Equity theory has been around just as long as the expectancy theories of work motivation.
However, equity has received relatively more recent attention in the organizational behav-ior field. As Figure 6.2 indicates, its roots can be traced back to cognitive dissonance the-ory and exchange thethe-ory. As a thethe-ory of work motivation, credit for equity thethe-ory is usually given to social psychologist J. Stacy Adams. Simply put, the theory argues that a major
OB in Action: Nice Work If You Can Get It
impossible for competitors to poach anyone within a few years of his bonus vacation. The absences also give managers a chance to see how well others perform while filling in for their on-leave colleagues.
The number of companies offering paid sabbaticals is small but steady. An annual survey by the Society for Human Resource Management finds that 5% of corpo-rate respondents offer the perk. Another 18% offer unpaid sabbaticals, which are increasingly being used as an alternative to layoffs when demand slackens. But there is some flux. Cracking the whip, Steve Jobs nixed Apple Computer Inc.’s program after returning as chief executive in 1997.
On the other hand, relative newcomers such as women’s clothing designer Eileen Fisher Inc,. have initi-ated sabbaticals, while McDonald’s Corp., where the perk dates back more than 40 years, is expanding the benefit in 2006 to every five years. “What it’s all about today is, how do you differentiate yourself as a com-pany?” says Richard Floersch, McDonald’s chief human resources officer. “This gives us bragging rights.”
Many HR managers argue that since sabbaticals encourage people to stick around, companies don’t have to spend as much on recruitment and training. Assigning temporary fill-ins can be a plus, too. While Intel’s Stagnitti was in Mexico, her supervisor tested someone else in her job. When she came back, that employee ended up staying on, and Stagnitti was promoted to a new job in HR. In addition, the generation just entering the workforce ranks time off as a top priority in survey after survey. Thus, offering sabbaticals should help attract young talent, says Hewitt consultant Raymond Baumruk.
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input into job performance and satisfaction is the degree of equity (or inequity) that people perceive in their work situation. In other words, it is another cognitively based motivation theory, and Adams depicts how this motivation occurs.
Inequity occurs when a person perceives that the ratio of his or her outcomes to inputs and the ratio of a relevant other’s outcomes to inputs are unequal. Schematically, this is rep-resented as follows:
Equity occurs when
other’s outcomes
other’s inputs person’s outcomes
person’s inputs
other’s outcomes
other’s inputs person’s outcomes
person’s inputs
other’s outcomes
other’sinputs person’s outcomes
person’s inputs
Last winter, Intel Corp. paid Melanie Stagnitti to research and develop her tan. Fleeing the soggy dreari-ness of Hillsboro, Ore., the compensation and benefits manager and her stay-at-home husband, John, packed up their 5-year-old son and 31⁄2-year-old daughter in their Ford Explorer and, towing a trailer full of camping gear, sauntered down to Mexico’s sun-drenched Baja peninsula.
For eight weeks, Stagnitti was utterly unplugged. She had no access to e-mail, voicemail, the Internet, or, for much of the time, electricity. Today she’s logging 50-hour workweeks again. But all that time lounging in a ham-mock helped make up for the long days. “The best part,”
she says, “was seeing the kids outside every day, playing in the water and being free.”
These days many companies view employees as profit sponges, particularly sitting-bull seniors who have received pay raises year after year. Paternalism is out;
lean and mean is in. But across the economy, a stubborn minority of employers is treating workers like tenured professors, lavishing paid sabbaticals on them. Such gen-erosity actually helps the bottom line, managers insist.
Giving employees a periodic respite is an antidote to the world of networked, always-on careers that lead to information overload. Sabbaticals reduce turnover and retain wisdom otherwise lost when veteran employees burn out. A recent study in the Journal of Education for Business found that the benefits of sabbaticals outweigh the costs when a good understanding between employer and employee regarding expectations is involved. The study also found that employees return more committed and more energized. In fact, sabbati-cals are so alluring that companies report that it’s almost
Chapter 6 Motivational Needs, Processes, and Applications 171
Both the inputs and the outputs of the person and the other are based on the person’s per-ceptions. Age, sex, education, social status, organizational position, qualifications, and how hard the person works are examples of perceived input variables. Outcomes consist pri-marily of rewards such as pay, status, promotion, and intrinsic interest in the job. In essence, the ratio is based on the person’s perception of what the person is giving (inputs) and receiving (outcomes) versus the ratio of what the relevant other is giving and receiving.
This cognition may or may not be the same as someone else’s observation of the ratios or the same as the actual reality. There is also recent recognition that the cultural context may affect the entire equity process.40
Equity as an Explanation of Work Motivation
If the person’s perceived ratio is not equal to the other’s, he or she will strive to restore the ratio to equity. This “striving” to restore equity is used as the explanation of work motiva-tion. The strength of this motivation is in direct proportion to the perceived inequity that exists. Adams suggests that such motivation may be expressed in several forms. To restore equity, the person may alter the inputs or outcomes, cognitively distort the inputs or out-comes, leave the field, act on the other, or change the other.
It is important to note that inequity does not come about only when the person feels cheated. For example, Adams has studied the impact that perceived overpayment has on equity. His findings suggest that workers prefer equitable payment to overpayment.
Workers on a piece-rate incentive system who feel overpaid will reduce their productivity in order to restore equity. More common, however, is the case of people who feel underpaid (outcome) or overworked (input) in relation to others in the workplace. In the latter case, there would be motivation to restore equity in a way that may be dysfunctional from an organizational standpoint. For example, the owner of an appliance store in Oakland, California, allowed his employees to set their own wages. Interestingly, none of the employ-ees took an increase in pay, and one service technician actually settled on lower pay because he did not want to work as hard as the others.
Research Support for Equity in the Workplace
To date, research that has specifically tested the validity of Adams’s equity theory has been fairly supportive. A comprehensive review found considerable laboratory research support for the “equity norm” (people review the inputs and outcomes of themselves and others, and if inequity is perceived, they strive to restore equity) but only limited support from more relevant field studies.41One line of field research on equity theory used baseball play-ers. In the first study, players who played out their option year, and thus felt they were inequitably paid, performed as the theory would predict.42Their performance decreased in three of four categories (not batting average) during the option year, and when they were signed to a new contract, the performance was restored. However, a second study using the same type of sample, only larger, found the opposite of what equity theory would predict.43 Mainly, performance improved during the option year. The reason, of course, was that the players wanted to look especially good, even though they felt they were inequitably paid, in order to be in a stronger bargaining position for a new contract. In other words, individuals faced with undercompensation may choose to decrease performance, but only to the extent that doing so will not affect the potential to achieve future rewards.44In any event, there are no easy answers nor is there 100 percent predictive power when applying a cognitive process theory such as equity.
Despite some seeming inconsistencies, more recent studies using sophisticated statistical techniques to estimate pay equity among ballplayers45and focusing more sharply on sub-sequent performance and other outcomes are more in line with equity theory predictions.
172 Part Two Cognitive Processes of Organizational Behavior
For example, one study found a significant relationship between losing final-offer salary arbi-tration and postarbiarbi-tration performance decline. The ballplayers who were losers in arbitra-tion were also significantly more likely to change teams or leave major league baseball.46In another study of baseball and basketball players, it was found that the underrewarded players behaved less cooperatively.47This type of equity theory development and research goes beyond expectancy theory as a cognitive explanation of work motivation and serves as a point of departure for more specialized areas of current interest such as organizational justice.