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Equity Theory Overview

Equity Theory proposes that a person's motivation is based on what he or she considers to be fair
when compared to others (Redmond, 2010). When applied to the workplace, Equity Theory focuses
on an employee's work-compensation relationship or "exchange relationship" as well as that
employee's attempt to minimize any sense of unfairness that might result. Equity Theory deals with
social relationships and fairness/unfairness, it is also known as The Social Comparisons Theory or
Inequity Theory (Gogia, 2010).
Equity Theory of motivation, developed in the early 1960s by J. Stacey Adams, recognized that
motivation can be affected through an individual's perception of fair treatment in social
exchanges. When compared to other people, individuals want to be compensated fairly for their
contributions (the outcomes they experience match their input(s)). A person's beliefs in regards to
what is fair and what is unfair can affect their motivation, attitudes, and behaviors. Equity Theory
helps explain how highly paid union workers can go on strike when no one else seems to
understand why. In the same way, well paid athletes feel they are not fairly compensated compared
to their peers. Equity Theory shows that one's perception is relative to their own reality.
Equity Equations

Negative (Also known as Underpayment)


Positive (Also known as Overpayment)

Key Terms

Input Anything of value that a person brings to a job. (ex. experience,


education, skills, characteristics, motivation etc.) (Redmond, 2010).

Outcome Benefits that a person is awarded from a job. (ex. pay, security,
insurance, promotion/advancement etc.) (Redmond, 2010).
Input/Outcome The ratio of perceived units of input compared to perceived units of
Ratio outcomes (Redmond, 2012).

Comparison Person or standard that an individual's input/outcome ratio is compared


Other to (Redmond, 2010).

Benevolent A giver, more willing to accept less rewards, contribute more inputs
than the outcomes they are receiving (Huseman, et. al.,1987).

Equity Sensitive A person who must have an equity balance or else they will experience
a stressor until they rebalance (Huseman, et. al.,1987).

Entitled A person who feels they are worth the extra compensation, therefore are
more willing to accept overpayment (Huseman, et. al.,1987).

Distributive Outcomes are spread evenly and fairly throughout an organization


Justice (Stecher and Rosse, 2007). Sweeney and McFarlin (1997) found that
this type of justice was more important for men than women.

Procedural Determines if the process of allocating outcomes/rewards is fair by


Justice making the procedures fully transparent (Redmond, 2010). Sweeney
and McFarlin (1997) found this type of justice to be more important
for women than for men.

Underpayment Also known as negative inequity. This occurs when the ratio of one's
Inequity own inputs and outcomes is greater than or less than favorable than the
ratio of a comparison other, creating a sense of unfairness. (Redmond,
2010).

Overpayment Also known as positive inequity. This occurs when the ratio of one's
Inequity own inputs and outcomes is lower than or more favorable than the ratio
of a comparison other, causing a person to feel overcompensated.
(Redmond, 2010).

Equity vs. Expectancy Theory- What is the relationship?


When discussing the equity theory, it is important to distinguish between equity theory of motivation
and expectancy theory, as both thesis are often interlinked. The expectancy theory emphasizes that
people will be motivated when they believe their efforts will lead to the outcome they desire. Both
the expectancy theory and equity theory represent a cognitive approach to motivation and describe
how people will adjust themselves (motivation) when they perceive their efforts may obtain outcomes
that are consistent with their expectations. The assumption is that people calculate costs and
benefits in determining course of action (Stecher & Rosse, 2007). In both instances, we are dealing
with individuals being motivated when they perceive their efforts will lead to the reward they expect;
such as money or recognition.
In both cases, we look at the valence of rewards- if employees do not perceive their efforts will pay
off (effort reward relationship), they will be less inclined to alter their behavior. However, the equity
theory goes on to evaluate the outcome-to-input ratio comparison process and the cognitive and
behavioral mechanisms to restore perceptions of equity (Stecher & Rosse, 2007). It also looks at
ways to reduce inequity by such means as employees changing their inputs to a level that matches
their outcomes and attempting to change their outcomes to a level that matches their inputs. There
is evidence that supports the theory's prediction that people respond to inequity by reducing work
effort to match the outcome (Stecher & Rosse, 2007). Below we will look at how the equity theory
deals with the outcome-to-input ratio.

Equity Theory can be broken down into four basic propositions (Huseman, Hatfield, & Miles,
1987).
1. Individuals develop their perception of fairness by calculating a ratio of their inputs
and outcomes and then comparing this to the ratio of others (Huseman, et. al., 1987). For
example, an individual may not perceive he is being treated fairly when he works 40 hours per
week (input) and receives $500 in pay (output) while his co-worker (comparable other) works 30
hours per week (input) and receives $650 in pay (output).
2. If the comparative ratios are perceived by the individual to be unequal, then inequity
exists (Huseman, et. al., 1987). For example, if someone feels they are putting in more effort
or working harder than a co-worker, yet they earn equal or less compensation, their perceived
ratios will be different and that person will experience underpayment inequity. In contrast,
overpayment inequity tips the scales in the other direction. For example, someone will feel they
are being paid too much considering their work, when compared to the work and compensation
of a co-worker. This can cause feelings of guilt and the ratios used for comparison are based
upon the perception of an individual, and not an objective measure of inputs and
outcomes. The choice of a comparison other is subjective selection of the individual.
3. As the difference in inequity increases, the tension and distress felt by an individual
will increase (Huseman, et. al., 1987). Smaller differences of inequity are more tolerable than
significant differences of inequity. Not every person will experience equity or inequity in the
same way because people have varying tolerance levels or sensitivity to perceived situations of
inequity. Three types of individuals have been identified along an equity sensitivity spectrum:
benevolents, equity sensitives, and entitleds. Benevolents are more tolerant of under-reward,
comfortable with giving more and getting less. Equity sensitives follow the norm of equity
theory and prefer their ratios to be equal to their comparison other. Entitleds prefer to be in
over-reward situations and are comfortable when they ration exceeds their comparison other
(Huseman, et. al., 1987). Entitleds frequently have the attitude that the world owes them a
favor, so they will freely accept and seek over-reward situations.
4. The greater tension an individual feels due to perceived inequity, the harder they will
work to decrease their tension and increase perceived levels of equity (Huseman, et. al.,
1987). Most individuals will attempt to achieve equity by adjusting their own inputs and
outcomes, or attempting to change the inputs or outcomes of the comparison other. Individuals
can use behavioral processes or cognitive processes in order to attempt to restore equity.
Examples include decreasing productivity at work, finding a new job, asking for a wage
increase, changing the comparative other, or attempting to distort or justify changes in their
perceptions of inputs and/or outcomes (Adams, 1963). The means of reducing inequity will
vary depending on the situation and will not all be equally satisfying to an individual (Adams,
1963). Keep in mind that there are many mechanisms that can be chosen to reduce
perceptions of inequity, Adams equity theory does not predict which one an individual will use,
but Adams does believe the chosen behavior will be the one that utilizes maximum utility
(Stecher & Rosse, 2007).

