Equity Theory | Meaning and Definition

What is Equity theory?

Equity theory is described as a position that is required to be maintained by people for achieving a fair relationship which must be developed between the performance performed and the reward gained in respect to our and the others. If put simply, then the equity theory can be defined as an ordinary phenomenon when demotivation affects the employee. The job ends up demotivating the employee and his employer as well in situations where his input is more compared to his output. 

If we go by the Equity Theory, then the employees are driven by the outcomes of the work. The inputs and outputs of an individual are compared by themselves at work. This is basically the driving force for the employees to keep being motivated to work despite the shortage of work they are working on as those are orders, and orders are absolute. It is common for employees to seek for their work to be in an equal ratio with the amount of work, loyalty, and dedication that they put into it and the payout and experience that they get out of it. 

Equity Theory is important as it is needed for the maintenance of the relationship of the performer and the reward gained by the performer with respect to that. There is an important philosophy behind the theory of equity. This philosophy is important for driving the employees and hence speeding up the work. This also makes it extremely crucial for the managers to keep an eye open on the effect of this philosophy on the employee, and the effects are not always positive and can affect the employee negatively as well.