Equity theory proposes that individuals who perceive themselves as either under rewarded or over rewarded will experience distress, and that this distress leads to efforts to restore equity. (Huseman, 1987). John Stacey Adams, a workplace and behavioral psychologist, asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others. (Adams, 1965) When people feel fairly or advantageously treated compared to their peers, they are more likely to be motivated; when they feel unfairly treated they are highly prone to feelings of disaffection and de-motivation. The way that people measure this sense of fairness is at the heart of Equity Theory. (Champman, 1995-2010)
In my organization, many feel like they are underpaid when compared to co-workers who have similar job functions. Many also have the impression that co-workers in our Foster City office only 20 miles away are paid much more (output) for the same positions (inputs). When speaking with these employees I gather a sense of hostility and regressed performance based on the perceived feeling of unfairness. A proposed solution is to link each job title to a specific salary code which will have a specific associated salary pay range within each geographical region.
I think this will work because it takes away from often false assumptions that certain individuals make more than others which cause employees to reduce their level of work to bring the equity ratio of outputs over inputs to a balance. It will address geographical differences that can often cause an imbalance of salary because of standard cost of living. Since each job and level have a clearly defined roles and responsibilities, a disgruntle employee can view what tasks they are currently doing and compare it to the level descriptions. This should encourage employees to work with their managers to take on new tasks to bump there up there level instead of de-motivating them which may cause them to work less hard.
The implementation of the new salary range system will require the salary data sharing among different divisions and business units. HR executives throughout the different organizations will have to meet to discuss job titles and work to get them in synch with the codes. This will take around 5 business days with 7 different human resource executives. At $60 per hour with 7 executives each working 40 hours it would total $16,000 to come up with the scale. The final data will be accessible for each employee which will eliminate the sense of being under rewarded. At an average of $30 per hour it will take 533 hours increased work by the employees who worked less due to the perceived unfairness to see a return,
Works Cited hampman, A. (1995-2010). JS Adams original Equity Theory concept. Retrieved November 29, 2011, from businessballs.com: http://www.businessballs.com/adamsequitytheory.htm
Huseman, R. C. (1987, April Vol. 12 Issue 2, ). A New Perspective on Equity Theory: The Equity Sensitivity Construct. Academy of Management Review , pp. p222-234.