Ways to Reduce Inequity


When an individual experiences tension due to perceived inequity they will work to reduce that
tension (Adams, 1963). The greater the tension they experience, the more effort they will put into
reducing it (Adams, 1963). There are two main processes an individual can use to restore equity:
behavioral processes and cognitive processes.

Employee Behavioral Processes to Restore Equity


Behavioral processes involve changing an individuals input or outcomes. These behaviors can be
positive, such as being more productive at work, or negative, such as decreased productivity at
work. Behavioral ways to reduce inequity are dependent on whether the individual perceives the
inequity as under-reward or over-reward. If they feel under-rewarded, they will decrease their inputs.
If they feel over-rewarded, they will increase their inputs. Another cognitive process alternative would
be to choose a different comparative other. The elementary principal could select other elementary
school principals in the same district. This might provide a more equitable comparison, which
decreases the principals perception of inequity and under-reward. For example, an employee who
feels underpaid at work compared to his co-workers (under-reward) might start taking longer breaks
which decreases productivity (reduced input). By decreasing inputs, the perception of equity is
restored. Conversely, an employee who feels overpaid compared to co-workers (over-reward) might
choose to start working through the lunch hour (increased input). In both of these examples, the
employee was dissatisfied with their perceived inequity and reduced or increased their input to
achieve equity. Types of behavioral outcomes are also determined by the employees perception of
under-reward or over-reward. If an employee doesnt receive their annual holiday bonus as expected
(under-reward) they might steal office supplies for their home to compensate (increased outcome).
Even though the employee might ethically disagree with stealing, the employee justifies the action
based upon the need to restore equity. Theft has been found as a retaliation tactic to unfairness in
the workplace (Hollinger & Clark, 1983). An employee can also take more ethical action to increase
inputs, such as lobbying for a wage increase or extra time off. On the other hand, an employee that
perceives inequity due to a large holiday bonus (over-reward) might donate toys to the company
daycare center (reduced outcome). This restores the perception of equity in the
workplace. Behavioral approaches can also cause an individual to attempt to change the input or
outcome of their comparative other. A group of employees might perceive that a co-worker is over-
rewarded, so they might pressure their co-worker to work faster or improve quality. Conversely, an
employee or group of employees might pressure a co-worker to slow down or work less. An
individuals power to change the inputs or outcomes of their comparative other might be limited, so
working to change their own inputs or outcomes is usually attempted first.
1. Changing their input to match outcomes such as leaving early or slacking off (Raja, 2009)
2. Change outcomes to match inputs such as asking for a pay increase or stealing (Raja, 2009)
3. Persuading others to change inputs such as complaining to superiors (Raja, 2009)
4. Withdrawal such as tardiness or turnover (Raja, 2009)
Employee Cognitive Processes to Restore Equity
Cognitive processes involve developing justifications for the inequity to make it seem equitable,
distorting perceptions of inputs and outcomes, changing the comparative other, or any other method
that attempts to re-frame the perception of the situation. In some ways, cognitive processes can
require less effort than behavioral processes; however, they can also be more difficult to accomplish
due to the necessity of distorting ones own perceptions.
For example, a principal at an elementary school may perceive inequity because the high school
principal earns more income and benefits even though they work in the same school district and
have the same occupation. The principal could choose to engage cognitive processes to restore
equity instead of behavioral processes. The principal could justify that the high school principal has
more credentials or manages a larger number of teachers. In this way, no actual change of inputs or
outcomes occur but the elementary school principal justified changes in the perception of inputs.
Another cognitive process alternative would be to choose a different comparative other. The
elementary principal could select other elementary school principals in the same district. This might
provide a more equitable comparison, which decreases the principals perception of inequity and
under-reward.
1. Distort one's own inputs or outcomes (e.g., "I'm not really working that hard," "I have a lot of free
time") (Raja, 2009).
2. Distort the inputs or outcomes of others (e.g., he/she gets more money than me but they have to live
in Buffalo) (Raja, 2009).
3. Change the comparison others (Raja, 2009). The longer a person has had their comparison other
the harder it is to change
4.
Here is a step by step video to further illuminate these concepts (Alanis Business Academy, 2012):

It is important to note that behavioral options in reducing inequity could involve risks. Many times
employees find themselves avoiding these options because pursuing one of them and failing could
be detrimental to the level of future rewards. As a result, the individual may end up feeling worse
than before. Often employees decide to restore equity through mental processes instead
(cognitively). Altering your thought process is not perceived as the easier option; but it produces a
minimal risk factor in comparison to changing your behavior (Redmond 2013).

Employer Processes to Restore Equity


Employers need to remember that employees can value different outcomes. For example, younger
employees tend to value more pay (Miles, et. al., 1994). If an employee receives a higher salary
than their co-worker they could still develop a perception of inequity if that co-worker has a flexible
schedule, and that type of schedule is more valuable to them than extra salary. To combat this
problem employers can implement two strategies. First, they could continually request feedback
from employees to determine what they value and how they would prefer to be compensated. A
second strategy is to offer a choice in benefits. For example, one employee might want to use a
health flexible spending account while another employee might prefer to have a dependent care
flexible spending account. Employers can offer choices on health or dental insurance as well as
other choices among benefits. This type of plan, called a cafeteria style, allows employees to select
outcomes that they value most. This can help prevent perceptions of inequity because each
employee has the outcomes that they value the highest. This helps increase their ratio of inputs to
outcomes when compared to their co-workers. Employers can also utilize intangible rewards such
as a pat on the back, a luncheon, or even simple praise in front of coworkers. These simple
intangible rewards can help balance a measure of inputs and outcomes.
Utilizing equity theory to understand how employees measure their inputs and outcomes can also
help employers prevent problems related to perceptions of inequity, such as reduced productivity,
theft or employee turn-over. In addition to reducing or preventing negative behavior, employers will
increase satisfaction and motivation in employees.
The founder of equity theory, J. Stacy Adams, admitted that cognitive methods to reduce inequity
had not proven to be extremely effective. However, Adams suggests that an individual attempt to
alter the importance and relevance of his outcomes and inputs. As an example he writes, if
Person perceived that the discrepancy between his and Others outcome-input ratios were
principally a result of his outcomes being too low, he might become aware of one or more outcomes
he had not recognized as being relevant before, (Adams, 1965, pp 291). In other words, one can
choose to focus on other positive outcomes that is delivered by your inputs that the Other may not
have access to. Another method of cognitively reducing inequity is called task enhancement. Task
enhancement occurs when a person distorts their evaluation of the task at hand. One may choose to
alter his perception of a mundane task to something that is interesting and valuable.
Both cognitive processes and behavioral processes can be effective in reducing ones perception of
inequity. An individual will most likely use a process that is relatively easy and the most satisfying in
restoring a perception of equity.

