David McClelland's 3-Need Theory Achievement, Affiliation, Power

McClelland's approach is not particularly associated with a theoretical perspective, but identifies three needs important in the workplace. The presence of these needs can be examined in various ways, but McClelland's drew upon Murray's use of projective pictures and story telling as a way of identifying the position of these needs in a leader. Power Needs (nPOW) Yukl (1989) reviewed the results of McClelland's theory in predicting leadership. Power stories reflect influencing others, defeating an opponent or competitor, winning and argument, or attaining a position of greater authority. Persons with low need for power may lack the assertiveness and self confidence necessary to organize and direct group activities effectively. A high need for power may be expressed as "personalized power" or "socialized power." People with high personalized power may have little inhibition or self control, and they exercise power impulsively. Correlated with this are tendencies to be rude, excessive use of alcohol, sexual harassment, and collecting symbols of power (e.g., big offices, desks, fancy cars, etc.). When they give advice or support, it is with strategic intent to further bolster their own status. They demand loyalty to their leadership rather than to the organiza tion. When the leader leaves the organization there is likely disorder and breakdown of team morale and direction. Socialized power need is most often associated with effective leadership. These leaders direct their power in socially positive ways that benefit others and the organization rather than only contributing to the leader's status and gain. They seek power because it is through power that tasks are accomplished. They are more hesitant to use power in a manipulative manner, are less narcissistic an d defensive, accumulate fewer material possessions or symbols of power or status, have a longer range perspective, and are more willing to receive consultation and advice. They realize that power must be distributed and shared, and that everyone must have a sense of influence over their own jobs. Effective leaders empower others who use that power to enact and further the leader's vision for the organization. For technical managers, need for achievement was predictive of advancement through lower levels of management, but power was predictive of higher levels of attainment. Achievement Need (nACH) Achievement is reflected in stories about attaining challenging goals, setting new records, successful completion of difficult tasks, and doing something not done before. High need achievers prefer a job in which success depends on effort and ability rather than on chance and factors beyond their control (locus of control). They prefer tasks that enable them to exercise their skills and initiation in problem solving. They want frequent and specific feedback about performance so they can enjoy the experience of making progress toward objectives. People scoring high are often found in jobs such as sales representative, real estate agent, producer of entertainment events, and owner-manager of small business. For managers in large organizations, moderate to high achievement is secondary to higher power needs. If achievement is dominant, the manager may try to achieve objectives alone rather than through team development. Affiliation Need (nAFF) Affiliation themes are revealed in stories about establishing or restoring close and friendly relationships, joining groups, participating in pleasant social activities, and enjoying shared activities with family or friends. It reflects behaviors toward others that are cooperative, supportive, and friendly and which value belonging and conformity to the group. They obtain great satisfaction from being liked and accepted by others, and prefer to work with others who prefer group harmony and cohesion (e.g.., relationship-centered, Jungian Type F's). A person low in affiliation tends to be a loner who is uncomfortable socializing with others except for a few close friends or family (introversion?). They may lack motivation or energy to maintain high social contacts in

networking, group presentations, public relations, and building close personal relations with peers and subordinates so necessary for most managers. Those with strong nAFF are reluctant to let work interfere with harmonious relationships. Moderate nAFF is related to effective management, since strong needs often lead to avoidance of unpopular decisions, permitting exceptions to rules, and showing favoritism to friends. This often leads to subordinates feeling confused about rules, playing to the manager's likes, and becoming anxious about what might happen next (inequity). Combinations for Managerial Success For managers in large organizations, power is most related to success, promotion, and accomplishment of objectives. Achievement and affiliation follow in that order, and are useful in creating a challenging and team spirited work environment. Greater career advancement and higher performance ratings are often related to both high power and achievement. For entrepreneurial managers (e.g., owner-managers of small, entrepreneurial organizations or autonomous subsidiaries of large organizations), high achievement is most obvious, followed by moderately high power and low affiliation. In summary:

Entrepreneurial small organizations or autonomous Large Organizations subsidiaries of large organizations nPOW (high) nACH (mod) nAFF (mod) nACH (high) nPOW (mod) nAFF (low)

In the figure below, each of the three needs can be over- or under-expressed, thereby leaving the leader in a position of potential abuse or insufficiency. In most cases, moderate to high ratings in these areas are desirable rather than excessively high or low ones.

