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Adams’ Equity Theory

Balancing Employee Inputs and Outputs

Adams' Equity Theory - Balancing Employee Inputs and Outputs

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DaveLongMedia

If you pay peanuts, you may get monkeys: find the right balance.

Adams' Equity Theory calls for a fair balance to be struck between an employee's "inputs" (hard work, skill level, acceptance, enthusiasm, and so on) and their "outputs" (salary, benefits, intangibles such as recognition, and more).

According to the theory, finding this fair balance helps to achieve a strong and productive relationship with the employee, with the overall result being contented, motivated employees.

Understanding Adams' Equity Theory

Adams' Equity Theory is named for John Stacey Adams, a workplace and behavioral psychologist, who developed his job motivation theory in 1963. Much like many of the more prevalent theories of motivation (such as Maslow's Hierarchy of Needs and Herzberg's Two-Factor Theory), Adams' Equity Theory acknowledges that subtle and variable factors affect an employee's perception of their relationship with their work and their employer.

The theory is built on the belief that employees become de-motivated, both in relation to their job and their employer, if they feel that their inputs are greater than the outputs they receive. Employees can be expected to respond to this in different ways, and may exhibit de-motivation, reduced effort, annoyance, or, in extreme cases, perhaps even disruption.

How to Apply the Adams' Equity Theory

Adams' Equity Theory can help you spot ways to improve an employee's job satisfaction and their level of motivation.

To do this, consider the balance or imbalance that currently exists between your employee's inputs and outputs, as follows:

Inputs typically include:

  • Effort.
  • Loyalty.
  • Hard work.
  • Commitment.
  • Skill.
  • Ability.
  • Adaptability.
  • Flexibility.
  • Acceptance of others.
  • Determination.
  • Enthusiasm.
  • Trust in superiors.
  • Support of colleagues.
  • Personal sacrifice.

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Outputs typically include:

  • Financial rewards (such as salary, benefits, perks).
  • Intangibles such as:
    • Recognition.
    • Reputation.
    • Responsibility.
    • Sense of achievement.
    • Praise.
    • Stimulus.
    • Sense of advancement/growth.
    • Job security.

While many of these points can't be quantified or perfectly compared, the theory argues that managers should aim for a fair balance between the inputs that an employee gives, and the outputs they receive.

And according to the theory, employees should be content where they perceive these to be in balance.

Tip:

For a similar approach to supporting your people's success and sense of satisfaction, see Frederick Herzberg's Motivation/Hygiene Theory.

Key Points

Much like the five levels of needs determined by Maslow, and the two factors of motivation classified by Herzberg (intrinsic and extrinsic), Adams' Equity Theory states that positive outcomes and high levels of motivation can be expected only when employees perceive their treatment to be fair.

This perception of fairness is based on a number of different inputs – what they put into their work – and outputs – what they get back as a result. Adams' Equity Theory is about striking a healthy balance between the two.

If the balance lies too far in favor of the employer, some employees may ask for more compensation or recognition. Others will be demotivated. Some may even decide to work elsewhere.

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Comments (9)
  • Over a month ago Leigh19 wrote
    Hello,

    I was hoping to find out who the author was and the publication date, please.

    Kind Regards,
    Sasha-Leigh
  • Over a month ago Yolande wrote
    Hi Cynthia

    Many thanks for your comment and for sharing these insights with us. It is indeed so that different things motivate different people - that's why it's so necessary for a manager to know what motivates each of his/her employees.

    Yolandé
    Mind Tools Team
  • Over a month ago Cynthia_Obiorah wrote
    Motivation is a very big word. For it to be most effective must be tailored to the individual need. We might be a team of 10 persons but what really motivates each of us differs greatly, one it might be something as simple as praise while to another it is something bigger like training while yet another could be a bonus and yet another an award where there is a large audience. It is important to identify the need to know what is the best motivation tool to use in making the person happier for longer which ultimately will add value to the whole system. Cynthia A. Obiorah
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