Equity Theory

Written By Michael Kurtagh

Equity Theory:

Motivation is one of the major individual influencers on job performance, and one of its major theories is equity theory which this blog post will discuss.  Equity theory states that a person’s motivation isn’t solely based on personal beliefs and circumstances, but also what happens to others.  Basically equity theory is saying that a person’s motivation is affected by whether or not they feel they are being treated fairly relative to their peers.  Akan, Allen & White state that “this sense of fairness is determined by one’s rewards (e.g., pay, promotions) relative to one’s work-related inputs (e.g., education, productivity, experience) as compared with a referent other’s rewards relative to that person’s work-related inputs.” (2008)  Equity theory has three possible outcomes when the person compares themselves to their colleagues.  These outcomes are either they feel they are being rewarded equally, more, or less for their work.  Another important aspect of equity theory is that the perception of equity or inequity is just as important as the actual truth of the situation.     

Equal to Your Peers:

This is the best possible outcome of equity theory.  This is when you and the other employees you’re comparing yourself to are receiving relatively equal rewards for the same amount of work.  The perception is that you’re not being treated any better or worse than your colleagues.  As a result, there’s really no need to change anything as there is a sense of equity. 

Rewarded More Than Peers:

            In this situation the person perceives that they are being rewarded more than their colleagues for equal amounts of work.  For example, if a team of employees successfully complete a project while doing equal work and one of the team members is given a bigger bonus than the rest, they have overreward inequity.  For many people this seems like it would be a good thing, receiving rewards beyond what is expected relative to others.  The problem though is that inequity in either direction can be detrimental to an employee.  Research shows that “those who are overpaid should be more productive but still less satisfied than equitably paid workers.”   (Livingstone, Roberts & Chonko, 1995) While they may enjoy the extra benefits they gained for their work, the fact that there is inequity means they will feel separated from their peers.  This can put stress on the person by making them feel anxiety or guilt.  A worker can attempt to restore equity without giving up their extra rewards by putting more effort and time into their work.  This can help them to perceive that the extra rewards that they are receiving are a result of the extra work they are putting in.     

Rewarded Less Than Peers:

            This is probably the most demotivating of the three equity theory outcomes.  If a worker feels that they receive less than their colleagues for equal amounts of work they have very little motivation to work hard.  One option to remedy the feeling of inequity is to put in less work so that the lesser rewards seem fair.  This of course is a negative option for the organization because they have a worker that is deliberately putting in less than their best effort.  The better solution is that the person who feels they are being treated less fairly than their colleagues speaks with management.  It is important for managers to understand that whether or not inequity actually exists, if the person perceives it as existing there will be affects.  Hopefully by speaking with management, the person will either have their rewards increased or realize they wrongly perceived inequity thereby restoring their feeling of equity.   

Perception vs. Reality:

            Understanding that just the perception of inequity can cause problems in an organization is very important.  While there may be a valid reason for one employee to be receiving more for relatively equally amounts of work, if that reason isn’t known by others they may perceive inequity.  While a manager may not want to reveal all the information behind their decision making process when handling compensation and rewards, they should make an effort to not make it so vague that it allows for the perception of inequity.    

Conclusion:

            Understanding the equity theory of motivation is important for any organization.  Because of its powerful effect on job performance, managers should make an effort to promote a feeling of equity throughout the workplace.  As mentioned earlier, even the perception of inequity can cause issues so even the appearance of unequal treatment is a problem.  One of the most important steps in promoting equity is “to tie the rewards to employee performance.” (Baxamusa, 2012)  By clearly linking rewards to worker inputs, managers can not only insure they are fairly distributing rewards, they also provide employees with their thought process.  If employees understand the manager’s thought process, perceptual inequity can be avoided.  Overall, equity theory is an important facet of employee motivation and it is a major influence on job performance. 

References:

Akan, O., Allen, R., & White, C. (n.d.). Equity sensitivity and organizational citizenship behavior in a team environment. (2009). Small Group Research,40(1), 94-112. Retrieved from Sage Journals.