_____________________________ McClelland, D. C. (1975). Power: The inner experience. New York: Irvington McClelland, D. C., & Burnham, D. H. (1976). Power is the great motivator. Harvard Business Review, 54(2), 100-110. Yukl, G. A. (1989). Leadership in organizations. Englewood Cliffs, NJ: Prentice Hall.

last updated 2-24-00 David X. Swenson PhD Homepage

David McClelland and his associates proposed McClellands theory of Needs / Achievement Motivation Theory. This theory states that human behaviour is affected by three needs - Need for Power, Achievement and Affiliation. Need for achievement is the urge to excel, to accomplish in relation to a set of standards, to struggle to achieve success. Need for power is the desire to influence other individuals behaviour as per your wish. In other words, it is the desire to have control over others and to be influential. Need for affiliation is a need for open and sociable interpersonal relationships. In other words, it is a desire for relationship based on co -operation and mutual understanding. The individuals with high achievement needs are highly motivated by competing and challenging work. They look for promotional opportunities in job. They have a strong urge for feedback on their achievement. Such individuals try to get satisfaction in performing things better. High achievement is directly related to high performance. Individuals who are better and above average performers are highly motivated. They assume responsibility for solving the problems at work. McClelland called such individuals as gamblers as they set challenging targets for themselves and they take deliberate risk to achieve those set targets. Such individuals look for innovative ways of performing job. They perceive achievement of goals as a reward, and value it more than a financial reward. The individuals who are motivated by power have a strong urge to be influential and controlling. They want that their views and ideas should dominate and thus, they want to lead. Such individuals are motivated by the need for reputation and self-esteem. Individuals with greater power and authority will perform better than those possessing less power. Generally, managers with high need for power turn out to be more efficient and successful managers. They are more determined and loyal to the organization they work for. Need for power should not always be taken negatively. It can be viewed as the need to have a positive effect on the organization and to support the organization in achieving its goals. The individuals who are motivated by affiliation have an urge for a friendly and supportive environment. Such individuals are effective performers in a team. These people want to be liked by others. The managers ability to make decisions is hampered if they have a high affiliation need as they prefer to be accepted and liked by others, and this weakens their objectivity. Individuals having high affiliation needs prefer working in an environment providing greater personal interaction. Such people have a need to be on the good books of all. They generally cannot be good leaders.

Victor Vroom
From Wikipedia, the free encyclopedia

Jump to: navigation, search Victor Vroom is a business school professor at the Yale School of Management, who was born on 9 August 1932 in Montreal, Canada. He holds a PhD from University of Michigan. Vroom's TESTING primary research was on the expectancy theory of motivation, which attempts to explain why individuals choose to follow certain courses of action in organizations, particularly in decision-making and leadership. His most well-known books are Work and Motivation, Leadership and Decision Making and The New Leadership.

Vroom has also been a consultant to a number of corporations such as GE and American Express.

Contents
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1 Expectancy Theory 2 Instrumentality 3 Valence 4 Bibliography o 4.1 Articles 5 See also 6 External links

[edit] Expectancy T eory

It has been suggested that this article or section be merged with Expectancy theory. (Discuss) Vroom's theory assumes that behavior results from conscious choices among alternatives whose purpose it is to maximi e pleasure and minimi e pain. The key elements to this theory are referred to as Expectancy (E), Instrumentality (I), and Valence (V). Critical to the understanding of the theory is the understanding that each of these factors represents a belief. The Expectancy Theory of Victor Vroom deals with motivation and management. Vroom's theory assumes that behavior results from conscious choices among alternatives whose purpose it is to maximi e pleasure and minimi e pain. Together with Edward Lawler and Lyman Porter, Vroom suggested that the relationship between people's behavior at work and their goals was not as simple as was first imagined by other scientists. Vroom reali ed that an employee's performance is based on individuals factors such as personality, skills, knowledge, experience and abilities. The expectancy theory says that individuals have differ sets of goals and can be motivated ent if they believe that:
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There is a positive correlation between efforts and performance, Favorable performance will result in a desirable reward, The reward will satisfy an important need, The desire to satisfy the need is strong enough to make the effort worthwhile.

Vroom's Expectancy Theory is based upon the following three beliefs:

1. Valence (Valence refers to the emotional orientations people hold with respect to outcomes [rewards]. The depth of the want of an employee for extrinsic [money, promotion, time-off, benefits] or intrinsic [satisfaction] rewards). Management must discover what employees value. 2. Expectancy (Employees have different expectations and levels of confidence about what they are capable of doing). Management must discover what resources, training, or supervision employees need. 3. Instrumentality (The perception of employees whether they will actually get what they desire even if it has been promised by a manager). Management must ensure that promises of rewards are fulfilled and that employees are aware of that. Vroom suggests that an employee's beliefs about Expectancy, Instrumentality, and Valence interact psychologically to create a motivational force such that the employee acts in ways that bring pleasure and avoid pain. This force can be 'calculated' via the following formula: Motivation = Valance Expectancy(Instrumentality). This formula can be used to indicate and predict such things as job satisfaction, one's occupational choice, the likelihood of staying in a job, and the effort one might expend at work. Vroom's theory suggests that the individual will consider the outcomes associated with various levels of performance (from an entire spectrum of performance possibilities), and elect to pursue the level that generates the greatest reward for him or her. E ectancy refers to the strength of a person's belief about whether or not a particular job performance is attainable. Assuming all other things are equal, an employee will be motivated to try a task, if he or she believes that it can be done. This expectancy of performance may be thought of in terms of probabilities ranging from zero (a case of "I can't do it!") to 1.0 ("I have no doubt whatsoever that I can do this job!") A number of factors can contribute to an employee's expectancy perceptions:
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the level of confidence in the skills required for the task the amount of support that may be expected from superiors and subordinates the quality of the materials and equipment the availability of pertinent information

Previous success at the task has also been shown to strengthen expectancy beliefs.