Theories That Assist Equity Theory


As the main focus of the researchers moved towards employees and their motivation factors,
following the Hawthorne Study results, there were many theories put forward to understand
employee motivation. The following are the five major theories that have helped in understanding
motivation.
Maslow's Need-Hierarchy Theory: Maslow put forward five levels of needs of employees.
These needs include physiological, safety, ego, and self-actualizing. Maslow put forward an
argument that said the lower level needs of employees need to be satisfied before the next
higher level need is fulfilled to motivate them. The motivation was categorized into factors by
Herzberg; motivators and hygiene. The motivators including intrinsic factors like achievement
and recognition help produce job satisfaction. The hygiene or extrinsic factors like pay and job
security lead to job dissatisfaction.
Vroom's Theory: This theory was based on the belief that employee effort leads to
performance and performance leads to rewards. These rewards can be positive or negative.
The positive rewards lead to a more positive employee who is highly motivated. The negative
rewards lead to obviously a less motivated employee.
Skinner's Theory: This theory states that the positive outcomes will be repeated and behavior
that lead to negative outcome won't be repeated. Thus, managers should try to reinforce the
employee behavior, such that it leads to positive outcomes. Negative reinforcement by
managers will lead to negative outcomes.
Adams Equity Theory Model: This theory shows that employees strive to achieve equity
between themselves and their coworkers. This equity can be achieved when the ratio of
employee outcomes over inputs is equal to other employee outcomes over inputs (Baxamusa,
2012).

Equity Theory Components


Adams equity theory is based on a ratio consisting of inputs to outcomes. Inputs consist of
contributions by an individual. An attribute is only considered an input if it is perceived as relevant
by the individual. Inputs can include abilities, effort, performance, age, seniority, education, and
other attributes. Outcomes are the rewards an individual receives for their inputs. Outcomes can
include pay, benefits, status symbols, and even intrinsic rewards. The value of an outcome is
determined by the recipient (Adams, 1963), so no outcome has a specific objective measure. For
example, an individual might rate their college degree as a more valuable input than the college
degree of another person due to their perception on a college's prestige. An individual makes more
money than a co-worker, but has a less flexible schedule; they might value the flexible schedule
more than their extra income. An individual calculates their subjective value of inputs and outcomes
then compares it to others ratios in order to determine if it is equitable.
Equity Theory can be applied in almost any exchange situation, so there are a multitude of
components that can be listed as inputs or outcomes. There also can be significant difficulty in
determining these exact components due to their subjective nature (Siegel, Schraeder, & Morrison,
2007). Siegel, et al. found that there might be patterns to how individuals cognitively frame inputs
and outcomes. For example, employees tend to distinguish inputs based on whether they are
controllable or uncontrollable. Such as communications or attendance within controllable inputs, and
seniority or job training within non-controllable inputs (Siegel, et. al., 2007). Employees also
distinguish differing characteristics of outcomes (Siegel, et. al., 2007). Outcomes are evaluated on
whether they are economic or noneconomic and whether they are personalized or generalized
outcomes (Siegel, et. al., 2007).
If managers can help prevent perceptions of inequality they can help prevent their employees from
becoming de-motivated. Swinton (2006) developed a list of ways an employee can express
motivation. This list is produced below.

Typical Inputs Typical Outputs

Effort Financial rewards (salary, benefits, perks, etc.)


Loyalty Intangibles that typically include:
Hard Work Esteem
Commitment Recognition
Skill Reputation
Ability Responsibility
Adaptability Sense of Achievement
Flexibility Praise
Tolerance Thanks
Determination Sense of Advancement/Growth
Enthusiasm Job Security
Trust in superiors Peer respect
Support of colleagues Self respect
Personal sacrifice Well-being
Time Stronger relationships
Honesty
Devotion
Organization

Equity Sensitivity
Individuals are happier and experience less tension when they are equitably rewarded, as opposed
to experiencing under-reward or over-reward (Austin & Walster, 1974). Equity Theory is based on
the norm of equity which assumes that everyone is equally sensitive to equity and inequity
(Huseman, et. al., 1987). This means that everyone experiences the same level of tension when
they experience the same level of inequity however, this isnt always true. Research has found that
other norms may exist which are dependent upon factors such as age or personality (Huseman, et.
al., 1987).
The Equity Sensitivity Construct describes a spectrum of varying sensitivities to equity and inequity
(Huseman, et. al., 1987). The idea of equity sensitivity determines the extent to which an individual
will tolerate inequity. Equity sensitives will experience distress when faced with either type of
inequity: under-reward or over-reward. Benevolents will experience distress and possibly guilt when
they are in a situation of over-reward. Because benevolents dont necessarily seek out under-
reward, they might not experience distress when in an equitable relationship. Entitleds experience
distress when in an equitable or under-reward situation.
The Equity Sensitivity Construct is useful to understanding equity theory and individual behavior.
However, the three categories of equity sensitivity do not account for all individual differences in
preferences and behavior. Individuals might show different equity sensitivities in different contexts
(Huseman, et. al., 1987). For example, an individual might be equity sensitive in their personal
relationships, preferring an equitable balance or they might be an entitled at work and feel
comfortable with over-reward.
In addition to preferring different outcome ratios, equity sensitivity groups also differ in their
preference for types of outcomes (Miles, Hatfield, & Huseman, 1994). Specifically, there are
differences in preference for extrinsic tangible outcomes versus intrinsic outcomes (Miles, et. al.,
1994). A specific example of this is in the realm of pay: entitleds rate pay higher in importance than
the other two equity sensitivity groups (Miles, et. al., 1994). Conversely, benevolents rate extrinsic
outcomes lower in preference and show a stronger preference for intrinsic outcomes (Miles, et. al.,
1994). It is possible that some of these differences can be attributed to other factors such as age.
Younger workers and older workers value different things and the meaning of work varies by age
(Smith, 2000). With this is mind, it is possible that age, or other external factors, might play a part in
which equity sensitivity group an individual is likely to be in.

