Equity theory tells us that when employees perceive inequitable treatment they will respond in a manner that will attempt to reestablish fairness.

Question

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Equity theory proposes that individuals compare their own inputs (e.g. effort, skills, education) and outcomes (e.g. salary, benefits, recognition) with those of colleagues in similar positions to determine if they are being treated fairly. If they perceive inequity (e.g. receiving lower outcomes for the same level of inputs compared to colleagues), they will respond by either reducing their inputs (e.g. putting in less effort) or attempting to increase their outcomes (e.g. asking for a raise or promotion) in order to regain a sense of fairness.

Equity Theory Tells Us That When Employees Perceive Inequitable Treatment