The Porter–Lawler extension of expectancy theory suggests that if performance results
in equitable rewards, people will be more satisfied. Thus, performance can lead to
satisfaction. Managers must therefore be sure that any system of motivation includes
Edward E. Lawler III and Lyman W. Porter. © 1967. Reproduced with permission of
John Wiley & Sons Ltd.
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Equity Theory
After needs have stimulated the motivation process and the individual has chosen an
action that is expected to satisfy those needs, the individual assesses the fairness, or
equity, of the resultant outcome.
Equity theory
contends that people are motivated to
seek social equity in the rewards they receive for performance.
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Equity is an individual’s
belief that the treatment he or she is receiving is fair relative to the treatment received by
others. According to equity theory, outcomes from a job include pay, recognition,
promotions, social relationships, and intrinsic rewards. To get these rewards, the indi-
vidual makes inputs to the job, such as time, experience, effort, education, and loyalty.
The theory suggests that people view their outcomes and inputs as a ratio and then
compare it to someone else’s ratio. This other “person” may be someone in the work
group or some sort of group average or composite. The process of comparison looks
like this:
Outcomes self
Outcomes other
Inputs self
Inputs other
Both the formulation of the ratios and comparisons between them are very subjective
and based on individual perceptions. As a result of comparisons, three conditions may
result: The individual may feel equitably rewarded, underrewarded, or overrewarded. A
feeling of equity will result when the two ratios are equal. This may occur even though
the other person’s outcomes are greater than the individual’s own outcomes—provided
that the other’s inputs are also proportionately greater. Suppose that Mark has a high
school education and earns $35,000. He may still feel equitably treated relative to
Susan, who earns $50,000, because she has a college degree.
People who feel underrewarded try to reduce the inequity. Such an individual might
decrease her inputs by exerting less effort, increase her outcomes by asking for a raise,
distort the original ratios by rationalizing, try to get the other person to change her or
his outcomes or inputs, leave the situation, or change the object of comparison. An indi-
vidual may also feel overrewarded relative to another person. This is not likely to be ter-
ribly disturbing to most people, but research suggests that some people who experience
inequity under these conditions are somewhat motivated to reduce it. Under such a cir-
cumstance, the person might increase his inputs by exerting more effort, reduce his out-
comes by producing fewer units (if paid on a per-unit basis), distort the original ratios by
rationalizing, or try to reduce the inputs or increase the outcomes of the other person.
Managers today may need to pay even greater attention to equity theory and its
implications. Many firms, for example, are moving toward performance-based reward
systems (discussed later in this chapter) as opposed to standard or across-the-board sal-
ary increases. Hence, they must ensure that the bases for rewarding some people more
than others are clear and objective. Beyond legal issues such as discrimination, managers
need to be sure that they are providing fair rewards and incentives to those who do the
best work.
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Moreover, they must be sensitive to cultural differences that affect how
people may perceive and react to equity and inequity.
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