How Can Equity Theory Explain the Motivation of Employees - Assignment Example

Business Behaviour Name Institution Tutor Date Question I How can equity theory explain the motivation of employees working at Diaco? The equity theory is grounded on the premise that individuals are motivated to acquire and preserve fair treatment for themselves. The theory therefore recommends that there should be fairness in an employee’s inputs (experience, skills, efforts and education) and the rewards/ outputs (the benefits, salary and promotion), in comparison to the rewards that others receive (Pride et al, 2013). The equity theory can be used to explain the motivation of employees at Diaco. An important factor that can be noted is that Diaco acknowledges that a highly motivated workforce is the key to survival in a highly competitive environment. Interestingly however, the company does not adopt approaches used by large corporations such as the Theory X and the feel good approach. Diaco has implemented its own motivation approach which is a reflection of the equity theory. For instance, Diaco offers its employees benefits such as day care centre and pays medical insurance for all employees, including casuals. In return the company requires hard work, creativity and teamwork. What is evident from this scenario is that the company considers the importance of fairness in the inputs and the outputs given to the employees. When the Diaco company employees make a comparison of the outputs and inputs with those of other companies, they perceive themselves as better off. As stated by the case, few of the employees are there because of the money since the company pays at the market rate or at a rate that is slightly higher. The main rewards are not monitory. It can therefore be stated that employees at Diaco are motivated by the fact that they receive better benefits than other companies. According to the equity theory, the idea of equity is implemented by first of all developing our personal input to outcome ratio. The next step involves making a comparison of our input–outcome ratio with those of others (Pride et al, 2013). Although, Diaco has adopted an employee motivation approach derived from the equity theory, it can be argued that the approach can result to an underpayment equity condition whereby a worker contributes more inputs but also gets the same outputs as referent. For instance, in the scenario where the company pays medical insurance and day care benefits for all employees both causal and full time employees, the underpayment equity condition arises. This is because the input of the casual employees is not similar to that of the full time employees , yet they receive the same benefits . White and Allen (2002) argue that the equity theory was re-energized by the emerging interest in equity and organizational justice. When looking keenly at the premise of the equity theory as proposed by John Stacey Adams, in 1963, it can be argued that the theory mainly promotes the concepts of equity and justice within the organization. The concept of equity is attained when the distribution of rewards is in direct proportion to the contribution the employees make to the organization. In a practical sense every employee in the organization cannot obtain similar rewards, but the rewards of each individual should be according to their contribution. Employees at Diaco are therefore motivated by the fact that there is justice in the organization because their contribution or input is rewarded with the lucrative non monitory benefits such as 50% tuition fees for those who want to study. The equity theory propagates that employees constantly compare their inputs and outputs with those of others (Pride et al, 2013). In a practical organizational context it is essential for managers to try and create a reasonable balance between the employees’ input and the outputs that they obtain. When a balance is created the employees develop a state of contentment due to the existing balance. Based on the case, it can be stated that the employees of Diaco are contented with the outputs provided for them by the company. However, a significant factor to take note is the fact that the underpayment equity condition exists in most of the motivation approaches adopted by the company. A case in point is where employees can take up to 6 weeks off at full pay working for environmental groups. Such a benefits approach basically implies that the workers on leave are contributing less input, yet they receive similar benefits as those contributing more input. Such an approach principally indicates that the company has not created an effective balance between its inputs and outputs of all the employees. A keen employee will make a comparison and note of these factor. Question 2 To what extent is Diaco’s approach to employee motivation consistent with expectancy theory? Discuss. The expectancy theory posits that people will put forth the greatest effort if they have expectations that their efforts will result to performance which will in turn yield a reward (Koontz and ‎Heinz, 2006). It can be argued that Diaco’s approach of employee motivation