Equity Theory of Motivation

What is the most complex object in the universe? Undeniably, a human brain which has billions of neurons connecting with each other in a split of a second. While we have not been able to fully comprehend how our mind gives rise to thoughts, actions, emotions and consciousness, we are able to study the ever evolving human behavior and institutively make predictions based on past experiences. Human behavior is hard wired through genetic inheritance at birth but is significantly influenced by family members, communities we live in, and our past and present experiences as we grow old. Once we enter into workforce, our cognitive abilities evolve further giving rise to different behaviors, which is scientifically known as organizational behaviors. Let us understand how and why people behave at work with the help of Equity Theory of Motivation.

Equity theory of motivation suggests that when individuals think the inputs and outputs are equivalent to the inputs and outputs of other colleagues, they are happy and satisfied. Employees compare their ratio of input-to-output with their colleagues' ratios of input-to-output to seek fairness and justice. The perceived inputs and outputs differ from person to person. Examples of inputs are effort, loyalty, hard work, commitment, skill, ability, flexibility, determination and personal sacrifice. Examples of outputs are pay, salary, perks, benefits, bonus, recognition, responsibility, training, travel, advancement, praise and sense of achievement. Generally, an individual comes across three scenarios of equity and fairness:

1) Equity: In this scenario, the employee finds that his or her ratio of input-to-output is fairly close to his colleague's ratio. The rewards may be intrinsic or extrinsic, but the employee feels a sense of fairness and equality, which in turn creates motivation.

2) Under rewarded inequity: In this scenario, the employee finds that his or her ratio of input-to-output is lower than that of his colleague's. Hence, the employee gets demotivated and disappointed to learn that his colleagues enjoy a higher input-to-output ratio, in spite of putting in equal efforts. For example, I handle real estate department and one of my duties is to process real estate taxes and disburse funds. For years there was no single particular method to disburse funds, so I put in significant efforts to create disbursement policies which explained step by step procedures one should follow to minimize errors and keep the procedures uniform. Because of these uniform procedures, loan histories looked user friendly and a lot of errors were eliminated when we disbursed funds from the loans. While working on these policies, I had communicated my expectations with my manager, Sandy Engyel. She had assured me that what I was doing was for the betterment of the organization, and it would payoff eventually. She presented my developments to the upper management and requested a pay raise or a promotion be issued to me for proactively working on new projects and helping the organization as a whole. Unluckily, our bank was going through 2008 financial crisis, and it didn't want to commit to any pay raises or promotions. Ironically, the bank was cutting down on expenses to stay in business, so my request was deemed rejected. To make the matters worse, my manager didn't even recognize my efforts or offered me some sort of intrinsic rewards. When the company is