[edit] Instrumentality
e.g. "What's the probability that, if I do a good job, that there will be some kind of outcome in it for me?" If an employee believes that a high level of performance will be instrumental for the acquisition of outcomes which may be gratifying, then the employee will place a high value on performing well. Vroom defines Instrumentality as a probability belief linking one outcome (a high level of performance, for example) to another outcome (a reward). Instrumentality may range from a probability of 1.0 (meaning that the attainment of the second outcome the reward is certain if the first outcome excellent job performance

 is attained) through zero (meaning there is no likely relationship between the first outcome and the second). An example of zero instrumentality would be exam grades that were distributed randomly (as opposed to be awarded on the basis of excellent exam performance). Commission pay schemes are designed to make employees perceive that performance is positively instrumental for the acquisition of money. For management to ensure high levels of performance, it must tie desired outcomes (positive valence) to high performance, and ensure that the connection is communicated to employees. The VIE theory holds that people have preferences among various outcomes. These preferences tend to reflect a person's underlying need state.

[edit] Valence
The term Valence refers to the emotional orientations people hold with respect to outcomes (rewards). An outcome is positively valent if an employee would prefer having it to not having it. An outcome that the employee would rather avoid ( fatigue, stress, noise, layoffs) is negatively valent. Outcomes towards which the employee appears indifferent are said to have zero valence. Valences refer to the level of satisfaction people expect to get from the outcome (as opposed to the actual satisfaction they get once they have attained the reward). Vroom suggests that an employee's beliefs about Expectancy, Instrumentality, and Valence interact psychologically to create a motivational force such that the employee acts in ways that bring pleasure and avoid pain. People elect to pursue levels of job performance that they believe will maximize their overall best interests (their subjective expected utility). There will be no motivational forces acting on an employee if any of these three conditions hold:
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the person does not believe that he/she can successfully perform the required task the person believes that successful task performance will not be associated with positively valent outcomes the person believes that outcomes associated with successful task completion will be negatively valent (have no value for that person)

(Source: WILF H. RATZBURG British Columbia Institute of Technology

:E
Related Links WebNote Index Motivation Overview Attitudes Values

ectancy Theory

Contact information:

Dr. Richard W. Scholl 36 Upper College Road Kingston, RI 02881 p. 401.874.4347 f. 401.874.2954 rscholl@uri.edu There are so many theories of individual motivation, that it is difficult to report, master or even understand them all. Motivation is defined as the force that: Energies Behavior- What initiates a behavior, behavioral patterns, or changes in behavior? What determines the level of effort and how hard a person works? This aspect of motivation deals with the question of What motivates people? Directs Behavior- What determines which behaviors an individual chooses? This aspect of motivation deals with the question of choice and conflict among competing behavioral alternatives. Sustains Behavior- What determines an individual's level of persistence with respect to behavioral patterns? This aspect of motivation deals with how behavior is sustained and stopped. When we observe behavioral patterns of time, we are looking at this aspect of motivation. I believe that motivation is behaviorally specific, that is, it is more appropriate to think in terms of an individuals motivation to excel in a particular job requirement or even to carry out a specific behavior than it is to think about an individuals overall motivation. While the Duracell battery people are amusing, we do not generally find people that are either always motivated in every situation or not motivated in any situation. While individual dispositional variables may affect an individual's motivation level at any particular time, motivation itself is not a dispositional variable (See Internal versus External webnote). Motivation theories are intended to explain one ingredient in the determination of individual performance. Performance is viewed as a function of motivation, ability, role perceptions and resources. Motivation theories explain the amount of efforts and the direction of that effort exhibited by organizational members. One way untangle the web of motivational theories is to categorize these various theories. For example, motivation theories are often divided among content theories, that explain the relative amount of effort (energizes behavior), and process theories, that explain the direct of that effort (directs behavior) and behavioral theories, that explain the continuation of a behavioral pattern (sustains behavior). Content and process theories are not competing explanations of the same construct in that each type of theory explains a part of the entire motivation process. Some motivation theories are really offering the same conceptual explanation using a slightly different approach or terminology. Finally there are theories offering entirely different explanations for the same construct. The Expectancy Theory of Motivation (Porter & Lawler, 1968; Vroom, 1964) is one of the process theories. I see this theory as a model of behavioral choice, that is, as an explanation of why individuals choose one behavioral option over others. In doing so, it explains the

behavioral direction process. It does not attempt to explain what m tivat s individuals, but rather how they make decisions to achieve the end they value. What follows is a brief summary of this model.
Expectancy Theory Components

Expectancy theory is comprised of three components: Expectancy, Instrumentality, and Valance.