Where does Perceived Inequity Come From?


According to equity theory, perceived inequity comes from social comparisons (Adams, 1965). A
person to whom we compare ourselves to is called the Comparison Other.
Comparison Other
There are several factors that an employee can use in determining the "comparison other." The
determination could be based on gender, length of service at their current position, job experience or
education level. The comparisons are:
Self-inside their experience versus someone else in their present company
Self-outside their experience they had in another organization
Other-inside another co-worker's experience inside their present company
Other-outside an individual's experience in another organization
For example, a newly hired employee would choose "self-outside" since they would not have
adequate experiences to compare in their current place of employment, whereas someone with a
longer length of service would choose "self-inside".
Equity Theory states that people strive hard to achieve and maintain a state of equity or fairness in
order to maintain internal, psychological balance (Adams, 1965). However, when ratios are
different, a state of inequity exists, and employees will be motivated to bring it back into
balance. With both types of inequity, under and overpayment, the amount of inequity a person feels
is proportional to the size of the difference between this person's ratio and their comparison other.

Examples of Inequity
Underpayment Inequity: Negative Inequity
Sarah was hired at Corporation X to work in their Human Resources department after she graduated
with a bachelors degree in Human Resources Management. As of current, Sarah has been with
Corporation X for 3 years and is in line to move into a management position within the next six
months. About three months ago, Corporation X hired another team member in the HR department
to assist Sarah in her daily duties as they were getting too much for one person. The new team
member, Alison graduated the same year as Sarah with a bachelors degree in Communications and
doesnt have any experience in HR relations. One day at lunch Alison reveals her salary to Sarah
and tells her that she is surprised a company would pay her that salary with no experience in HR.
Sarah realizes that she doesnt make quite as much as Alison. She is immediately leaded to feeling
under-compensated considering she does most of the work and Alison just helps. Sarah realizes
that she needs to make Alison accountable for more projects so her inputs match her outputs.

Overpayment Inequity: Positive Inequity


Sarah was hired at Corporation X to work in their Human Resources department after she graduated
with a bachelors degree in Human Resources Management. As of current, Sarah has been with
Corporation X for 3 years and is in line to move into a management position within the next six
months. About three months ago, Corporation X hired another team member in the HR department
to assist Sarah in her daily duties as they were getting too much for one person. The new team
member, Alison, graduated the same year as Sarah with a bachelors degree in Human Resources
Management and until recently worked for another company in their HR department. One day at
lunch Alison reveals her salary to Sarah and tells her that she is surprised a company would pay her
that salary starting out in their HR department even though she has experience elsewhere. Sarah
realizes that she makes a few more dollars than Alison. She is immediately lead to feeling
overcompensated considering she does most of the same work Alison does and gets paid
more. Sarah realizes that she needs to be accountable for a few more things than Alison so her
inputs match her outputs.
Research on Equity Theory
In the four decades since John Stacey Adams pioneered the Equity Theory of motivation, an
extensive amount of research has been conducted testing the validity of this theory. Equity Theory
has been used to test several types of dyadic relationships like marriages, teacher/student and
employee/employer relationships. The research has tested parts of the theory including the effects
of over and under payment equity, equity sensitivity, and the behavioral and cognitive methods of
reducing the dissonance caused by feelings of inequity. Within the work setting Equity Theory has
been researched in several important areas. Outlined below, research related to determine the
effects of perceived equities or inequities on the level of worker motivation or satisfaction will be
discussed. Each of these research studies focused on key pieces of Equity Theory in practice: work
output when inequities are present, sensitivity to equity or inequity, and work outputs as measured
against ones peers.
1967: Effects of Inequity on Work Output and Quality by Underpayment
A study published in 1967, Effects of Inequity Produced by Underpayment on Work Output, Work
Quality, and Attitudes Towards the Work, by Lawler & O'Gara found that equity theory was indeed
supported in that those who received less pay than their peers doing the same job (the comparative
other) found ways to "increase their outcomes while decreasing their inputs" (p. 408). Lawler and
O'Gara (1967) conducted their research via an experiment. Forty Yale University undergraduate
students were hired to conduct interviews and were paid on a piece-rate basis. The lower paid
group received $.05 per interview and the higher paid group, which was more in line with competitive
wages during the time, was paid $.25 per interview. The workers were given two hours to complete
as many interviews as possible.
The researchers hypothesized that the workers who were in the underpaid group would produce
more survey results (in hopes of increasing their outcomes - making more money), but that the
surveys they produced would be of a lower quality than the higher paid group. Further, Lawler and
O'Gara (1967) believed that the underpaid group would be less satisfied with their scope of
work. The level of equity or inequity and the level of job satisfaction that was felt by both groups
were measured after the work assignment using The California Personality Inventory scores for Job
Performance and Job Attitudes.
The study results proved that Equity Theory was applicable in the work environment. The underpaid
group experienced feelings of inequity using the higher paid group members as their comparative
others. Further, the hypothesis that the underpaid worker would produce more work output via
conducting more interviews was indeed correct. Lawler and O'Gara (1967) determined that this
group was increasing their personal outcomes to earn more money by working harder to make up for
the piece-rate inequity. Additionally, the researchers proved their position that the work of the
underpaid group would be of poorer quality than the group who experienced fewer feelings of
inequity (the higher paid group). The interview results of the lower paid group had fewer recorded
results; thus, their inputs were also reduced in response to perceived inequities. The lower paid
group was found to have perceived the work as "relatively unimportant, simple and unchallenging"
(Lawler & O'Gara, 1967, p. 408) as opposed to the more equitably compensated group.

