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The Application of Equity Theory in Business Today

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The Application of Equity Theory in Business Today

Research Paper

Marcy Adams
Organizational Behavior and Theory, Bus 7000
Professor Bryan Forsythe
October 15, 2012 “That’s why you get paid the big bucks!” A phrase often head in all levels of management may actually hold theoretical meaning as opposed to what was often thought as simply an excuse to get out of performing a task. Unfortunately, implications of such could be the demonstration of a much deeper feeling in inequity that could ultimately damage the motivation of an entire organization. As defined, an organization is a collection of people who work together to achieve a variety of goals (Understanding & Managing Organizational Behavior, p 1). Organizational behavior is the actions and attitudes of those people within the organization (Understanding & Managing Organizational Behavior, p 1). The attitude of an individual determines the job satisfaction or dissatisfaction, commitment to the organization and overall involvement. Attitude can be influenced by internal factors, external factors and perception. First developed by John Stacey Adams in 1963, Equity theory attempts to explain the relationship between how fairness and unfairness correspond to a persons satisfaction. It asserts that employees seek a need to maintain balance between their inputs and outputs, all in comparison to that of a “referent” other (McShane & Von Gilnow p.151). Further, it suggests people will avoid those relationships that seem unfair or inequitable and recognizes the balance of the inputs and outcomes as ones perception of them, not necessarily by objective standard (Understanding & Managing Organizational Behavior, p 27). When an imbalance of inputs and outcomes exist, the individual’s reaction is to find balance. Occasionally they find this…...

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