs or compare themselves to friends, neighbors, etc. The people the employee compares themselves to are called referents. This can also be family members or themselves from a different job.

They are Three Likely Equity Theory Scenarios.

  • Equity-This is when an employee’s output/input ratio is equal to his referents outcome/input ratio. Here an individual feels fairly treated and motivation to do their best is sustained.
  • Under Rewarded Inequity/negative Inequity-When the outcome/input ratio is less than the person an employee compares themselves to they feel underpaid and are likely to be angry and try to seek justice.
  • Over Reward Inequity/Positive Inequity-A person feels overcompensated when their input/output ratio is greater than that of the person they are comparing themselves to. Equity theory states that such an employee works to produce more and can feel guilty that they are getting more than they give.

One of the key things to note about this theory is that it is largely based on an employee’s perception. And we know individuals tend to over-inflate what they do and undervalue the performance of others.

As already noted if an individual finds or perceives that others are getting more rewards and recognition than them yet they are putting the same job input it would lead to demotivate and reduced productivity.

Adam’s Equity Theory shows that when this happens an employee can be expected to make one of the following choices.

  • Change Their Inputs-The employee may decide not to work as hard on the job. They will begin leaving work early or coming in late to try to get a balance between what they put in and the rewards gotten.
  • Change Their Output– They may try to influence management to give them more pay, demand a corner office or ask for a promotion.
  • Distort Perceptions of Self—They may say the person they are comparing themselves to may deserve more because they have better education, experience or produce more.
  • Distort Perception of Others– The individual may begin to attack the person who they perceive is getting more yet they give the same input. May try to get this person to get more work delegated to them and may point out to colleagues that this person is overpaid yet he/she doesn’t do much.
  • Seeking an Alternative Job- This can happen in situations where they feel they is such a significant imbalance between input and output that it is impossible to correct it.
  • Choose Different Referent.

For management, they can apply the equity theory to ensure employees are motivated by:



    according to their contributions.
  • Inform employees who their pay referents are in the pay system.
  • Strive for consistent evaluation and pay reviews to ensure they match input and output.

The ‘Adam Equity Theory’ is key to assessing motivation at work. So, for well-motivated staff managers should ensure they grasp and implement this theory otherwise they will have a bunch of disgruntled people who feel unappreciated.

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About Sonia Kukreja

I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. I hold a degree in MBA from well known management college in India. After completing my post graduation I thought to start a website where I can share management related concepts with rest of the people.