Baxamusa, B. N. (2012). Equity theory of motivation. Retrieved from http://www.buzzle.com/articles/equity-theory-of-motivation.html

Livingstone, L. P., Roberts, J. A., & Chonko, L. B. (n.d.). Perceptions of internal and external equity as predictors of outside salespeoples. (1995). The Journal of Personal Selling and Sales Management, 15(2), 33-46. Retrieved from JSTOR.

How Important is Motivation?

Jake Harlick

How Important is Motivation?

                The importance of Motivation in the workplace is sometimes an aspect that is overlooked by management. However this can be a huge mistake, because an unmotivated employee is an unproductive employee, which directly affects the business as a whole. Motivation is the energy within each employee that keeps him or her going through the day and helps them to excel in the workplace and provide value to the company. When an employee lacks this energetic force it can be contagious and bring a company down.

                The biggest aspect that motivation is affected by is employee well-being.  If the atmosphere of the company is one that creates unhealthy habits including excess stress and fatigue, the levels of motivation will suffer in accordance. Motivated employees are happy employees so it is crucial that management provide an environment that keeps spirits up in order for that motivational energy inside of each employee to stay fueled. From a dollars and cents prospective a lack of motivation will directly affect the bottom line revenue of a company. Employees will not go above and beyond to get the job done if they don’t feel the benefits associated with success warrant the effort. This will be reflected through to customers and they will look to take business elsewhere to a place where they feel their business is important to the company. 

                Motivation provides five key benefits to the workplace, it “puts human resources into action, improves level of efficiency of employees, leads to achievement of organizational goals, builds friendly relationship, leads to stability of work force” (Importance). These five benefits turn the company into a well-oiled machine, where employees get along, work together, and become a team that produces the results expected by management. Companies that do not achieve these benefits will find unmotivated workers who, “are likely to expend little effort in their jobs, avoid the workplace as much as possible, exit the organization if given the opportunity, and produce low quality work” (Amabile). These characteristics of unmotivated employees are the opposite of success and will cause a company to struggle mightily as they battle with the sluggish work force and uncooperative employees. “the ability to predict, understand, and influence motivation in the workplace has increased significantly as a result of the attention that has been given to all rather than only a few aspects of an employee’s motivation” (Work Motivation). This attention to detail shows good things going forward in that many companies are realizing the importance of motivation and are working hard to provide their employees with an office that they look forward to coming to every day and a team of coworkers who they genuinely enjoy spending time with.

                In class we often talk about job satisfaction and how so many different things go into making somebody happy. We have found that having a good job doesn’t mean you’re going to be happy with it, and that being happy at home doesn’t always mean you’re happy at work. This being said, if you go to work every day motivated to do a better job than the day before it helps you wake up in the morning. Additionally motivation in the workplace can come from an outside source and not necessarily be provided solely by the employer. If you are a dedicated family person the simple motivation of providing a better life for your family may motivate you to do a good job. This type of attitude is contagious in the workplace and it is important for management to harness it and try to spread it from employee to employee. This type of atmosphere will get employees excited and push them to do a better job every day. 

                Students in the workplace now can use this as a way to evaluate where they want to work during college and post-graduation. If a current position offers an atmosphere that creates a lot of distaste for going to work every day and stress dealing with less than appealing coworkers then it probably is not a position that he or she should be looking to long term to create a good footing for a livelihood. Going into interviews and a job search students should be looking for somewhere they could see themselves enjoying going to work every day with a group of people that will help grow them as a professional through proper mentoring.

Works Cited

Importance of Motivation. http://www.managementstudyguide.com/importance_of_motivation.htm

Work Motivation Theory and Research at the Dawn of the Twenty-First Century

Annual Review of Psychology. Vol. 56: 485-516 (Volume publication date February 2005)

First published online as a Review in Advance on June 21, 2004

DOI: 10.1146/annurev.psych.55.090902.142105

Amabile, T. M. (1993). MOTIVATIONAL SYNERGY: TOWARD NEW CONCEPTUALIZATIONS OF INTRINSIC AND EXTRINSIC MOTIVATION IN THE WORKPLACE. Human Resource Management Review, 3(3), 185.

