Use Adams’ Equity Theory to Understanding How Your Employees Think and Feel

Before I began working with a recent client, a couple of talented employees and the management of a group got into a tiff. The employees perceived the value of what they gave to and received from the company one way, and management saw things another way. The employees felt things were out of balance, leaning towards their inputs. The management felt the outputs were in balance with the employee’s inputs. The disagreement started small and was allowed to continue over time without any intervention until it reached a boiling point. Ultimately, a less than satisfactory outcome resulted.

I think the situation could have been resolved with a better outcome if management had considered a management theory by John Stacey Adams. His approach, Equity Motivation Theory, builds upon the work of Maslow’s Hierarchy of Needs as we all Herzberg’s Two Factor Theory.

Equity Theory is a helpful tool that will allow you to put workplace psychology in place and increase your team’s motivation.

Inputs

The crux of the theory states employees will seek to balance their inputs and outputs. They will be motivated if the company’s outputs exceed the employee’s inputs and will become demotivated if the employee's perceived inputs exceed their outputs. The fundamental question the employee will ask themselves is “Am I giving the company more than what I’m getting from the company?” It’s how they determine what is fair.

There are three parts to the theory - inputs, outputs, and the employee’s perception of how those two compare to each other. The inputs are what the employee brings to the company. The outputs are what the company gives the employee in exchange for their contributions. In the employee's mind, they calculate what is fair. Where they get their comparison of what is fair is the final and most critical aspect of the theory.

Their inputs, or what they bring to the table, will be expressed in many ways;

• Effort
• Loyalty
• Hard Work
• Commitment
• Skill
• Ability
• Knowledge
• Adaptability
• Flexibility
• Tolerance
• Determination
• Enthusiasm
• Trust in manager and superiors
• Support of colleagues and peers
• Personal sacrifice, etc

Inputs are what business owners are buying from the employees. Inputs can be tangible and intangible. Initially, the exchange seems fair to the employee. Otherwise, they likely wouldn’t have joined the team. They felt the input and outputs were in balance.

Outputs

Outputs are those things the company offers to the employee in exchange for the inputs. As with input, outputs are both tangible and intangible. They can include the following:

• Salary and benefits
• Recognition
• Reputation
• Responsibility
• Sense of achievement
• Praise and thanks
• Stimulus
• A sense of advancement and growth

Like outputs, inputs of the intangible nature can be difficult assigning value to those intangible aspects.

It’s All About Balance

Each day your employee will leave work and will perform the following algorithm. They will ask themselves, “Were my inputs in balance with my outputs?” If they feel the inputs are greater the outputs, then they might feel they owe and probably ought to work harder. If the inputs are equal to the outputs, then they’ll continue working at their current level. If the inputs are less than the outputs, then they’ll throttle back and might even encourage others to do that as well.

As a leader, you want them to choose the first option. When they get to the last option, then you’re facing a real problem employee. The problem for the leader is when the employee starts down the slippery slope. That’s when they perceive their inputs to exceed the outputs of the company. When they begin down this path, you’ll notice demotivation creeping in, and ultimately you will witness disruptive behavior.

The perception of imbalance is when demotivation begins. Helping the employee understand the real value of the inputs and outputs is challenging. It is necessary to know where they are obtaining their comparisons for their values. They will look inside the company and use their peers as comparisons. They will always look outside the company for comparisons too. They might even use an example companies from entirely different industries. Sometimes they might not be comparing apples to apples. It could be what they think is an apple is a head of lettuce. As their leader, you’ll want to understand where they are getting their baselines.

Most of the Time, It’s Not About the Money

As the leader, you are responsible for keeping an eye on the tangible and intangible outputs from your company. If you own the company, you are “the company” in their eyes. If you’re their supervisor, fair or not, you also represent “the company” to them. It’s up to you make an effort and be vigilant.

You’ll notice the intangible outputs from the company outnumber the tangible. Frequently, the intangible outputs have greater weight than the tangible. It’s the people touch that may matter more. Let your people know they matter and that will go a long way to go in working to balance their inputs. Provide praise, recognition for work well done, assign more responsibility and help them grow. Doing this will often outweigh any monetary issues.

The value the people place on the outputs of the company is a personal issue. Get to know your people so you can understand their values and where they obtain their comparisons. Meet regularly with them to discuss goals and their personal development. Help them pick the proper benchmarks for their input and output values. Determine what matters to most them. I’d bet it’s usually the intangible. If you can get within 90% of the tangibles for your type of practice, you’ll be okay. Focus on ways to provide the intangible outputs. If you do this, you’ll tip the scales and create a motivated employee.