Expectancy- Probability (E P)

The expectancy is the belief that one's effort (E) will result is attainment of desired performance (P) goals. This belief, or perception, is generally based on an individual's past experience, self confidence (often termed self efficacy), and the perceived difficulty of the performance standard or goal.
Examples include:
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If I spend most of tonight studying will it improve my grade on tomorrow's math exam? If I work harder than everyone else in the plant will I produce more? If I practice my foul shot more will my foul shooting improve in the game? If I make more sales calls will I make any more sales?

Variables affecting the individual's Expectancy perception:

Self Efficacy. Self efficacy is a persons belief about his or her ability to perform a particular behavior successfully. Does the individual believe that he or she has the require skills and competencies required to perform well and the required goals? Goal Difficulty. Goals that are set too high or performance expectations that are made too difficult, lead to low expectancy perceptions. When individuals perceive that the goals are beyond their ability to achieve, motivation is low because of low expectancy. Control. One's perceived control over performance is an important determinant of expectancy. In order for expectancy to be high, individuals must believe that some degree of control over the expected outcome. When individuals perceive that the outcome is beyond their ability to influence, expectancy, and thus motivation, is low. For example, many profitsharing plans do not motivate individuals to increase their effort because these employees do not think that they have direct control over the profits of their large companies.

Instrumentality- Probability (P R)

The inst umentality is the belief that if one does meet performance expectations, he or she will receive a greater reward. This reward may come in the form of a pay increase, promotion, recognition or sense of accomplishment. It is important to note that when it is perceived that valued rewards follow all levels of performance, then instrumentality is low. For example, if a professor is known to give everyone in the class an "A" regardless of performance level, then instrumentality is low.
Examples include:
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If I get a better grade on tomorrow's math test will I get an "A" in math? If I produce more than anyone else in the plant, will I get a bigger raise? A faster promotion? If my foul shooting improves will I have a shot a team MVP? If I make more sales will I get a bonus? A greater commission? If I make more sales will I believe that I am the best sales person or be recognized by others as the best sales person?

Variables affecting the individual's Valance for outcomes:

Trust. When individuals trust their leaders, they're more likely to believe their promises that good performance will be rewarded. Control. When workers do not trust the leaders of their organizations, they often attempt to control the reward system through a contract or some other type of control mechanism. When individuals believe they have some kind of control over how, when, and why rewards are distributed, Instrumentality tends to increase. Policies. The degree to which pay and reward systems are formalized in written policies has an impact on the individuals' Instrumentality perceptions. Formalized policies linking rewards to performance tend to increase Instrumentality.
Valance- V(R)

The valance refers the value the individual personally places on the rewards. This is a function of his or her needs, goals, values and Sources of Motivation.
Examples include:
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How much I really want an "A" in math? Do I want a bigger raise? Is it worth the extra effort? Do I want a promotion? How important to me is it to be team MVP? Do I need a sales bonus? Is the extra time I spend making extra sales calls worth the extra commission? Is it important to me that I am the best salesperson?

Variables affecting the individual's Valance for outcomes:

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Values Needs

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Goals Preferences Sources of Motivation

Potential Valued Outcomes may include:

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Pay increases and bonuses Promotions Time off New and interesting assignments Recognition Intrinsic satisfaction from validating one's skills and abilities Intrinsic satisfaction from knowing that your efforts had a positive influence in helping someone.

We use the Expectancy Theory of motivation to help us understand how individuals make decisions regarding various behavioral alternatives. This model deals with the direction aspect of motivation, that is, once behavior is energized, what behavioral alternatives are individuals likely to pursue. The following are propositions of Expectancy Theory: When deciding among behavioral options, individuals select the option with the greatest motivational force (MF). Motivational Force (MF) = E pectancy x Instrumentality x Valance Expectancy and instrumentality are attitudes, or more specifically, they are cognitions. As such, they represent an individual's perception of the likelihood that effort will lead to performance and performance will lead to the desired outcomes. These perceptions represent the individuals subjective reality, and may or may not bear close resemblance to actual probabilities. These perceptions are tempered by the individual's experiences (learning theory), observations of others (social learning theory), and self-perceptions. Valance is rooted in an individuals value system. Expectancy Theory can be used to define what is termed a strong situation. Strong situations act to have base is a strong influence on the behavior of individuals, often overriding their personalities, personal preferences, and other dispositional variables. Consequences. There are highly valued positive or negative outcomes perceived to be associated with behavior in the situation. This is the same as valance in expectancy theory. Likelihood. There is a high perceived probability that these consequences will follow behavior (e.g., "I am certain that if I swear at my boss, she will fire me"). This is the same as instrumentality in expectancy theory. Specificity. Required behavior is well defined and understood by the individual (e.g., "Wear a black tuxedo" is more specific than "dress appropriately"). This is a part of what determines expectancy in expectancy theory.
References