Different Forms of Motivation

written by: Sonia Zafar

There are many different ways to motivate employees, and everyone is motivated in a different way. Some may be motivated by compensation, and some employees are motivated simply by the feeling of self-achievement. In order to become a successful company, it is important to understand what motivates employees. It is necessary to know what encourages employees in order to increase performance. When motivation is increased, job satisfaction is also increased.

Extrinsic vs. Intrinsic

There are two different types of rewards that employees can gain from high job performance. One type of reward is extrinsic, and the other is intrinsic. Extrinsic rewards are tangible rewards such as bonuses, pay raises, and benefits. Rewards like this are controlled by others such as managers deciding whether an employee deserves a pay raise or not. Intrinsic rewards are psychological, and employees reward themselves psychologically when they perform well. Intrinsic rewards have been more common in recent times because of the variation of work in today’s world. “Extrinsic rewards played a dominant role in earlier eras, when work was generally more routine and bureaucratic, and when complying with rules and procedures was paramount. This work offered workers few intrinsic rewards, so that extrinsic rewards were often the only motivational tools available to organizations” (Thomas, 2009). Extrinsic rewards are still a very important consideration in whether prospective employees to accept a job. Intrinsic rewards may not always be enough to motivate workers.

One of the most common motivators is career advancement. The ability to work one’s way up the company’s ladder plays a very important role in how motivated the employee can be. This requires employers to be willing to open doors of opportunity for their employees so they can advance in their careers (Llopis, 2012). Another common idea that motivates people is job security. Those who have families want a stable future so they are motivated to do their best in order to obtain that stability from their employer.

In today’s world, many people are determined to create an impact in society. They want to contribute by using their skills and knowledge to help their company succeed. Having an impact on others and the company is a major intrinsic reward that employees give themselves. Last but not least, happiness is one of the most important motivations an employee can use in order to perform well. Happiness gives people higher self-esteem which in turn makes them better at their job. It is very common for people to dislike their jobs, which leads them to slacking off and not putting in all the effort they can. Those who are satisfied with their jobs, are motivated to work and enjoy being in the workplace environment every day. As an employer, it is very important to make sure that employees are satisfied with their job. If they are not satisfied, the employer should take into consideration what he or she can do to help.  

Levels of Intrinsic Rewards

Professor Walter Tymon developed the levels of the four intrinsic rewards; sense of meaningfulness, choice, competence, and progress. Each reward is broken down into three levels. People who obtain the high range scores experience all four intrinsic rewards most often, which means these rewards are the most highly motivating for those individuals.  The middle range scores experience the intrinsic rewards moderately. An example of this would be a worker who believes that they are performing well but not as well as they would like to perform. They feel satisfaction, but they are less satisfied than they would like to be. Those who score low range scores are not satisfied at work. They believe that the work they do is pointless and meaningless and that they are not capable of influencing decisions. Feelings like this tend to drain workers of their energy and lead them to be resentful about their jobs (Thomas, 2009).

PBS Interview

DANIEL PINK: We tend to think that the way you get people to perform at a high level is, you reward what you want and punish what you don't want, carrot and stick. If you do this, then you get that.

That turns out, the science says, to be an extraordinarily effective way of motivating people for those routine tasks, simple, straightforward, where there's a right answer. They end up being a terrible form for motivating people to do creative conceptual tasks.

PAUL SOLMAN: How does the science show this?

DANIEL PINK: If you offer me a reward, $500 reward, you have my attention, absolutely. A contingent reward gets you to focus like this, narrow vision. If the answer is right in front of you, that's terrific. You race a lot faster. But if you have this kind of vision for a creative conceptual problem, you're going to blow it. You're not going to do anything good.

