Inequity in Social Exchange - Essay Example

Critically examine equity theory for its effective application Course Name and Code Institution Name Faculty Name Insert Your Name Insert Your Number Instructors Name 23 May 2009 The aim of equity theory tries to expound on relational satisfaction basing on fair/unfair distributions of resources within an interpersonal relationships. Equity theory is traced back to John Stacey Adams in 1962. Adams based theory on his experience in the workplace and behavioural psychology (Adams 1965). Moreover, Adam asserted that employees tend to balance between the inputs that they accomplish a task and the resultant outcomes, this, the employees weigh them against the inputs and output of other employees. Many people value fair treatment, which forms the foundation of motivation. The motivated worker within tend to ensure fairness within the relationship of the organisation and co-workers. Thus, the way that employees work in the workplace is based on the balance that is created by the ratio of inputs and outputs. In this case, the inputs are the contributions that the employees bring into an organization, which range from job experience to interpersonal behaviour. Thus, the aim of this paper is to examine equity theory for its effective application. Equity theory is one of the justice theories that require that everybody should be treated equally. Thus, theory postulates that a person who perceives that they are over-rewarded or under-rewarded will likely to experience distress. The distress will be the foundation of trying to restore equity within the relationship or within persons in the organization. Thus, it tries to determine whether the distribution of resources between employees in an organization is fair. Measuring equity is through comparing the rations of employees’ contribution to the organization and the benefits that the employees achieve. In fact, Guerrero et al (2007) view that equity theory acknowledges the variable individual factors usually affects individual perception and assessment of their individual relationship with the relationship of their respective partners. Spector (2008) share the same sentiments with Adams (1965) by stating that guilt is caused by overpayment equity while underpayment inequity is causes anger. In most organisations, the salary usually is the cause of disagreement since it brings into consideration inequity and equity. This is because individual employee feel that the payment is reflects their contributions and the quality of work that they accomplish. For example, an employee who is underpaid may feel hostile towards other employees and the entire organization. This may result in the employee not performing as required. In fact, minimal and good variables make a person to appreciate equity. When an employee is recognised by the organisation or the management through acts such as thanking the employee will make the employee to feel satisfied and thus will become a component to improve on the outputs (Cropanzano 2001). An employee will feel that he is treated fairly when he compares the ration of inputs to outputs is the same as other employees around him. Hence, it is acceptable that a senior employee get a higher salary since the value of input is higher compared to other less senior employees. Most employees usually base their experience with those of other employees within the organisation to ascertain whether they are satisfied. Thus, for example, when an employee notices that another employee is getting better compensation in the tasks that the employee has completed and both employees had completed the same task may be a factor that brings into consideration dissatisfaction (Adams 1965). Hence, the dissatisfaction may make the employee to feel that he is worthless or not an important factor in the organization. This aspect is against the ideologies of the equity theory, because equity theory states that the inputs should equal the outcomes. Hence, if the two employees were equally rewarded, other employees will realize that the organization is appreciative, observant and fair. Thus, what are inputs as applied by the equity theory? Inputs are components that each employee contributes towards the organisation so that they can achieve rewards. Hence, the inputs may be either assets or liabilities. When an employee brings an asset, the employee will get rewards while liabilities entitle costs. However, the entitlement to costs or rewards that is ascribed to each input varies, since it depends on the relational setting. Walster, Traupmann and Walster (1978) state that different scenarios require different inputs and resulting in different outcomes. They present an example of industrial setting. In the industrial setting, the relevant inputs are the manual labour and capital in which it entitles the contributor to get a reward. While liabilities such as cruelty or arrogance entitles the individual costs. Some examples of inputs are time, effort, skill, hard work and trust (Cropanzano 2001). On the other hand, the outcomes may be termed as the negative or positive consequences that the employee perceives an employee has incurred because of relationship with another employee, customer or the entire organisation. Walster, Traupmann and Walster (1978) state that the outputs can be tangible or intangible. Moreover, when the ration of outputs is close to that of the inputs, the employee will likely be satisfied with their job. Thus, some of the outputs or outcomes are job security, salary, expenses and praise. Equity theory usually brings into consideration four propositions. The first proposition is the idea that different employees seek to maximise their outcomes or outputs. Here the outputs are rewards minus any costs. The second preposition stipulates that groups can come together and maximise on rewards through the development of accepted systems that ensures for equitability apportioning the rewards and the costs between the members. Thus, the system of equity develops within the group, and the members within the group will induce these systems and making the members to accept and adhere to these systems (Cropanzano 2001). To achieve this, the members within the team ensure that they increase the benefit that they achieve through behaving equitably rather than inequitably. Hence, the team will rewards individuals that treat others equitably and punish those who treat others inequitably. The third proposition is that individuals who participate in inequitable relationships are faced with distress. Thus, the more the relationship is inequitable, the more distressful is the individual. Moreover, basing