Porter, L. W., & Lawler, E. E. 1968. Managerial Attitudes and Performance. Homewood, IL: Richard D. Irwin, Inc. Vroom, V. H. 1964. Work and Motivation. New York: McGraw Hill.

adams' equity theory

j stacey adams - equity theory on job motivation

John Stacey Adams, a workplace and behavioural psychologist, put forward his Equity Theory on job motivation in 1963. There are similarities with Charles Handy's extension and interpretation of previous simpler theories o f Maslow, Herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of their relationship with their work, and thereby their employer. However, a wareness and cognizance of the wider situation - and crucially comparison - feature more strongly in Equity Theory than in many other earlier motivational models. The Adams' Equity Theory model therefore extends beyond the individual self, and incorporates influence and comparison of other people's situations - for example colleagues and friends - in forming a comparative view and awareness of Equity, which commonly manifests as a sense of what is fair. When people feel fairly or advantageously treated th ey are more likely to be motivated; when they feel unfairly treated they are highly prone to feelings of disaffection and demotivation. The way that people measure this sense of fairness is at the heart of Equity Theory. Equity, and thereby the motivation al situation we might seek to assess using the model, is not dependent on the extent to which a person believes reward exceeds effort, nor even necessarily on the belief that reward exceeds effort at all. Rather, Equity, and the sense of fairness which com monly underpins motivation, is dependent on the comparison a person makes between his or here reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar situation.

adams' equity theory

Adams called personal efforts and rewards and other similar 'give and take' issues at work respectively 'inputs' and 'outputs'. Inputs are logically what we give or put into our work. Outputs are everything we take out in return. These terms help emphasise that what people put into their work includes many factors besides working hours, and that what people receive from their work includes many things aside from money. Adams used the term 'referent' others to describe the reference points or people with whom we compare our own situation, which is the pivotal part of the theory. Adams Equity Theory goes beyond - and is quite different from merely assessing effort and reward. Equity Theory adds a crucial additional perspective of comparison with 'referent' others (people we consi der in a similar situation). Equity theory thus helps explain why pay and conditions alone do not determine motivation. In terms of how the theory applies to work and management, we each seek a fair balance between what we put into our job and what we ge t out of it. But how do we decide what is a fair balance? The answer lies in Equity Theory. Importantly we arrive at our measure of fairness Equity - by comparing our balance of effort and reward, and other factors of give and take - the ratio of input and output - with the balance or ratio enjoyed by other people, whom we deem to be relevant reference points or examples ('referent' others). Crucially this means that Equity does not depend on our input -to-output ratio alone - it depends on our comparison between our ratio and the ratio of others. We form perceptions of what constitutes a fair ratio (a balance or trade) of inputs and outputs by comparing our own situation with other 'referents' (reference points or examples) in the market place as we see i t. In practice this helps to explain why people are so strongly affected by the situations (and views and gossip) of colleagues, friends, partners etc., in establishing their own personal sense of fairness or equity in their work situations. Adams' Equity Theory is therefore a far more complex and sophisticated motivational model than merely assessing effort (inputs) and reward (outputs).

The actual sense of equity or fairness (or inequity or unfairness) within Equity Theory is arrived at only after incor porating a comparison between our own input and output ratio with the input and output ratios that we see or believe to be experienced or enjoyed by others in similar situations. This comparative aspect of Equity Theory provides a far more fluid and dynami c appreciation of motivation than typically arises in motivational theories and models based on individual circumstance alone. For example, Equity Theory explains why people can be happy and motivated by their situation one day, and yet with no change to t heir terms and working conditions can be made very unhappy and demotivated, if they learn for example that a colleague (or worse an entire group) is enjoying a better reward -to-effort ratio. It also explains why giving one person a promotion or pay -rise can have a demotivating effect on others. Note also, importantly, that what matters is the ratio, not the amount of effort or reward per se. This explains for example why and how full -time employees will compare their situations and input -to-output ratios with part-time colleagues, who very probably earn less, however it is the ratio of input -to-output - reward-to-effort which counts, and if the part -timer is perceived to enjoy a more advantageous ratio, then so this will have a negative effect on the full -timer's sense of Equity, and with it, their personal motivation. Remember also that words like efforts and rewards, or work and pay, are an over simplification - hence Adams' use of the terms inputs and outputs, which more aptly cover all aspects of what a person gives, sacrifices, tolerates, invests, etc., into their work situation, and all aspects of what a person receives and benefits from in their work and wider career, as they see it.

inputs

equity dependent on comparing own ratio of input/output with ratios of 'referent' others People need to feel that there is a fair balance between inputs and

outputs

Inputs are typically: effort, loyalty, hard work, commitment, skill, ability,

Outputs are typically all financial rewards - pay, salary, expenses, perks, benefits, pension

adaptability, flexibility, tolerance, determination, heart and soul, enthusiasm, trust in our boss and superiors, support of colleagues and subordinates, personal sacrifice, etc.

outputs. Crucially fairness is measured by comparing one's own balance or ratio between inputs and outputs, with the ratio enjoyed or endured by relevant ('referent') others.

arrangements, bonus and commission - plus intangibles recognition, reputation, praise and thanks, interest, responsibility, stimulus, travel, training, development, sense of achievement and advancement, promotion, etc.

