John Stacy Adams equity theory of motivation is easy to sum up at its heart equity theory says we are motivated when we feel that our circumstances are fair and we are demotivated when we feel they are unfair human beings are wired for fairness but as you'd expect there is a little more to it than that and this is what we'll look at in this video for John Stacy Adams who was an industrial psychologist of the general electric company what matters most in terms of workplace motivation is the comparison between the outcomes that we receive the rewards of doing our work and the effort or work we put in when we perceive where the outcomes are fair in comparison to the work we've done then we'll be motivated otherwise we will not but have you ever noticed that some people can be perfectly well remunerated and yet not be satisfied with their rewards because they look over their shoulder so the colleague next to them who's doing the same job but receiving a slightly better remuneration package or perhaps they look over their other shoulder to a colleague who's earning just as much as they are but doesn't seem to be working as hard it's that sense of fairness or unfairness that drives our motivation rather than the absolute reward often times so equity theory is all about how we as workers assess the fairness of the rewards we get for the work that we do there are three important components to equity theory and the first of them is known as equity norm and it's the simplest one people expect a fair reward for the work they put in if they don't get what they consider to be a fair reward then they will be unhappy the second principle is known as social comparison simply stated people evaluate whether the rewards they're getting are fair by comparing the rewards that I'm getting with the rewards that you're getting and comparing the work that I do with the work that you do and if the ratio of outcome to work is the same or better for me then I'll feel pleased if it's less then I will be upset of course if it is too much more for me and I may feel a little guilty and that takes us to our third principle and the third principle is that employees who perceive that they are not being treated fairly will try to redress the balance and there are two ways that we can do this the obvious thing is to tailor the amount of work we do to our perception of the reward so if we feel we're not being rewarded enough we will reduce the amount of work we put in in order to feel that we're getting a fair recompense if on the other hand we feel we're being over rewarded then the guilt may well drive us to work that much harder the second approach to addressing the balance is known as cognitive distortion or sometimes cognitive reframing and in cognitive distortion what we do is we mentally distort our perception of either the work that we do or the rewards that we're getting so that they appear to have a different magnitude or scale to give us a sense that things are fair for example if initially we may feel that we are being over awarded in our minds and we might play out the amount of work we're doing to feel that we've earned that high level of reward if on the other hand we feel that we are under awarded we may play up the value of the reward we receive or play down value of the work we do in order to feel more comfortable with the situation now what does this mean for you as a manager well firstly you have to recognize that your perception of the values of work people do and a reward they get may not match their perceptions equity theory works on perceived values not on real values and therefore two workers who are earning the same and doing the exactly same work and may have different perceptions of the equity of their reward simply because they may have different expectations different upbringings different needs one may find the work to be harder than the other finds it another important thing to be aware of as a manager although it's often more important that senior levels in the organization is a recognition that particularly for organizations which span multiple countries or multiple regions in a large country the value of money its buying power may be very different in different places and therefore organisations and managers as advocates for people within their organisations may need to tailor the rewards they offer to where people are based where they live and work according therefore to the cost of housing the cost of food the cost of clothing education healthcare on all of those things another important thing for organisations to be aware of is the sense of equity particularly within some cultures of senior managers and the highest up in the organisation earning substantially more than junior people within the organisation and pay disparity between the different levels of the organisation is an important measure for many organisations particularly global ones and in some cultures a disparity that would be accepted elsewhere is seen as unfair and another thing that immediately comes to mind in thinking about that is in many cultures there are differences between the pay that men and women receive for doing the same job now in many cultures pay gaps based on gender alone are illegal but the reality is that they persist be very careful certainly in jurisdictions where there is legislation you need to be scrupulous about this but what I would say is if two people are doing the same drill they should be remunerated the same regardless of their gender their race their cultural background or anything else another thing for you to be aware of particularly if you receive complaints or representations from members of your team is that when people compare themselves with colleagues the assumptions they make about the remuneration and the terms and the level of work that their colleagues do may be distorted they may be just plain wrong because the reality is very few people are prepared accurately to divulge their remuneration they don't like to discuss in detail the work they do and the reward they get for it so if I feel that I'm not being fairly remunerated compared to my colleague it may be that I just don't understand properly the work my colleague does and the remuneration they receive finally there is a calculated element of this some employees we want to adjust the amount of work they do in knowing that it will impact the remuneration they receive and as long as they feel that the adjustments go hand in hand if I reduce my workload I will reduce my salary by a fair amount that will be a trade-off that they will willingly accept a lot of people these days prefer to work part-time particularly if they have a family or other commitments or hobby they want to pursue if I know I can move from five days a week working to four days are we working and receive 80 percent of the remuneration then that will seem fair if on the other hand my organization insists on reducing my remuneration not by 20 percent but by 30 percent then I will feel cheated in a decision that I may have to make the family circumstances or may want to make for personal reasons if the next thing to look at are some examples of the inputs or the work that we do and the outputs or the outcomes and that people get for the work they do so you can get a sense of what's going on when people make these mental calculations of fairness or equity some of the inputs include things like time and effort and loyalty experience commitment perhaps educational background or other investments we've made in our career in the past qualifications our general ability our willingness to be flexible our tolerance for setbacks and discomforts in the workplace our enthusiasm possibly there are family or personal sacrifices we have to make in order to do the job that we're doing perhaps support that we give to our organization and to our co-workers outcomes or what we get for doing the work the important ones are of course the positive outcomes the things that we do the work for the rewards we get but recognize there can be some negative outcomes losing time which we could see as an input but it could also be seen as an outcome but some of the most important positive outcomes that people exchange for the commitment the inputs they give include our salary our pension arrangements healthcare arrangements job security expenses to cover the costs that we incur recognition learning opportunities of growth in our reputation and personal brand responsibility that we're granted sense of achievement and learning new stuff simple praise and thanks from our managers and the last component of equity theory that I want to discuss here are the four sources of comparison that people make and when evaluating for fairness of their condition the first of these is self inside basically I'm comparing what I get in terms of rewards and recognition with the work that I do I'm comparing my own perception of the value of the work I put in to the value of the rewards I get the second is self outside and this is the kind of comparison people make when they get itchy feet in their thinking about trading up their current job for another self outside is the comparison of the work I'm doing now with the rewards I would get if I were doing it in some other organization I may recognize that I'm getting the right remuneration self inside compared to the work I'm doing here based on the remuneration structures of this organization but if I work in another organization which pays better or recognizes my work more highly than I could do better the third form of comparison I can make is others inside I compare the work that I do with colleagues within my organization and the remuneration and the rewards and the outcomes I get with the rewards remuneration and outcomes of other people in my organization if I see that I am getting rewarded and recognized to a different extent than my colleagues then I feel a sense of unfairness and another trigger for people wanting to leave their organization is others outside I look at the work that I'm doing and the outcomes I'm getting within my organization and then I look at former colleagues friends business contacts who are doing similar work in other organizations and getting different levels of recognition reward remuneration and outcome those four sources of comparison can all lead to a sense that I'm doing okay or I'm not getting a fair reward for the work that I'm putting in John Stacy Adams equity theory is simple it says that human beings are motivated by perceptions of fairness and demotivated by a sense of unfairness if you as a manager uh not aware how people feel in terms of fairness or unfairness then you will not be in control of their motivation please give us a thumbs up if you'd like this video there's loads more great management courses content to come so please subscribe to our channel and hit the bell so that you don't miss any of it I'll see you in the next video and in the meantime keep learning