on the ideology of the equity theory, individuals who get more or less usually feel distressed. For example, an employee within the same standard and quality may receive higher pay compared to the other individual with the same qualities and capabilities. Hence, the person who gets a higher pay will feel shame or guilt while the person who gets little pay may feel humiliated or angry. The fourth proposition according to Walster, Traupmann, and Walster (1978) is that the individuals who perceive that they receive an inequitable relationship tend to remove their distress through trying to restore equity. Thus, the greater the inequity, the higher the distress that the individuals will feel and the more chances that they look for to ensure that equity is restored. Thus, the equity theory as played a major role in understanding the way that organisation behaves. In fact, Industrial Psychologists view that an employee motivation is based on the perception of in-equitability or equitable treatment. Hence, the relationship between the employee and employer determines the way that the employee views whether a given situation is equitable or inequitable. Adams (1965) states that the employees tend to maintain an equitable ration between the inputs and outputs that they utilise in an organisation. Carrell and Dittrich (1978) introduces the idea of social comparison in trying to understand the requirements of equitability. They state that the employees evaluate individual input/ output rations and compares with other employees inputs/ outputs. Thus, in the case of an organisation the inputs may be employees’ time, experience, qualifications, personal qualities and interpersonal skills. While the outcomes/ outputs are flexible work arrangements, monetary compensation and other benefits. Thus, when the employees perceive inequity will tend to change the ratio of inputs/ outputs, cause interpersonal conflicts or even quit from the organisation. Carrell and Dittrich (1978) states that equity theory has far reaching implications in terms of efficiency, turnover, morale and productivity of the employee towards the organisation. However, when the equity theory is applied to an organisation, there are some assumptions that are made. The first assumption is that employees usually expect fair return for their contribution to the organisation. Thus, when the employee works hard and ensures that the work completed is of high quality, expects that the management of the organisation recognise the ability that the employee has provided. This aspect in most instances is referred to as equity norm. The second assumption is that the individual employees estimate their equitable return after analysing their inputs/ outputs and comparing it with the input/ outputs of their co-workers. This is usually the fundamental approach that the employees tend to gauge themselves. Hence, this approach is referred to as social comparison. The third proposition brings into consideration cognitive distortion. This means that the employees perceive that they are in a situation that is inequitable and thus tries to reduce or eliminate the inequity. This can be achieved by distorting the inputs/ outputs in their minds or directly (Carrell and Dittrich, 1978). Moreover, the employee may decide to quit the organisation and looking for another that values the employees’ contribution. Business managers have several concepts that they can achieve from equity theory. Many people measure the totals of the inputs/ outcomes. This means that a worker may accept a minimal compensation due to another more important requirement. For example, a working mother may accept a small salary but with flexible working hours (Borkowski 2005). Different individuals within the organisation ascribe personal values towards the inputs/outputs. Thus, even if two employees who have the same qualities and capabilities and receive equal output may have different perceptions towards the deal. Employees will base the way that they work and fulfilment of the outcome based on the conditions of their place of work and ability of the outcome to provide purchasing power. This means that different localities will require employees to be accorded different outcomes. For example, an employee in New York will demand for a different payment compared to an employee in Johannesburg, South Africa. Moreover, the difference of the pay between the job levels should not be that much to prevent de-motivation of the employees. For example, a manger may earn ten times higher salary compared to a janitor or office messenger. Thus, this will likely make the employee to loose the motive to accomplish given tasks (Borkowski 2005). Due to degree of difference in understanding individual perceptions, the management should put into place means to ensure that the perception is effectively managed. The compensation that an employee receives determines the way that the employee accomplishes the tasks that are presented. For example, an employee who is over-compensated may increase individual effort to accomplish tasks or may use it to assert their superiority decreasing the efforts of accomplishing the given tasks. Equity theory brings into consideration the perception of employee towards the organisation determining whether a given scenario is far or unfair. The theory originates from Adams perspective of the work place and behaviours exhibited by many organisations towards the way that employees accomplish their tasks. The theory brings into consideration the relationship between inputs and outputs presented by the way an employee participates in a given task. Thus, the ration of inputs to output should be close so that the employee is motivated and ready to improve the effectiveness in accomplishing the given tasks. Examples of inputs are qualifications, experience and skill while examples of output are monetary compensation, promotion and recognition. References Adams, J. 1965. Inequity in Social Exchange. Advances in experimental Social Psychology, 62: 335-343 Borkowski, N. 2005. Organizational Behaviour in Health Care. New York: Jones & Bartlett Publishers. Chan, K., Godby, R., Mestelma, S. & Muller, R. 1997. Equity Theory and the Voluntary Provision of Public Goods. Journal of Economic Behaviour & Organisation, 32(3): 349-364 Cropanzano, R. 2001. Justice in the Workplace: from Theory to Practice. New York: Lawrence Erlbaum Associates. Carrell, M. & Dittrich, E. 1978. Equity Theory: The Recent Literature, Methodological Considerations, and New Directions. The Academy of Management Review, 3(2): 202-210 Culyer, A. 2001. 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