If we feel are that inputs are fairly rewarded by outputs (the fairness benchmark being subjectively perceived from market norms and other comparable references) then generally we are happier in our work and more motivated to continue inputting at the same level. If we feel that our ratio of inputs to outputs is less beneficial than the ratio enjoyed by referent others, then we become demotivated in rel ation to our job and employer. People respond to a feeling of inequity in different ways. Generally the extent of demotivation is proportional to the perceived disparity with other people or inequity, but for some people just the smallest indication of ne gative disparity between their situation and other people's is enough to cause massive disappointment and a feeling of considerable injustice, resulting in demotivation, or worse, open hostility. Some people reduce effort and application and become inward ly disgruntled, or outwardly difficult, recalcitrant or even disruptive. Other people seek to improve the outputs by making claims or demands for more reward, or seeking an alternative job. Understanding Equity Theory - and especially its pivotal comparati ve aspect - helps managers and policy-makers to appreciate that while improving one person's terms and conditions can resolve that individual's demands (for a while), if the change is perceived by other people to upset the Equity of their own situations th en the solution can easily generate far more problems than it attempted to fix. Equity Theory reminds us that people see themselves and crucially the way they are treated in terms of their surrounding environment, team, system, etc - not in isolation - and so they must be managed and treated accordingly.

A free fully detailed dia gram similar to the image below explaining Adam's Equity Theory is available in various formats. When using or referring to the diagram emphasise that the calibration of the scales - the comparison of input/output ratios - is the crucial aspect, not merely a judgement of whether rewards are appropriate for efforts: Adams' Equity Theory diagram (mono pdf) Adams Equity Theory diagram (mono doc) Adams Equity Theory (colour pdf) Adams Equity Theory diagram (colour doc)

click to enlarge

This interpretation of Adams' Equity Theory was updated and improved in December 2007. The previous summary failed to emphasise the pivotal significance of the comparative aspect within the theory. Thanks NT for your guid ance in making these improvements.

see also
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Adair's Action-Centred Leadership Model - its systemic approach very relevant to Equity Theory Personality Theories and Types - Jung, Myers Briggs, Keirsey, Belbin, etc Charles Handy Maslow's Hierarchy of Needs McGregor's X-Y Theory McClelland's Motivational Theory Teambuilding and motivational activities, for example the Hellespont Swim case study and exercise Free online resources section, which includes many other useful

Equity theory
From Wikipedia, the free encyclopedia Jump to: navigation, search

Equity Theory attempts to explain relational satisfaction in terms of perceptions of fair/unfair distributions of resources within interpersonal relationships. Equity theory is considered as one of the justice theories. It was first developed in 1963 by John Stacey Adams, a workplace and behavioral psychologist, who asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others (Adams, 1965). The belief is that people value fair treatment which causes them to be motivated to keep the fairness maintained within the relationships of their co-workers and the organization. The structure of equity in the workplace is based on the ratio of inputs to outcomes. Inputs are the contributions made by the employee for the organization.

Contents
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1 Background o 1.1 Definition of equity o 1.2 Inputs and outcomes  1.2.1 Inputs  1.2.2 Outcomes o 1.3 Propositions 2 Equity Theory in business o 2.1 Assumptions of Equity Theory applied to business o 2.2 Implications for managers 3 Criticisms and related theories o 3.1 Equity Sensitivity Construct o 3.2 Fairness Model 4 See also 5 References 6 Literature

[edit] Background
Equity theory proposes that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship. It focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratios of contributions and benefits of each person within the relationship. Partners do not have to receive equal benefits (such as receiving the same amount of love, care, and financial security) or make equal contributions (such as investing the same amount of effort, time, and financial resources), as long as the ratio between these benefits and contributions is similar. Much like other prevalent theories of motivation, such as Maslows hierarchy of needs, Equity Theory acknowledges that subtle and variable individual factors affect each persons assessment and perception of their relationship with their relational partners (Guerrero et al., 2007). According to Adams (1965), anger is induced by underpayment inequity and guilt is induced with overpayment equity (Spector 2008). Payment whether hourly wage or salary, is the main concern and therefore the cause of equity or inequity in most cases. In any position, an employee wants to feel that their contributions and work performance are being rewarded with their pay. If an employee feels underpaid then it will result in the employee feeling hostile towards the organization and perhaps their co-workers, which may result the employee not performing well at work anymore. It is the subtle variables that also play an important role for the feeling of equity. Just the idea of recognition for the job performance and the mere act of thanking the employee will cause a feeling of satisfaction and therefore help the employee feel worthwhile and have more outcomes.
[edit] Definition of equity

