Application of Equity Theory

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Equity Theory

Equity theory has helped in promoting social comparison thus enabling a fair working environment thus promoting productivity and efficiency. The theory can also help the managers to improve the welfare and general conditions of their employees and are able to measure the employees' efforts against the compensation (Daft, Martyn, and Natalia 615).

Historical Context

John Adams developed the Equity Theory in 1963 with an intention of striking fairness and employee perception at work since individuals consider fair treatment. The fact that many workers feel that they are not treated fairly by their employers and that they expect a treatment equal to their input prompted Adams, a workplace, and behavioral psychologist, to develop the theory (Capellen, et al. 15368-71).

Impacts

Equity theory has had a huge impact on how employees are treated in many organizations. The theory is significant in instituting fairness in organizations and provided a platform for motivating their employees. Employees motivation is dependent on how employees are treated in relation to their surrounding as explained by the equity theory thus influencing organizations to always remain conscious in the manner in which their employees are treated (Bell and Jeanette 106-8).

Evidence

Equity theory is applied by the management in assessing employee satisfaction and ensuring that the employees are highly motivated. The management encourages fair treatment of employees in order to enhance production of organizations (Daft, Martyn, and Natalia 615-6). Ensuring employee satisfaction has remained a crucial aspect of the current management processes and that has forced managers to apply the equity theory.

Management Function

The management function that is most impacted by the equity theory is planning because it involves providing direction to the management and the company as a whole. In planning, an organization is likely to measure the compensation and other employee arrangements that can ensure they are motivated and that no single employee is treated better than the other (Bell and Jeanette 109-13). It is also possible to determine the employees' output in relation to the input and plan for better ways of ensuring fair exchange.

Works Cited

Bell, Reginald and Clair Martin, Jeanette. “The Relevance of Scientific Management and Equity Theory in Everyday Managerial Communication Situations.” Journal of Managemnt Policy and Practice, vol. 13, no. 3, 2012, pp.106-115.

Capellen, Alexander W. et al. “Equity Theory and Fair Inequality: A Neuroeconomic Study.” Proceedings of the National Academy of Sciences of the United States of America 111.43, 2014, pp. 15368–15372. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4217432/. Accessed 3 Feb. 2018.

Daft, Richard L, Martyn Kendrick, and Natalia Vershinina. Management. Andover: South-Western/Cengage Learning, 2010. Print.

October 30, 2023
Category:

Business Economics

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Corporations

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Company

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