Equity theory is a motivational theory that states that employees are motivated by a desire for fairness and justice in the workplace. Employees compare their inputs (e.g., effort, education, experience) and outcomes (e.g., pay, recognition, benefits) to those of others and make judgments about whether they are being treated fairly. When employees perceive that they are being treated unfairly, they may become dissatisfied and less productive.
Equity theory has important implications for managers. Managers need to be aware of the factors that employees use to compare themselves to others and ensure that employees perceive that they are being treated fairly. This can be done by providing employees with clear and accurate information about their pay and benefits, by creating a fair and equitable performance appraisal system, and by providing employees with opportunities for development and advancement.
