equity theory n.
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EQUITY THEORY PowerPoint Presentation
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  1. EQUITY THEORY • This process theory focuses on workers' perceptions of the fairness of their work outcomes and inputs. Specifically they strive to maintain ratios of their own rewards to contributions which are equal to others' ratios .

  2. EQUITY EQUATIONS • Equity • Outcomes (self) = Outcomes (other) Inputs (self) Inputs (other) • Underpayment Inequity Outcomes (self) Inputs (self) Outcomes (other) Inputs (other) < • Overpayment Inequity Outcomes (other) Inputs (other) Outcomes (self) Inputs (self) >

  3. BALANCING THE SCALES • Workers can change their inputs • Workers can change their outcomes • Workers can try to change others outcomes and inputs • Workers can change their perceptions • Workers can change their reference person • Workers can change jobs

  4. IMPLICATIONS OF EQUITY THEORY • Avoid underpayment • Avoid overpayment • Be sensitive to inequity perceptions • Monitor regularly for creeping inequity • When sacrifices are needed distribute equally from top to bottom

  5. PROCEDURAL JUSTICE • A process theory about motivation that focuses on workers perceptions of the fairness of the procedures used to determine outcomes. It deals with how performance is evaluated and how pay scales are determined and how grievances are handled.

  6. BUILDING PROCEDURAL JUSTICE • Treat workers with respect • Give workers a voice in decisions concerning them • Explain decisions to workers

  7. ETHICAL ISSUES AND PROCEDURES • Conflict of interest • Nepotism • Equal employment opportunity • Intellectual property rights • Whistle blowing

  8. EXPECTANCY THEORY • A process theory that states motivation is determined by the outcomes people expect as a result of their actions on the job. Essentially it holds that people will be motivated when expect that they will be able to achieve what they want from their jobs

  9. EXPECTANCY COMPONENTS • Expectancy — the belief that efforts will influence performance. Ex. If I study hard, I'll be able to answer exam questions. • Instrumentality — Belief that performance leads to a specific outcome. If I answer that questions, I can get an A. • Valence — The value attached to a reward or outcome.

  10. EXPECTANCY EQUATION Effort Expectancy X Perfor- mance MOTIVATION Instrument ality Rewards X Rewards Valence

  11. IMPLICATIONS OF EXPECTANCY THEORY • Clarify expectancies about effort and levels of performance • Help employees attain desired level of performance, be a coach • Clearly link rewards and performance • Know what types of rewards are desired. • Be sensitive to workers perceptions of expectancy

  12. COMPARING THE THEORIES • Need theory -- works well when the focus is one outcomes and you have control over the outcomes • Equity theory -- salient when appraisals are done, increases are given • Expectancy theory -- salient at times of goal setting and performance appraisal, and salary increases, and promotions.

  13. BACKWARDS & FORWARDS • Summing up: How fairness in the work place can motivate to a change in performance when we looked at equity theory. The importance of tying performance to outcomes was the heart of expectancy theory. • Next time we look at some common applications of motivational theory to the workplace: job design, goals setting and pay.