Equity Theory And Employee Motivation

In business, the Equity Theory of employee motivationAccording to the Equity Theory, the most highly
describes the relationship between how fairly anmotivated employee is the one who perceives his
employee perceives he is treated and how hard he isrewards are equal to his contributions. If he feels that
motivated to work. Peter Drucker, an author whohe is working and being rewarded at about the same
specialized in economics, first proposed the linkrate as his peers, then he will judge that he is being
between Equity Theory and employee motivation.treated fairly.
The basic idea behind the Equity Theory is thatThis doesn't mean that every manager should treat
workers, in an attempt to balance what they put in toevery employee identically, because every worker
their jobs and what they get from them, willdoes not measure his contributions in the same way.
unconsciously assign values to each of his variousFor example, flexible working hours might motivate a
contributions.working mother even more than a pay raise.
In addition to their time, workers contribute theirConversely, though an across-the-board wage
experience, their qualifications, and their capability inincrease may delight most employees, the highest
addition to their personal strengths such as acumenproducers may become less motivated if they
and ambition. Money, of course, is the primaryperceive that they are not being rewarded for their
motivating outcome for an employee, but it is not theambition. Research on Equity Theory and employee
only, and in some cases not even the most important,motivation has shown that, in general, over-rewarded
factor. Power and status are also prime motivators, asemployees will produce more and of a higher quality
are flexibility, perquisites and variety.than will under-rewarded, less motivated employees.