PR 662 Lecture Notes - Lecture 82: Equity Theory
23 Oct 2020
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Equity theory: employees weigh what they put into a job situation (input) against what they get from it (outcome), they compare their input-outcome ratio with the input-outcome ratio of relevant others. The idea is that employees compare their ratios of outcomes to inputs of others they see as relevant. When the see the ratios as equal there is a perceived state of equity and no tension arises. However, when they perceive the ratios to be unequal they may experience anger or guilt depending on the result of the equity analysis and then tension can arise. This tension can motivate people to act in a way to bring the situation into a more equitable state. Under-rewarded: produce more lower quality units will produce more. Piece produce less output or poorer output quality. People behave differently when they are over-rewarded than under-rewarded.