is to a great extent consistent with the expectancy theory. The expectancy theory argues that employees will put their greatest efforts if they are aware that their performance will yield a rewards (Koontz and ‎Heinz, 2006). The objective of Diaco Company is to produce the highest quality products with minimum negative implications on the environment. In order to meet this objective the company has adopted a lucrative rewards system that aims at ensuring that the performance of the employees meets this target. As noted by the case, the objective of producing high quality products with minimum impacts on the environment is an inspiration for the 250 employees. In addition, despite the competitive business environment, Diaco has developed a strong reputation in the industry. This basically implies that the employees of the company are performing well and these performance can be attributed to the lucrative benefits that are offered by the company. As argued by Marrelli, (2010) motivated employees perform their duties effectively. In reality, what goes through the mind of every employee is the question of ‘’what do I get out of performing a certain task.’’ Diaco is aware of this perspective, as a result, the lucrative benefits given to the employees are aimed as motivating them to work harder in order to meet the objectives of the company. The expectancy theory also promotes the idea that employees should be presented with credible evidence that good performance can lead to the anticipated results (Koontz and ‎Heinz, 2006). Diaco has used this perspective of the expectancy theory in order to influence the motivation of the employees. For instance, the CEO encourages the employees to take a break at the beach on hot days. In addition, the employees are also provided with health insurance benefits, day care services and school fees payments. All these benefits are tied to good performance. The company requires the employees to display hard work, teamwork and creativity. It can therefore be stated that to a large extent, the expectancy theory influences the motivation practices adopted by Diaco. The employee motivation approach adopted by Diaco is also consistent with expectancy theory based on the fact that it the approaches used match the three main elements of the theory. Lunenburg (2011) highlights that the three major elements of the theory are: expectancy, instrumentality and valence as indicated by (Figure 1). An employee is motivated by believing that their effort will result to acceptable performance ( expectancy), the second element is that the performance they give will be rewarded ( instrumentality ) and that the value of the reward is very positive ( valance ). When looking at the reward approach adopted by Diaco, it can be stated that the three elements of the expectancy theory are depicted. For instance, few employees working in the company are there because of the money, most of them work for the company due to the non-monitory benefits that are offered by the company (expectancy). The employees of the company are also certain that the performance they give will be rewarded (instrumentality). As noted, Diaco is one of the well performing companies within the competitive market. This implies that the employees are giving their best performance based on the fact that they are rewarded effectively. The rewards given to the employees are very positive (valence) for instance the 50% of tuition fees is a very lucrative deal for many employees. In addition, rewards such as day care services and health insurance even for casual workers can greatly capture the interests and expectations of any employee. Figure I. The Basic expectancy Model On the other hand, it can be argued that the motivation approach used by Diaco is not greatly consistent with the expectancy theory. Lunenburg (2011) highlights that the equity theory provides a model to enhance the motivation of the workforce through altering performance to reward expectancy. Diaco has not precisely set up its motivation approaches with the objective altering performance to reward expectancy. As noted, Diaco has provided the employee with a tough condition, which is ‘’ you either perform or lose your job. ‘’ The condition is not ‘’ perform your work to get rewards,’’ as proposed by expectancy theory. It can therefore be argued that Diaco’s motivation approach is not entirely based on the premise of the expectancy theory. References Adams, J, 1963, Towards an Understanding of Inequality, Journal of Abnormal and Normal Social Psychology, (67), p 422-436 Koontz, H, and ‎Heinz, W, 2006, Essentials of management , Cengage. Lunenburg, F, 2011.Expectancy Theory of Motivation: Motivating by Altering Expectations, International journal of management, business, and administration, 15(1), p 1-5 Marrelli, A, 2010, Managing for Engagement -- Communication, Connection, and Courage, Diane Publishing. Pride, W, Hughes, R and Kapoor, J, 2013, Business, Cengage Learning. White, S and Allen, R, 2002, Equity sensitivity theory: a test of responses to two types of under-reward situations. Journal of Managerial Issues, 14(4), p 4435-451, Read More