Equity theory

In management studies and in social policy, equity theory focuses on determining whether the distribution of resources is fair. Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person within an organization or social context. Considered one of the justice theories, equity theory was first developed in the 1960s by John Stacey Adams, a workplace and behavioral psychologist, who 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. According to Equity Theory, in order to maximize individuals' rewards, we tend to create systems where resources can be fairly divided amongst members of a group. Inequalities in relationships will cause those within it to be unhappy to a degree proportional to the amount of inequality. The belief is that people value fair treatment which causes them to be motivated to keep the fairness maintained within the relationships of their co-workers and the organization. The structure of equity in the workplace is based on the ratio of inputs to outcomes. Inputs are the contributions made by the employee for the organization. The theory can also be applied in a wider social context.