Equity theory of motivation

Equity Theory of Motivation

The equity theory was developed by John Stacey Adams in 1963 and sees that the individual will be motivated on the job as long as he has a sense of equality. In other words, the employees want to be subjected to the same fair and uniform treatment as their fellow colleagues. Despite the vast legislation in terms of fair treatment and lack of discrimination, employers sometimes fail in properly implementing the principles of the equity theory. This often leads to internal frictions and may even end the collaboration between employee and employer. In order to avoid too much information being available to the staff members (information which could reveal discrepancies in wages or other benefits and could lead to the dissatisfaction of employees), most organizations now employ an internal policy of secrecy relative to the wages of each worker. However information does leak as the employees search for proof of equal treatment. But when this proof fails to materialize, or even worse, the employees find evidence of unequal treatment, the organization should prepare for some consequences.

Michael Bishop, sales assistant, had been an employee with ABC Cars for nearly two decades now. He did not have a college education, but his performances were always considered satisfactory for the organization. He was 'street smart' and was able to convince a customer and close a deal. He was among the most capable sales representatives the organization employed. Bishop's salary had two components: a base salary that paid $5 per hour and a commission of 5% from the sales finalized. Bishop was good at his job; he enjoyed it and was constantly motivated by the financial perks (mostly the 2% commission, but also other premiums and bonuses) and by the sense of security and belonging the job offered.

ABC ended the previous financial year with record high revenues and as the business was expanding, the management decided to hire more individuals. Among the new employees was 23 years old Tom Pitt. He had recently graduated from college (a business education) and was employed as a sales assistant. Pitt and Bishop had hit it off from the start and were constantly sharing the theoretical and practical knowledge they had acquired. Through a series of events, Bishop found out the wage of Pitt: $7 per hour, plus a 2.5% commission on sales. As a result, his performances and enthusiasm drastically decreased.

Bishop's behavior can simply be explained with the aid of the equity theory. The experienced sales assistant recognized the importance of a college education, but did not feel that it was superior to his two decades of expertise and various positive results for the organization. He felt discriminated against and subjected to unequal treatment. In a more scientific approach, Bishop felt that his input (efforts) was similar to Pitt's (if not superior even), but the output (remuneration) was highly discrepant.

The solution to this problem is rather complex. The issue can be reduced to the long standing conundrum relative to the superiority of book smarts vs. street smarts and experience. It is clear that ABC Cars found a college education to be better than two decades of dedicated work within the organization. The view point and the solution to be implemented depend highly on the personal beliefs of each leader in the long lasting dilemma of education vs. expertise. Whichever the stand, the manager should engage in clear and open communications with Michael Bishop. They should listen to his stand and should present their own. The subjective belief of this group is that the management should not discriminate against a loyal employee of twenty years and that they should offer him a consistent raise. Bishop, after twenty years and high performance, should not have a salary lower than a new comer.

Expectancy Theory of Motivation

The expectancy theory was developed by Victor Vroom and it sees the existence of a relationship between the individuals' on the job performances and their personal goals. Vroom also explains that a manager has the ability to motivate his worker is he identifies his desires and is able to offer solutions for the employee to meet his goals. In a simpler formulation, the employee will perform better on the job if he has the conviction that this will help him achieve his objective. Say for instance that an employee wishes to buy a car. He knows that if he works harder he will get a raise, which will support his down payment on the automobile. If on the other hand, one employee only wishes to get a hamster, his purchase decision is not influenced by the job and therefore his performances will not increase.

Paul Londex is a software developer at WNT Networks. He took this position right out of college and this year will be his fifth within the organization. He always liked it there because the corporate culture was open and friendly, and his initial peers had transformed into life lasting friends. Most of the gang was formed from young adults, barely out of college, who has numerous things in common. A job related thing they had in common was that they did not have any major responsibilities. Some of the employees were still living at home, whilst others were living in rented apartments, with roommates. The relatively low expectations and financial objectives made it easier for the employees to get by in the times when the company did not have many projects on the role and the pay was delayed.

Londex however got married last year; he bought a house and a car, and he has to make monthly payments. He can no longer work at WNT Networks as they do not offer him the security he needs as the head of his newly formed family. Londex went to several interviews as his expertise was valued by numerous employers. He was mostly drawn to less formal environments, but these stood the risk of the same problems that WNT was facing. Eventually, he decided to take a job at RGY Software, a more traditional entity, with more formal values, but which offered a higher wage and an increased security of the position. All he had to do know was tell his employer and his friends of the decision. It was a tough situation, but it had to be done. Two months later, Londex was comfortably installed in his own office in RGY Software.