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Essay Paper on Equity Theory

The main idea behind the Equity Theory is that workers, while trying to balance what they invested in to their jobs and what they obtain from them, are unconsciously attributing values to each of his various contributions. According to the Equity Theory, the most highly motivated employee is the one who perceives his rewards to be equal to his contributions. If he sees that he is working and being rewarded at about the same rate as his colleagues, then he will judge that he is being treated fairly.

High Investment, High Reward. The person who gets too much may feel guilt or shame. The rule is that an employee who believes he is over-compensated may increase his effort. This is the most motivating module for an employee. For example, if a person feels are that their investments are fairly rewarded by outputs, then generally they are happier in their work and more motivated to continue inputting at the same level. High Investment, Low Reward. When individuals find themselves participating in inequitable relationships, they become distressed. Basically, according to equity theory, both the person who gets “too much” and the person who gets “too little” feel distressed. The person who gets not enough or too little may feel angry or humiliated. This is the point where they might feel they want to leave the company. Low Investment, High Reward. This is the least motivating module. For instance, people measure the totals of their investments and rewards. This means a working mother may accept lower monetary compensation in return for more flexible working hours. Low Investment, Low Reward. Indeed, an employee, who doesn’t input a lot and who thinks he is under-compensated may withdraw good will and lower his efforts. Living a quiet life of desperation, without confidence that would naturally make the person feel better about them and also enhance their job opportunities is typical for low investment/reward module.

Finally, it should be said that what matters is the ratio, not the amount of effort or reward per se…

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