An individual will consider that he is treated fairly if he perceives the ratio of his inputs to his outcomes to be equivalent to those around him. Thus, all else being equal, it would be

acceptable for a more senior colleague to receive higher compensation, since the value of his experience (an input) is higher. The way people base their experience with satisfaction for their job is to make comparisons with themselves to the people they work with. If an employee notices that another person is getting more recognition and rewards for their contributions, even when both have done the same amount and quality of work, it would persuade the employee to be dissatisfied. This dissatisfaction would result in the employee feeling underappreciated and perhaps worthless. This is in direct contrast with the idea of equity theory, the idea is to have the rewards (outcomes) be directly related with the quality and quantity of the employees contributions (inputs). If both employees were perhaps rewarded the same, it would help the workforce realize that the organization is fair, observant, and appreciative. This can be illustrated by the following equation:

[edit] Inputs and outcomes [edit] Inputs

Inputs are defined as each participants contributions to the relational exchange and are viewed as entitling him/her to rewards or costs. The inputs that a participant contributes to a relationship can be either assets entitling him/her to rewards or liabilities - entitling him/her to costs. The entitlement to rewards or costs ascribed to each input vary depending on the relational setting. In industrial settings, assets such as capital and manual labor are seen as "relevant inputs" inputs that legitimately entitle the contributor to rewards. In social settings, assets such as physical beauty and kindness are generally seen as assets entitling the possessor to social rewards. Individual traits such as boorishness and cruelty are seen as liabilities entitling the possessor to costs (Walster, Traupmann & Walster, 1978). Inputs typically include any of the following:
y y y y y y y y y y y y y y y

Time Effort Loyalty Hard Work Commitment Ability Adaptability Flexibility Tolerance Determination Enthusiasm Personal sacrifice Trust in superiors Support from co-workers and colleagues Skill

[edit] Outcomes

Outputs are defined as the positive and negative consequences that an individual perceives a participant has incurred as a consequence of his/her relationship with another. When the ratio of inputs to outcomes is close, than the employee should have much satisfaction with their job. Outputs can be both tangible and intangible (Walster, Traupmann & Walster, 1978). Typical outcomes include any of the following:
y y y y y y y y y y y y

Job security Esteem Salary Employee benefit Expenses Recognition Reputation Responsibility Sense of achievement Praise Thanks Stimuli

[edit] Propositions

Equity Theory consists of four propositions:

1. Individuals seek to maximize their outcomes (where outcomes are defined as rewards minus costs)[1]. 2. Groups can maximize collective rewards by developing accepted systems for equitably apportioning rewards and costs among members. Systems of equity will evolve within groups, and members will attempt to induce other members to accept and adhere to these systems. The only way groups can induce members to equitably behave is by making it more profitable to behave equitably than inequitably. Thus, groups will generally reward members who treat others equitably and generally punish (increase the cost for) members who treat others inequitably. 3. When individuals find themselves participating in inequitable relationships, they become distressed. The more inequitable the relationship, the more distress individuals feel. According to equity theory, both the person who gets too much and the person who gets too little feel distressed. The person who gets too much may feel guilt or shame. The person who gets too little may feel angry or humiliated. 4. Individuals who perceive that they are in an inequitable relationship attempt to eliminate their distress by restoring equity. The greater the inequity, the more distress people feel and the more they try to restore equity. (Walster, Traupmann and Walster, 1978)

[edit] Equity Theory in business

Equity Theory has been widely applied to business settings by Industrial Psychologists to describe the relationship between an employee's motivation and his or her perception of equitable or inequitable treatment. In a business setting, the relevant dyadic relationship is that between employee and employer. As in marriage and other contractual dyadic relationships, Equity Theory assumes that employees seek to maintain an equitable ratio

between the inputs they bring to the relationship and the outcomes they receive from it (Adams, 1965). Equity Theory in business, however, introduces the concept of social comparison, whereby employees evaluate their own input/output ratios based on their comparison with the input/outcome ratios of other employees (Carrell and Dittrich, 1978). Inputs in this context include the employees time, expertise, qualifications, experience, intangible personal qualities such as drive and ambition, and interpersonal skills. Outcomes include monetary compensation, perquisites (perks), benefits, and flexible work arrangements. Employees who perceive inequity will seek to reduce it, either by distorting inputs and/or outcomes in their own minds ("cognitive distortion"), directly altering inputs and/or outcomes, or leaving the organization (Carrell and Dittrich, 1978). Thus, the theory has wide-reaching implications for employee morale, efficiency, productivity, and turnover.
[edit] Assumptions of Equity Theory applied to business

