J. Stacy Adams’ Equity Theory posits that individuals evaluate workplace motivation by comparing their ratio of outcomes/inputs to that of:

Explanation

• Equity Theory asserts that employees assess social fairness by comparing their own job inputs (effort, skill, education) and outcomes (pay, recognition) against a ‘referent other’.
• Perceived under-reward equity creates cognitive tension, motivating employees to lower effort, demand higher rewards, or leave the organization.
• Understand the three states in Equity Theory: Equity, Over-reward Inequity, and Under-reward Inequity.