1988: Equity and Workplace Status: A Field Experiment


Greenberg (1988) stated that, "according to equity theory, workers who receive levels of reward
higher or lower than coworkers who made equivalent contributions to their jobs are considered
overpaid and underpaid respectively" (p. 606). Since research on equity theory had previously
studied pay, Greenberg (1988) wanted to study workplace status as an outcome of equity theory.
The purpose of this study was to assess whether equity theory applied to situations where
employees experienced inconsistencies between their job status and work area (Redmond, 2010).
Greenberg (1988) found a company that was refurbishing their offices and was able to manipulate
variables. The sample group was 198 employees from an insurance company with the independent
variable being office conditions of higher, lower, or equal status. The dependent variables were the
job performance and satisfaction of the employees. The data was collected at six intervals, two
before reassignment, two during, and two after (Redmond, 2010).
Greenberg (1988) hypothesized that employees assigned to offices of higher status would be more
productive than those assigned to offices of equal status employees. Similarly, workers transferred
to offices of lower status were expected to be less productive than those placed in offices of equal-
status workers (Redmond, 2010). Greenberg was correct in his hypothesis and now had results
showing that money was not the only driving factor for equity theory.
Critics of this study point out that this was a short-term study that shows no long-term results.

1990: Employee Theft as a Reaction to Underpayment Inequity: The Hidden Cost of Pay Cuts
In this study, Greenberg (1990) looked at employee theft as a reaction to inequity. A manufacturing
company had lost two large contracts which forced the company to temporarily reduce pay of their
employees in Plants A and B while employees in Plant C did not have to reduce pay. Plant A
workers received a 90-minute meeting to explain these pay cuts while workers of Plant B received
only a 15-minute meeting. Greenberg (1990) hypothesized that Plant B would experience a large
increase in employee theft, Plant A would experience a slight increase, while Plant C's theft rate
would stay the same. Two categories of dependent measures were used, data on employee theft
and self-report measures were reported as well (Greenberg, 1990).
Once again, his theories were correct. Plant B experienced a large increase in theft while Plant A
experienced a smaller increase. Plant C's employee theft remained the same (Greenberg, 1990).
1992: Product quality and pay equity between lower-level employees and top management:
An investigation of distributive justice theory.
Cowherd and Levine (1992) used a sample 102 business units in 41 corporations to examine
whether the size of the pay differential between lower-level employees and top management had
any impact on product quality. Cowherd and Levine suggest that individuals often compare their pay
to that of people higher in the organization structure. If lower-level employees feel inequitably
treated, they may seek to reduce their effort to achieve equity. Quality, in their study, was defined as
customer perceptions of the quality of goods and services. They hypothesized that extra role, or
citizenship behaviors, such as freely offering to help others, following the spirit rather than letter of
rules, and correcting errors that would ordinarily escape notice, would be less likely when pay
differentials between hourly and top managerial employees were large. Their results supported this
hypothesis, suggesting that organizations need to take care that they do not forget the potential
adverse motivational consequences of executive pay for the motivation of other employees.
1993: The Equity Sensitive Construct
Gauging the level of tolerance for inequities is an important field of study in Equity Theory. From an
employer's perspective, it may often be necessary to know which employees will be sensitive to any
level of inequalities derived from work policies or practices. In the study, A Test and Refinement of
the Equity Sensitivity Construct, researchers hoped to test, both in an experimental and field setting,
a "refinement of the equity sensitivity construct" (King, Miles & Day, 1993, p.301). The proposition of
the study was that some individuals are uniquely sensitive to perceptions of equity or inequity and
will, in turn, react accordingly based upon their perceptions. The equity sensitive construct,
according to the researchers, is defined as the investigation of a person's "perception of what is and
what is not equity, and then uses that information to make predictions about reactions to inequity"
(King, et. al., 1993, p.302).
The study classifies people as either "benevolents, equity sensitives, or entitleds" (King, et al., 1993,
p. 302), depending on how sensitive they are to the equity rating. Equity sensitives will follow
Adams model of the Equity Theory, but the benevolents and entitleds will be at opposite ends of the
"equity sensitive spectrum" (King, et. al., 1993, p.302). Thirteen separate hypotheses were
evaluated in this research study.
The researchers first administered tests to the participants to determine their level of equity
sensitivity. The participants were then assigned randomly to either under reward or over reward
conditions. The results showed that all of the researchers' hypotheses were consistent with the
equity sensitivity construct. The researchers did find that the "manipulations of outcomes was a
stronger cause of dissatisfaction than was manipulation of inputs" (King, et. al., 1993, p. 310),
essentially indicating that the participants were more sensitive to inequities when they didn't feel they
were rewarded as much as their peers. The researchers confirmed that there is "strong support for
the equity sensitivity construct and its incorporation into equity theory to enhance its predictive
power" (King, et. al., 1993, p. 310). The results of this research further help make Equity Theory
germane to the workplace, allowing employers to make initial assumptions about how employees
may react to potential or perceived inequities, based upon their employees' beliefs and personal
norms.

2000: Effort-Reward Imbalance and Burnout Among Nurses


"Burnout is defined as a psychological syndrome of emotional exhaustion, depersonalization, and
reduced personal accomplishment that occurs among individuals who work with other people"
(Bakker, Killmer, Johannes & Schaufeli, 2000). Nurses work in a field where much of their motivation
and reward comes from the act and feelings they get from helping others in very desperate
times. They also are considered to work in one of the most stressful job fields/environments due to
the constant requirement to manage and help people in a stressful time in their lives. In the context
of Equity Theory, the desire for reciprocity between their interpersonal relationships is challenged
here, and as a response to the feeling of inequity nurses often respond to their patients in a more
depersonalized manner (Bakker, Killmer, Johannes & Schaufeli, 2000).
A study performed based on the effort-reward imbalance model, which is based on the reciprocity of
costs and gains, demonstrated that the feeling of inequity or lack of equal reciprocity had a positive
correlation with burnout, particularly with emotional exhaustion and depersonalization (Bakker,
Killmer, Johannes & Schaufeli, 2000). In addition, the nurses who had a higher need for control over
situations experienced a higher degree of this burnout, whereas the nurses who had a higher degree
of intrinsic motivation experienced lower burnout or emotional distress. Practical implications of this
study could be used to restructure how workloads are distributed. Additionally, redesigning training
programs/ to help nurses better prepare in l handling increased job related stress and burnout.