The three primary assumptions applied to most business applications of Equity Theory can be summarized as follows:
1. Employees expect a fair return for what they contribute to their jobs, a concept referred to as the equity norm . 2. Employees determine what their equitable return should be after comparing their inputs and outcomes with those of their coworkers. This concept is referred to as social comparison . 3. Employees who perceive themselves as being in an inequitable situation will seek to reduce the inequity either by distorting inputs and/or outcomes in their own minds ( cognitive distortion ), by directly altering inputs and/or outputs, or by leaving the organization. (Carrell and Dittrich, 1978)

[edit] Implications for managers

Equity theory has several implications for business managers:

y

People measure the totals of their inputs and outcomes. This means a working mother may accept lower monetary compensation in return for more flexible working hours. Different employees ascribe personal values to inputs and outcomes. Thus, two employees of equal experience and qualification performing the same work for the same pay may have quite different perceptions of the fairness of the deal. Employees are able to adjust for purchasing power and local market conditions. Thus a teacher from Alberta may accept lower compensation than his colleague in Toronto if his cost of living is different, while a teacher in a remote African village may accept a totally different pay structure. Although it may be acceptable for more senior staff to receive higher compensation, there are limits to the balance of the scales of equity and employees can find excessive executive pay demotivating. Staff perceptions of inputs and outcomes of themselves and others may be incorrect, and perceptions need to be managed effectively.

An employee who believes he is over-compensated may increase his effort. However he may also adjust the values that he ascribes to his own personal inputs. It may be that he or she internalizes a sense of superiority and actually decrease his efforts.

[edit] Criticisms and related theories

Criticism has been directed toward both the assumptions and practical application of Equity Theory. Scholars have questioned the simplicity of the model, arguing that a number of demographic and psychological variables affect people's perceptions of fairness and interactions with others. Furthermore, much of the research supporting the basic propositions of equity theory has been conducted in laboratory settings, and thus has questionable applicability to real-world situations (Huseman, Hatfield & Miles, 1987). Critics have also argued that people might perceive equity/inequity not only in terms of the specific inputs and outcomes of a relationship, but also in terms of the overarching system that determines those inputs and outputs. Thus, in a business setting, one might feel that his or her compensation is equitable to other employees', but one might view the entire compensation system as unfair (Carrell and Dittrich, 1978). Researchers have offered numerous magnifying and competing perspectives:
[edit] Equity Sensitivity Construct

The Equity Sensitivity Construct proposes that individuals have different preferences for equity and thus react differently to perceived equity and inequity. Preferences can be expressed on a continuum from preferences for extreme under-benefit to preferences for extreme over-benefit. Three archetypal classes are as follows:
y y y

Benevolents, those who prefer their own input/outcome ratios to be less than those of their relational partner. In other words, the benevolent prefers to be under-benefitted. Equity Sensitives, those who prefer their own input/outcome ratios to be equal to those of their relational partner. Entitleds, those who prefer their own input/outcome ratios to exceed those of their relational partner. In other words, the entitled prefers to be over-benefitted. (Huseman, Hatfield & Miles, 1987)

[edit] Fairness Model

The Fairness Model proposes an alternative measure of equity/inequity to the relational partner or "comparison person" of standard Equity Theory. According to the Fairness Model, an individual judges the overall "fairness" of a relationship by comparing their inputs and outcomes with an internally derived standard. The Fairness Model thus allows for the perceived equity/inequity of the overarching system to be incorporated into individuals' evaluations of their relationships (Carrell and Dittrich, 1978).

[edit] See also

y y

Expectancy theory Social Psychology

[edit] References
1. ^ E.g. ultimatum games show, that the maximation of outcomes is only one of several objectives for an individual. In order to foster rules desired by an individual, the individual may be willing to sacrifice maximum outcomes.

Equity Theory
Explanations > Theories > Equity Theory Description | Example | So What? | See also | References

Description
People are happiest in relationships where the give and take are about equal. If one person is getting too little from the relationship, then not only are they going to be unhappy with thisthe person getting the lions share will also be feeling rather guilty about this imbalance. This is reinforced by strong social norms about fairness. In short-term relationships we tend to trade in things, such as loaning small sums or buying beers. In longer-term relationships the trade is more emotional. Overall, though, it is still better to be getting more than lessalthough you could feel better about the relationship, the benefits you get from it can buy you compensatory happiness elsewhere. Equity Theory is also called Inequity Theory as it is the unequal difference that is often the area of interest.

Example
Men who have been pulled away from their family by their work sometimes try to even the scales with expensive holidays. This does not work well as they are trying to trade (shortterm value) money for (long-term value) emotion.

So what?
Using it

If you are getting the short end of the stick in a relationship, use this to make the other person feel even more guilt than they already feel. Get them to focus on the value of the relationship itself rather than the more material things they are getting from it.

Defending

If you are getting what you want from a relationship, resist attempts to change the balance.

See also
Epistemological Weighting Hypothesis, Reciprocity Norm, Social Exchange Theory, Social Comparison Theory http://www.cba.uri.edu/Scholl/Notes/Equity.html

References
Adams (1963), Adams (1965), Homans (1961), Walster, Walster and Berscheid (1978)