Solman, P. (2010, April 15). Personal interview with D. Pink

Llopis, G. (2012, June 04). The top 9 things that ultimately motivate employees to achieve. Retrieved from 

Pink, D. (2010, April 15). Interview by P SOLMAN [Web Based Recording]. What drives motivation in the modern workplace?., Retrieved from http://www.pbs.org/newshour/bb/business/jan-june10/makingsense_04-15.html

Thomas, K. (2009, December). The four intrinsic rewards that drive employee engagement . Retrieved from http://www.iveybusinessjournal.com/topics/the-workplace/the-four-intrinsic-rewards-that-drive-employee-engagement

Goal-Setting Theory

Written by: Bryan Baines

“The ability to concentrate and to use your time well is everything if you want to succeed in business--or almost anywhere else for that matter” (Lee Iacocca). As one of the most prolific businessmen in the world, Lee Iacocca was an advocate of setting goals. He practiced what he preached when he was working at Ford and also when he was president and CEO at Chrysler. Goals are often credited for successes, and the lack of goals is often blamed for failures. The word is used so much that the meaning loses its intended impact. A goal is the difference between victory and defeat in sports; it’s a benchmark for dreamers and achievers; or it can be the finish line for others. While a goal may seem like an overused term, its meaning should not be diluted in our lives. Goal setting is one of the most important motivators that we utilize in our every day lives.

                  Goal setting is often applied in the workplace. When employees are given assignments, they decide how much effort they will give for the assignment and what their desired outcome will be as a result of that effort. According to the textbook, the theory of goal setting “views goals as the primary drivers of the intensity and persistence of effort.” In other words, goals are the motivator behind our performance. The text also goes on to describe how specific and difficult goals actually produce better results from workers than simple goals or even no goals at all. The argument being that if people have a specific benchmark they need to reach – for example, a report that needs to be done by 2:30 on Wednesday – they will know exactly how much effort they will have to give to achieve the desired results. They could even use that deadline as a motivator and try harder to get it done ahead of schedule.

                  Setting goals should not be limited to only work tasks. Goals can be a great way to improve our lives on many different fronts. In an edition of Current Directions in Psychological Science, Edwin Locke and Gary Latham published the article “New Directions in Goal-Setting Theory” in which they describe 4 mechanisms of the relationship between goals and performance. “High goals lead to greater effort than do easy goals…Goals direct attention towards goal-relevant actions at the expense of non-relevant actions…Goal effects depend on having the requisite task knowledge and skill…And goals may motivate one to use one’s existing ability or to ‘pull’ stored task-relevant knowledge into awareness.” Locke and Latham explain that goals can be the motivating force that causes people to want to perform better and, if they don’t have the required knowledge, they may seek to obtain the required knowledge. They also explain that goals along with self-efficacy often enlist the effects of other motivators like autonomy, feedback and personality traits.

                  Having the wrong focus when setting goals can have worse effects than not having goals set at all. Making a goal looking only from the business perspective can cause unwanted behaviors to attain the goal. Goal setting needs to be a result of a balance between the business perspective (efficiency, accuracy) and the human psychological perspective (realistic deadlines and workload). The end result is what Bill Lycette and John Herniman are calling the new goal-setting theory. Goals are strongly linked to business metrics, which is ideally: Specific, Measurable, Achievable, Relevant and Timed (SMART). Lycette and Herniman are saying that SMART is not adequate to produce the best results. The say that to achieve superior results, metrics also need “to have a single owner who takes accountability for the metric, be clearly articulated in an easy to understand and reusable format, and be applicable to all levels of the organization (Lycette & Herniman, 2008).” Their new dynamics help address the human psychological aspect of goal setting and business metrics in addition to the already-established metric model. These new characteristics help to make the employees feel equal and autonomous in the workplace. By having an equal goal model from top to bottom of an organization will help the social dynamic in the business as well.

                  While setting goals is often an effective method of optimizing productivity, some are saying that setting too many goals becomes a problem. Since businesses rapidly adopted the idea of goal setting, it quickly escalated into more. Professor Schweitzer, who wrote “Goals Gone Wild” which was published in the journal Academy of Management Prospectives stated that “The proponents of goals focused on the benefits of the goals, not the harm, and too many businesses went too far, saying ‘Here’s what we want you to accomplish,’ and implicitly saying, ‘We don’t care how you got there’ (Tugend, 2012).” He was hinting that this was leading into unethical behavior. This brings up the important idea that, if goals are the only way that one’s performance will be measured, what incentive does one have to go above and beyond when their deadline or benchmark is already met? “Besides possibly leading to unethical behavior — a lawyer being told to bill a certain number of hours a week will be tempted to fudge the numbers — too much emphasis on goals can inhibit learning and undermine intrinsic motivation (Tugend, 2012).” Goals are important in the workplace, but they cannot be the only measure people have in order for performance and, more importantly, the quality of their performance to be optimized.