2005: Wage Comparisons with Similar and Dissimilar Others


Wage satisfaction and social comparison relationships has been the subject of several research
studies over the past 30 years. Paul D Sweeney and Dean B. McFarlin of University of Dayton
conducted a study, Wage Comparisons with Similar and Dissimilar Others (2005), in order to
determine if social comparisons can predict an employees satisfaction with their wage. Sweeney
and McFarlin hypothesized based on the Equity Theory that as employees compared their wages to
similar others; their wage satisfaction would vary based on that social comparison. (Sweeney &
McFarlin, 2005)
Four individual survey-based studies were conducted to test the hypothesis that wage satisfaction
would more likely be affected by comparison to similar others in order to determine if their wage was
fair. In the first two studies, subjects were asked to compare satisfaction with others in a similar
occupation within and outside of their current organization. In the third and fourth studies wage
satisfaction was compared with employees who had similar and dissimilar occupations.
Study 1
Two hundred and thirty-five engineers at a Midwest utility company were mailed surveys to collect
salary, age, sex, marital status, tenure, and job grade. The survey also collected data from scale
rated questions pertaining to satisfaction of their pay and their perception of how others are paid with
similar jobs outside the organization. The researchers found that wage is a strong predictor of wage
satisfaction but comparisons to similar as well as dissimilar others also was an important and equal
predictor (Sweeney & McFarlin, 2005).

Study 2
During this study researchers attempted to replicate their findings from study 1 by using a large
sample of US federal government workers from the Office of Personnel Management. The data was
collected from a random stratified sample of workers where demographic information and scaled
rated questionnaire responses were submitted by participants (Sweeney & McFarlin, 2005). Upon
statistical analysis of the data, the researchers once again found that wage itself was the most
reliable predictor of wage satisfaction but both internal and external comparisons were also highly
important predictors of the variation in wage satisfaction (Sweeney & McFarlin, 2005).
Study 3
During this study the construct of similarity was viewed based on similar and dissimilar occupations.
The data for this study came from Economic incentives, values, and subjective wellbeing research
project of the Survey Research Center of the Institute of Social Research, the University of Michigan
(1975). The survey-based data were collected using a multistage area probability sampling
procedure where each data point came from someone who was at least 18 years old and employed.
Like the first two studies the questions were scale based and represented perceptions about their
wage and their relative satisfaction. As in the first two studies, the highest predictor of wage
satisfaction was based on the income level itself and comparisons with both similar and dissimilar
occupations predicted variability in wage satisfaction (Sweeney & McFarlin, 2005).
Study 4
This study was researched in order to replicate the results of Study 3 and pulled data from the same
University of Michigan research project while using an entirely different sample using the same 18
and older and employed criteria. The results and conclusions were the same as Study 3.
The results of all of the studies were surprising to the researchers. The most important predictor of
wage satisfaction was the level of income and although comparisons to similar others did show a
strong correlation, so did comparisons to dissimilar others. Defining the similarity construct as an
occupation or organizational comparison did not change the strength of income being the strongest
predictor of satisfaction. According to Adams Equity Theory (n.d.), employees would have detected
a discrepancy of their efforts and wage ratios with similar others which would lead to
dissatisfaction. Also, this would explain that our social comparison of the most similar others would
have the greatest impact but in the case of wages there seems to be the other primary factor of
income level and what that means to an employee that determines level of satisfaction.

2006: Work Motivation on an Assembly Line


During 2006, another research study applying Equity Theory in the workplace was conducted by
professors from Cornell's School of Management, Eastern Michigan University's College of
Business, and Penn State University's Department of Industrial and Manufacturing Engineering. The
cross-functional research offered a unique perspective toward best practices in "modeling and
understanding [assembly] line design" (Schultz, Schoenherr & Nembhard, 2006) in the work
entitled, Equity Theory Effects on Worker Motivation and Speed on an Assembly Line. The study
was completed on the basis that equity theory indicates that workers react to and modify their work
behavior based upon the speed or rate of the work of the people around them. The hypothesis
under evaluation was: "In additive interdependent work situations, workers will adjust their speed
toward the speed of their coworkers, creating a correlation among processing times" (Schultz, et. al.,
2006, p.9).
Data was examined for three production lines of a major automobile manufacturer. One hundred
forty-eight workers' task times for a period of six months' work was recorded and reviewed. The
results found that, on average, a person will adjust his or her "time by 41% of how much faster, or
slower, their nominal time is in relation to the coworkers" (Schultz, et. al., 2006, p. 15). The
researchers believed that the positive correlations found between the speed of a worker and the
speed of his or her co-worker were consistent with Equity Theory, as workers desired to decrease
gaps between their work pace (inputs) and the work pace of their co-workers. The study results
were purported as important in design of assembly lines such that workstations should be arranged
as to take advantage of this equity theory effect by allowing workers only to be able to see the
employees who are the fastest in the plant.
Both classical and contemporary research supports the validity of Equity Theory and its application
in the work setting. While Equity Theory is supported as fact when reviewing the actions and
behaviors of those who feel they are subject to inequities, additional research into how Equity
Theory can be used proactively to increase the motivation and behavior of workers is necessary.
2009: Dishonesty in the Name of Equity
In 2009, Gino and Pierce conducted a research study in order to determine when it is that people act
dishonestly to either help or hurt others. They had two experiments. The first was to analyze the
effects of emotional reactions to inequity. The second was to analyze how far individuals would go
to help one another.
The participants in this study were mostly students from Carnegie Mellon University. They were
divided into groups and either did or did not receive money. They then had to grade problems
completed by the individual with whom they were paired. If the solver got the problem right, he
would get money. They tried to determine if individuals would be dishonest in reporting whether or
not the solver actually completed the problem correctly. They found that individuals did help when
there is equity (having money or not). They also found that having negative inequity causes them to
have a much stronger influence on reporting the performance of the solvers (Gino & Pierce, 2009).
This study found that individuals are more likely to engage in dishonest behavior when they have
inequity of wealth (Gino & Pierce, 2009). The implications of this study suggest that managers
should try to keep equity between employees, because when inequity occurs, dishonesty will also
occur.

