Equity theory recognizes that individuals are concerned not only with the absolute amount of rewards they receive for their efforts, but also with the relationship of this amount to what their peers receive (Ramlall, 2004). Adams (1963, 1965) posits that individuals are motivated by the perception of inequality, as measured by "input" and "outcome" ratios in comparison to others. Equity theory draws from multiple empirical theories and is utilized to make predictions about how individuals manage their relationships with others (Huseman, et al., 1987). If equity exists, the individual is at peace with the exchange and therefore not moved to action. If the individual perceives that his or her outcome/input ratio is less than that of a referent individual, then inequity exists, and motivation to restore equity arises (Chhokar et al., 2001).
Perception of inequity
Behavioral response (define)
Individuals may respond by choosing a behavioral response by reducing their inputs or increasing their outcomes. On the other hand, subjects may instead use a cognitive response to reduce feelings of inequity such as selecting another person to use as their referent. The subject may choose to exit the situation by deciding to transfer or quit the organization (Allen & White, 2002). Exiting the organization is one of the most commonly explored responses to inequity.
The most commonly studied responses to inequity are behavioral in nature, and include raising or lowering work inputs (Greenberg, 1988), or, in extreme cases, quitting a job (Bing and Burroughs, 2001).
Huseman et al., (1994) notes that empirical research in equity theory has consistently failed to study psychological individual difference variables and has instead centered upon demographic variables. The globalization of the workforce intern creates a need to focus more on the individual differences rather than the demographic variables.
In other studies Mueller and Clarke (1998) note that findings have generally been mixed and despite its appealing parsimony, equity theory has come under increasing criticism, centered primarily on questions of the theory's generalizability and its inability to explain individual differences in perceptions of fairness and reactions to inequality (Huseman et al., 1987; King et al., 1993). This seems to indicate that cultures perceive rewards differently even in similar settings. Some cultures perceive certain rewards as motivational while others perceive the same reward as unfair or inequitable. It is essential to determine the underlying cause of the varying individual responses in certain reward situations. The comprehension of individual motivating factors has limitless value to employers.
Huseman, Hatfield, and Miles (1985, 1987) proposed the construct of equity sensitivity. Equity sensitivity attempts to clarify why people react differently to inequitable exchanges. The construct posits that individuals are differentially sensitive to the various levels of outcome/input ratios found between themselves and their peers in the workplace (Bing and Burroughs, 2001). It was an improvement over equity theory in that it offered the opportunity to account for and recognize individual differences in reactions to inequity without sacrificing parsimony (Mueller and Clarke, 1998).
Notably it allows a certain level of predictability to a theory that once lacked this essential component.
Equity sensitivity is utilized in this study due to its predictive nature and the integral role it plays in the evolution of the original equity theory. Equity theory originally served as a rational explanation of motivation; however, researchers noted an obvious lack of clarity in Adam's (1963, 1965) works. This original theory failed to explain individual reactions both positive and negative in reward situations. The lack of consistent and predictable individual responses in reward situations created a concern regarding the reliability and validity of the equity theory. Miner (1980) and Mowday (1991) concluded that equity theory could only remain viable if it could account for observed differences in reactions to equity within the workplace.
Huseman et al., (1985, 1987) and Miles et al., (1989) have provided empirical evidence in support of a categorization of individuals on a continuum of equity sensitivity (Bing and Burroughs, 2001). Equity sensitivity expands equity theory by classifying individuals into three categories based upon their sensitivity to equity, which are benevolents, equity sensitives and entitleds (Huseman et al., 1985). These three categories form what has now developed into a continuum of individuals. All individuals fall somewhere along this continuum thus enabling employers to make some type of predetermination of an employee's perception of the current or future reward program. Figure 2 presents a continuum of these three categories.
Figure 2. The equity sensitivity continuum.
Note: the equity formulas shown in figure 1 are simple adaptations of Adam's original formula. This figure is specifically adapted from Huseman et al. (1987).
The equity sensitivity construct is related directly to equity theory and suggests that individuals react in consistent but individually different ways to both perceived equity and inequity because they have a different preference for (i.e., are differentially sensitive to) equity (Huseman et al., 1987). Equity sensitivity is distinctive among individual difference variables in that it proposes that an individual has a unique sensitivity to equity that influences perceptions of equity (or inequity) and likewise influences reactions to perceived inequity (King et al., 1993). It has proven to be the natural progression of the original equity theory and has enabled researchers to answer some of the criticisms surrounding the original theory. The potential ability to predict employee responses to certain situations is the driving force justifying the utilization of this model in the current study. The next few paragraphs will discuss the three categories that form equity sensitivity.
Benevolents are individuals who prefer their outcome/input ratios to be less than the outcome/input ratios of the comparison of others. Bing and Burroughs (2001) note that empirical evidence reveals that benevolent individuals are willing to do more work for less pay than those of an entitled disposition (Miles et al., 1989, 1994). For them, satisfaction is a result of perceiving that their inputs exceed their outcomes and that they have made valuable contributions to the relationship (Huseman et al., 1987). While King et al., (1993) have since reconstrued benevolents as individuals "who have a greater tolerance for, but not preference for under-reward" (Sauley and Bedian, 2000). These employees are most likely preferred by employers due to their acceptance or tolerance of under reward in certain situations. Benevolent individuals are predominately preferred by employers due to their higher tolerance of inequity in reward systems. According to Huseman et al., (1987) the conceptual roots of benevolence can be traced to the psychology of individuals originally developed by Alfred Adler (Adler, 1935).
ES: Equity Sensitives
Equity sensitives are individuals who merely want to be equitably rewarded when compared to their peers. These individuals represent the traditional equity theory model, and thus, require little description (Huseman et al., 1987). Equity sensitive individuals fit into the classic equity theory and they will most likely react if they perceive their ratios to be higher or lower than that of others (Wheeler, 2002). These individuals feel "distress" if they are under rewarded and guilt when over rewarded; this is the only group that experiences both of these feelings (Huseman et al., 1987). Patrick and Jackson (1991) conducted a survey that demonstrated equity sensitives were significantly more likely to alter their inputs and their outcomes than Entitleds when they are over compensated (Allen and White, 2002).
Entitleds are the type of employees that are the least preferred by employers. Individually they prefer to have a higher outcome to input ratio than. coworkers.
These individuals usually feel that they have a right to receive a greater reward than their inputs deserve in relation to coworkers (Wheeler, 2002).
However, much like the definition of Benevolents King et al., (1993) reconceptualized entitleds as individuals "who are more focused on the receipt of outcomes than on the contribution of inputs and who are thus intolerant of under-reward, more tolerant of over reward than are either equity sensitives or benevolents" (Sauley and Bedian, 2000).
Summarization of the Equity Sensitivity Construct
The equity sensitivity construct can therefore be viewed as a continuum, with entitleds at one extreme (preferring high ratios of outcomes to input), benevolents at the other extreme (preferring low ratios of outcome to input), and equity sensitives in the middle (Mueller and Clarke, 1998). This continuum is represented in Figure 2.
The current study adopts Huseman et al., (1985, 1987) framework by using the three categories (Benevolents, Equity Sensitives, Entitleds) in order to determine how they fit in the cross-cultural context. Over time, scholars have utilized empirical research evolving these categories into a notable continuum of potentially predictable actions or reactions when certain types of individuals are faced with equitable or inequitable situations in certain types of environments.
Equity perceptions are unique to each individual and the particular reward the individual is offered. Each individual has his or her own perception of what may be considered an equitable reward in any given reward situation (Miles and Day (1993).
King et al., (1993) contend that equity sensitivity is distinctive among individual…