References

Locke, E. A., & Latham, G. P. (2006). New directions in goal-setting theory. Retrieved from http://www.jstor.org/stable/20183128 .

                 

Lycette, B., & Herniman, J. (2008). New goal-setting theory. Industrial Management, 50(5), 25-30,5. Retrieved from http://search.proquest.com/docview/211637649?accountid=12924

Tugend, A. (2012, October 05). Experts’ advice to the goal-oriented: Don’t overdo it. . Retrieved from http://www.nytimes.com/2012/10/06/your-money/the-perils-of-setting-goals.html?

Motivational Theories

All the employers have common goals. They want to keep improving efficiency, increasing productivity, and making the quality of their products or services better. In order to achieve these goals, they have to keep motivating their employees since motivation affects the productivity of individuals. Motivation is best described as "a person's active participation in and commitment to achieving the prescribed results".

Since everyone responses differently to different kinds of motivation, many theories have been developed. I would like to put emphasis on three of those that I found interesting and they show how this field has improved during the years.

Cussin's Approach or Management by Threat

This theory was popular the year after World War II. It lies on the anticipation that the more the employees get yelled at the harder they will work. Today this approach is only used in third world countries, in areas where the economy is left behind but as workers are becoming aware of their rights “management by threat” is disappearing. During the early years of Cold War, the majority of the labor force were soldiers who fought during the war and they had no other choice but to accept any job they could get since due to the extremely low number of jobs available. Note that this approach did only create a work environment where employees just wanted to avoid to get yelled at, and it did not have positive effect on productivity.

Maslow's theory

Abraham H. Maslow developed his theory, also known as hierarchy of needs theory, when Cussin's approach was widely used, in 1954. He believed that the personal needs motivate human the most. His hierarchy consists of, from the bottom of the pyramid to top; psychological needs, safety needs, social needs, esteem needs, and the highest is the self-actualization needs. Psychological needs are the most important and essential; wage, salary, and proper working conditions. Safety needs include job security. Social needs mean interaction with coworker and developing a healthy relationship with them. Esteem needs are met by giving the workers opportunities for promotion within the company and giving positive feedback. Self-actualization needs are created by challenging tasks that are stimulating.

Herzberg's theory

Maslow's theory is one the most well-known motivational theories and the basis of Herzberg's theory. Fredrick Herzberg developed this theory by observing a few hundreds of engineers and accountants; how their working relationships are, how their attitudes change, and what motivates their performances.

He believes that there is one factor that motivates, the job enrichment factor, and one factor that demotivates, the hygiene factor.

Job enrichment factors include achievement, recognition, responsibility, freedom, and advancement. When an employee is given a difficult task and she can complete the task on her own way it creates in confidence therefore she is going to perform at her best and complete the task. As a result, she receives recognition which will motivate her in the future.

Hygiene factors include work conditions, policies, administrative efficiency, style of supervision, and relationship between employees. If we are in the same situation but our employee is not rewarded it will demotivate her for the next task. Additionally, if she is forced to work with someone she would not like to, or supervised they way that creates uncomfortable working environment, she will also be demotivated.

References

Ranjan, B. K., & Charles, J. H. (2002). Motivational theories and successful total quality initiatives. International Journal of Management, 19(4), 605-613. Retrieved from http://search.proquest.com/docview/233230946?accountid=12924

Hassan, A. H. (2005). Motivational theories and their application in construction. Cost Engineering, 47(3), 14-18. Retrieved from http://search.proquest.com/docview/220451052?accountid=12924

Colquitt, J. A., Lepine, J. A., & Wesson, M. J. (2009). Organizational behavior . (Second ed.). New York, NY: McGraw-Hill/Irwin.

 Matyas Keresztes