2013: The mediating effect of supervisor conflict on procedural injusticejob strain relations:
The function of power distance.
Very recently, researchers Liu, Yang, and Nauta (2013) conducted a study that broadens most
research on the relationships between supervisor conflict, procedural injustice and job strain. Their
study presents a more complex model of how perceived injustice influences employees' job strains
than is currently available in the literature. According to the process model of conflict, (Liu et. al.,
2013) conflict typically starts when one person perceives that another has negatively affected, or is
about to negatively affect, something the first person cares about. This is often seen in the
workplace and is common in the relationships held between a supervisor and an employee. The
result is a strain in the equity shared between the two. Based on previous research on the Equity
Theory, when employees perceive a lack of fairness at work, they react negatively toward the source
of unfairness. Thus, because employees usually attribute procedural injustice to supervisors, Liu,
Yang and Nauta's (2013) first goal was to investigate procedural injustice as a possible predictor of
supervisor conflict, not just a cause.
Procedural injustice, as portrayed in this study, refers to perceived unfairness with respect to the
procedures used to determine outcome distributions (Liu et. al., 2013). . To further examine
procedural injustice as a predictor of conflict in a work setting, 301 university employees were
randomly selected and mailed survey packets including an extra survey they were to give to a co-
worker to fill out. The questions on these packets centered around supervisor conflict, procedural
injustice, power distance, anxiety and depression. Once these surveys were mailed back, the data
were analyzed. In the results of this study, it was found that procedural injustice could in fact be
identified as a possible predictor for supervisor conflict. Based on employeecoworker dyad data,
Liu and her colleagues (2013) found that perceived procedural injustice was positively related to
reported conflict with supervisors. Second, power distance moderated procedural injustice in relation
to supervisor conflict, as reported by both employees and their coworkers. Finally, supervisor conflict
(self-reported) mediated the relations between procedural injustice and job strains (i.e., anxiety and
depression) for employees with low to moderate power distance orientations but not for employees
with high power distance orientation (Liu et. al, 2013).
This study adds literature to current research relative to problems in a work setting. Relationships
held between supervisors and employees must have equity in order to succeed and maintain
perceived justice. This study opens up many opportunities to conduct further research on conflict in
the workplace, as well as ways interventions can be implemented in a work setting guided by the
Equity Theory.

The Future of Equity Research


Most of the research into Equity Theory thus far has been experimental in nature and concerned
with interpersonal relationships. While this is important, especially to social psychologists, new
insights can be gained by looking on a larger level. By looking at Equity Theory on a broader scale,
a more complete theory can evolve. Instead of focusing on just person to person and person to
organization aspects, the opportunity exists to refocus on a larger scale such as how companies as
a whole function in a corporate world. The people who run the companies and make the decisions
run their numbers against how their competitors are doing. Their competitors can serve as
comparison others. How does the company as a whole deal with their comparison other? To
resolve what is essentially an underpayment inequity, if the company is not doing well, the same
rules can apply and the company can work harder and look internally to see how they can resolve
the inequity. Another avenue for future research would be a cultural analysis. Equity Theory has
been said to be primarily rooted in Western values, however Equity Theory is suggested to be
culturally bound (Kilbourne & Kelly, 1994). The opportunity is there to see what cultures are more
compatible with equity theory and which, like Eastern cultures, stress equality instead. Finding out
what cultures are compatible with the theory and which are not could give us insight into better ways
for us to operate and why what these cultures emphasize instead works for them.
Staff members that work with the disabled are often plagued with feelings of being under-benefited
(Disley, 2009). Future research calls for an investigation into the equity perceptions of the staff to
determine the relevant rewards and inputs, as well as who their comparison others are. Is the staff
aware of the impact their perceptions have on their peace of mind as well as how they perform at
work? How much does the inequity they feel at work impact how they perform at work and does it
affect the disabled that they are there to help? We can all agree that slacking off due to
underpayment inequity becomes more serious when your job involves another person who is
dependent on you.

Strengths and Weaknesses of Equity Theory


Equity Theory is a good resource for organizations to consider when it comes to understanding
social comparison amongst employees. However, as with any theory, there are strengths and
weaknesses in terms of both practice and research. Thus, in order to understand the use and
applicableness of the Equity Theory as an explanation and/or as a motivator in the workplace it is
vital that these strengths and weaknesses be reviewed and evaluated.

Strengths
The following factors add to the strength and validity of Equity Theory.

Research Efficiency, effectiveness, For example:


and applicableness of
1. 1967- Effects of Inequity Produced
theory components
by Underpayment on Work Output, Work Quality,
supported by several
and Attitudes Towards the Work, by Lawler &
research studies over the
O'Gara
years
2. 1993- A Test of Refinement of the Equity
Sensitivity Construct
3. 2006- Equity Theory Effects on Worker
Motivation and Speed on the Assembly Line
4. The effects of underpayment inequity in
organizations are strongly supported (Pinder, 2008)

Theory Accurately predicts For example: As in underpayment conditions, which


behavior is observed and proven through the research of the
Greenburg Studies in 1990

Theory Makes practical sense For example: Reasonable to assume that most people
do compare "their inputs and outcomes relative to
others" (Redmond, 2009)

Theory Ability to fit with other Stetcher and Rosse (2007) state that "based on the
theories (particularly the assumption that people are capable of calculating
expectancy theory) costs and benefits in choosing among alternative
courses of action" (p. 778). For example, employees
can use the equity theory to determine if inequity has
occurred, and if so, they can use the expectancy
theory to act upon the inequity.

Weaknesses
The following factors illustrate some of the problems with Equity Theory.

Theory Lacks detail into certain For example: Offers a variety of strategies for
factors restoring equity but does not predict in detail
which option an individual will select
(Redmond, 2009)

Research Mixed empirical support For example: Research on overpayment


inequity reveals little effect of it in
organizations (Redmond, 2009)

Research Limitations For example: Because many studies were short-


term there is no knowledge of long-term
reactions to inequity (Redmond, 2009)

Theory Little practical value, thus For example: Various factors, which are not
better as an explanation after under administrations, managers, and/or
the fact than as a predictor of organizations control can lead to inequity
behavior (Redmond, 2009) (Redmond, 2009)

Theory Perception errors For example: Human perception can be flawed,


thus exposing any conceived perception of
outcomes and inputs to error as well

Theory The original equity theory, as For example: Research conducted on the equity
posed by Adam's, lacks theory as it pertains to the Eastern cultures
scientific consideration or found that equality, rather than equity, was
explanation for different preferred (Leung and Bond, 1982, 1984; Leung
values or lack thereof of and Park, 1986; Mahler, Greenberg, and
equity itself within cultures Hayashi, 1981, as cited in Fadil et al, 2005)

As illustrated above, the Equity Theory possesses both strengths and weakness, the examination of
which is necessary for the correct use of the theorys application in the workplace. Equity Theory,
with its strong empirical support, can be used in the workplace as a vital tool in reviewing motivation
and understanding employee behaviors. Furthermore, the weaknesses of the theory shed crucial
light upon what it is that needs further research and examination, thus providing us with the
knowledge of the information we ought to seek in order to further understand the structure of
workplace motivation.

