What is the equity theory in the work place?

In workplace, the equity theory illustrates the relationship between how hard an employee is motivated to work and how moderately he perceives he is treated. The main idea behind equity theory in the workplace is that employees, in an attempt to balance what output they get from their jobs and what input they put into their jobs, will instinctively give values to all of their contributions. Apart from money, the employees also contribute their ability, their skills, and their knowledge, along with their personal strengths. Equity in workplace is reached when the ratio of their inputs to the output is equivalent to the output over input of their colleagues.

As per the equity theory in work place, the most highly motivated worker is one who perceives his remunerations are equivalent to his input. If the worker feels that he is working and is being paid at a similar rate as his co-workers, he will certainly feel that he is being treated moderately. However, this does not indicate that every manager must treat all his workers identically, since all workers do not fulfill his demands in the same way. Research on equity theory in workplace proves that, generally, over-rewarded workers will produce more compared to less motivated, under-rewarded workers.

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