Procedural and Distributive Justice


In terms of handling the distribution of rewards, employers should be attuned
to distributive and procedural justice. Distributive justice involves ensuring that outcomes are
fairly distributed in the organization (Stecher and Rosse, 2007). A low level of distributive justice is
associated with increased amounts of organizational counterproductive work behaviors (Kwak,
2006). Procedural justice deals with whether or not the process used to allocate the rewards is fair
(Redmond, 2009). Low levels of procedural justice correlate with increased organizational and
interpersonal counterproductive work behaviors (Kwak, 2006). Increased levels of distributive or
procedural justice can help prevent perceptions of inequity as well as any counterproductive work
behaviors.
While the meaning of procedural justice will vary from organization to organization, there are several
common themes that will help to establish a just process. Ensuring that employees understand the
decision-making process, giving employees a voice in the process, making unbiased decisions, and
being consistent in the application of rules all lend to a procedurally just process. People feel
affirmed if the procedures that are adopted treat them with respect and dignity, making it easier to
accept outcomes they do not like (Deutsch, 2000, p.45). High levels of procedural and distributive
justice wont necessarily prevent employees from having a perception of inequity or unfairness in the
workplace but, can help an employer prevent repercussions from perceptions of inequity. For
example, Skarlicki and Folger (1997) found that employees that are treated with respect are more
likely to tolerate unfair pay. Whether the pay or compensation is actually unfair might be irrelevant.
To the employee a perception of unfair compensation is the same as actual unfair compensation.
So, if an employee has a perception of inequity in their compensation, they might be more willing to
tolerate their perception of unfair pay if they are treated with respect by their employer. Then they
will be less likely to decrease their inputs or engage in counterproductive work behaviors to
compensate for a perception of underpayment inequity. In addition to establishing fair distribution
and procedures in an organization, employers should always treat their employees with respect. This
can help maintain or increase motivation and prevent problems that stem from perceptions of under
reward.

Fairness Heuristic Theory in Equity Theory


While distributive justice is an important aspect of equity theory, there is often very little information
regarding the actual distribution of outcomes. However, fairness in procedures is often quite visible
and is generally widely known. A distinct relationship exists between distributive justice and
procedural justice. This relationship is explained in Kees van den Bos Fairness Heuristic Theory
which states, When people do not have information about outcomes of others they indeed use
procedural fairness as a heuristic substitute to assess how to react to their outcome, (Van den Bos,
2001, pp 68). In other words, when employees are not able to see whether or not resources are
distributed fairly, they instead examine the procedures to determine the fairness of an outcome. The
Fairness Heuristic Theory also explains that in, situations in which information about the
authoritys trustworthiness is missing- people refer to the fairness of the authoritys procedures to
decide how to react to the outcome, (Van den Bos, 2001, pp 73). The most important aspect of
equity theory is how an individual perceives the fairness of the outcomes in relation to input; the
Fairness Heuristic Theory explains the profound effect that procedural justice has on individual
perception of fairness.

Global Application of Equity Theory


While there have been various attempts at breaking down the cultural barriers that have developed
within organizations across the globe, one factor that continues to need research is how cultural
differences influence the equity theory (Fadil, Williams, Limpaphayom, and Smatt, 2005). Although
the equity theory, as posed by Adams , has been recognized by many to be on target, it was not until
the 1980s that it was tested on non-Western cultures. Once research was conducted on the equity
theory and how it pertains to the Eastern culture, results found that equality rather than equity was
preferred (Leung and Bond, 1982, 1984; Leung and Park, 1986; Mahler, Greenberg and Hayashi,
1981 as cited in Fadil et al, 2005).
The Eastern cultural view of the equality rule states that rewards will be given out equally to all those
involved in the groups performance regardless of individual inputs or personal efforts (Fadil, et. al.,
2005). Based on this information it was thought that a more detailed look at how equality fits into
the equity theory model would be very beneficial. This would enable international managers and
global organizations to have a clearer understanding of how the equity theory can be applied across
Western and Eastern cultures as well as regions throughout the world (Fadil, et. al., 2005).

Equity vs. Equality


Under the equality model rewards are equally given out to all participants despite individual inputs.
Therefore, the outcome is preset. This is opposite of the equity theory which states that individual
outcomes or rewards will be in proportion to individual inputs and efforts (Fadil, et. al., 2005).
Researchers found that individuals may be inclined to have varying views on the concepts and
orientation of equity based on their socio-historical period, cultural background, and even individual
personality types (Sampson, 1980 as cited in Fadil, et. al., 2005).
Individualism vs. Collectivism
Individualism (Western) and Collectivism (Eastern) are cultural dimensions that separate the regions
of the world, with the major difference being their cultural view on group membership. Collectivistic
cultures make a clear distinction between their in-groups and out-groups compared to those in the
individualistic cultures. (Hui, Triandis, and Yee, 1991 as cited in Fadil et al, 2005).
The Culturally-Sensitive Equity Model

Inputs Outcomes Choice of a Methods of


Referent Other Reducing Inequity

Individualism Effort, Pay, autonomy, Range of Altering inputs or


education, job status, individuals due outcomes of the
intelligence, fringe benefits to loosely tied individual or the
experience in-groups comparison other

Collectivism Group Harmony, May choose May alter inputs of


membership, acceptance, out-groups as a self; however, due
loyalty, support, social status, group referent, to shame control
respect solidarity, not an they are unlikely
cohesion individual to occur

The Culturally-Sensitive Equity Model serves to show how the equity theory not only applies to the
Western culture, but also Eastern, collectivistic cultures (Fadil, et al., 2005). The model also
encompasses the more collectivistic cultural notion of equality. Lastly this model illustrates how the
inputs and outcomes components of the equity theory can include group-based rewards as well as
the importance of in-groups and outgroups via group membership. The Culturally-Sensitive Equity
Model can be used as a tool for international managers who either have employees, customers, or
suppliers in both the Western and Eastern regions of the world. Through the use of this model, these
managers can gain a global understanding and have a true appreciation for the various inputs and
outcomes that motivate their employees based on orientation and cultural perspectives.

Workplace Considerations
When looking at how the notion of equality fits into the equity theory it is important for organizations
to understand that in some cultures this idea is favored. managers may be more prepared to handle
conflict or issues that arise within their own organizational culture. Conflict between co-workers could
arise if some employees believe in equality, while others follow the equity theory, expecting their
individual contributions to be individually rewarded.
The Culturally-Sensitive equity model can be used as a tool for international managers who either
have employees, customers, or suppliers in both the Western and Eastern regions of the world.
Through the use of this model, these managers can gain a global understanding and have a true
appreciation for the various inputs and outcomes that motivate their employees based on orientation
and cultural perspectives (Fadil et al., 2005).