Employee Retention and Engagement through the Lens of Adam's Equity Theory

Employee turnover and poor performance can be extremely costly and disruptive to organizations. HR practices that create and maintain an engaged, satisfied workforce and a positive organizational culture, however, can mitigate these problems, by improving organizational performance and the retention of high-performing talent. It is reasonable to question how employees stay engaged in the workplace beyond the effects of rewards and punishments. Leaders should aim to understand how to get employees' goals to alight with the organization's mission, goals, and vision to optimize their employee engagement and talent retention.

John Stacy Adam's Equity Theory (AET) is a psychology theory that provides a framework for research in the IO specializations or retention and engagement. The theory describes the relationship between workers and organizations concerning job attitudes and satisfaction. According to AET, workers make personal judgments on their employers and behave based on their perceptions of justice and equality (Adams, 1963; Adams, 1976; Hattangadi, 2019). Fairness is the fundamental construct assessed in this theory. Adams (1963) suggested that perceptions of fairness that vary between everyone affect one's morale, and thus motivation. Individuals assess fairness by comparing one's ratio of contributions (inputs) and rewards (outcomes) to a comparison person or group. Likewise, AET acknowledges that subtle and variable factors influence employees' assessment of their relationship with their employer (1976). Suppose people are hard-wired for fairness and expect a fair reward from organizations (outcomes) for the work they put in (inputs). In that case, one could assume that workers who receive unfavorable results for what was perceived as high efforts experience distress. Likewise, workers who receive excellent outcomes for unjustifiably low inputs should also share this distress (Greenberg, 1988; Huseman et al., 1987). ?

Adams (1963) represented the state of equity as Op/Ip = Oa/Ia, whereas O = the sum of all outcomes, I = the sum of all inputs, p = person, a = other. A state of inequity is represented as either Op/Ip > Oa/Ia or Op/Ip < Oa/Ia. AET theory helps make sense of the psychological process used to assess comparisons between the person and others in the IO context (Al-Zawahreh & Al-Madi, 2012). Propositions describe these assessments. If a state of inequity arises from the evaluation, the person making the assessment will experience psychological distress and be encouraged to restore equity from their perspective - means of inequity reduction (Adams, 1963; Greenberg, 2017; Hattangadi, 2019).

Equity Norms for Inputs and Outputs

Individuals define inputs and outcomes from social norms in I/O research framed in AET. In some cases, they may be inaccurate assumptions of norms in the direct comparison of one to another person (Adams, 1963). Inputs, also known as investments, consist of those things a person perceives as contributing to their worth in a relationship. In a work setting, inputs are likely to consist of a person's previous experience, knowledge, skills, seniority, and effort (Adams, 1963). As a worker assesses inputs, they recognize relevant assets to justify rewards or liabilities to justify costs. Workers must make cognitive considerations for what they acknowledge as applicable for review within the appraisal. Outcomes are the perceived positive and negative receipts of an exchange relationship with an organization. They are what the worker gets out of the employment exchange. Social norms for work outcomes are usually salary, levels of autonomy, fringe benefits, recognition, and the status given to an individual by others (Adams, 1963; Adams, 1976). ?

Four Propositions for Social Comparison

According to Adams (1976), fairness is assessed from within, based on information available, and compared to others on four levels called propositions. If a person feels inequity, they will feel equity tension. When assessing their equity, if a person feels under-rewarded for their inputs, they will feel guilt and seek to restore equity. In inequitable relationships, the person who is getting "too much" will feel guilt or shame. The person who gets "too little" will feel angry and humiliated. However, it is essential to note that individuals seek to maximize their outcomes (Adams, 1976). In other words, the theory suggests that people would instead do more to earn more rather than do less to earn less.

The self-inside proposition describes when an employee assesses their self-worth in an organization and reflects on their inputs and outcomes in another job or another social role within the same organization (Adams, 1976). The self-outside proposition describes when employees assess their self-worth in an industry by evaluating inputs and outcomes from past experiences in an organization outside of the current one (Adams, 1976). The others-inside proposition describes when an employee compares their inputs and outcomes in the current organization to another person or group in the organization (Adams, 1976). These people are usually co-workers and colleagues. The others-outside proposition describes when an employee compares their inputs and outcomes in the current organization to another person or group belonging to an outside organization (Adams, 1976). Outside people or groups may be a relative, neighbors, or members of a community of practice.

Restoring Equity through Modes of Inequity Reduction

AET describes that employees become distressed if they feel that their inputs are more significant than the outcomes from their employer. Employees may respond to this in different ways, such as becoming disengaged, reducing their effort, becoming disgruntled, or, in more extreme cases, becoming disruptive (Al-Zawahreh & Al-Madi, 2012; Greenberg, 2017; Hattangadi, 2019). Each of these behavioral outcomes derives from means of inequity reduction, a person's efforts to restore equity (Adams, 1976). Means of inequality include altering one's inputs or outcomes; cognitively distorting one's inputs or outcomes; leaving the field; acting on the object of comparison by behaviorally altering or cognitively distorting the other's outcomes or one's inputs; and changing the basis of comparison (Hattangadi, 2019; Greenberg, 2017; Al-Zawahreh & Al-Madi, 2012).

Conclusion

There is no single theory of motivation to explain all aspects of human motivation in the workplace. Still, theoretical explanations may serve as the basis for developing approaches and techniques to increase motivation in distinct areas of life domains. Selecting an appropriate framework for research in IO psychology begins with the purpose of the study. AET is a theory of motivation that describes topics of workplace culture (e.g., employee engagement, retention, performance, and counterproductive workplace behaviors).

In I/O literature, AET is used to predict and describe an individual's attitude towards the organization out or perceptions of justice when comparing inputs and outcomes at different propositions. Outcomes always come from organizations to individuals. In other words, an organization cannot look at outcomes as inputs towards an employee to compare equity for the organization. This would be a misuse of the theory. In turn, inputs are generally provided from the employee and the roles do not reverse. According to the theory, finding this fair balance serves to ensure a strong and productive relationship is achieved with the employee, with the overall result being contented, motivated employees. It is crucial to consider the AET factors when striving to improve an employee's job satisfaction, motivation level, etc., and what can be done to promote higher levels of each.

AET uses the school of behaviorism to understand motivation in the workplace. It suggests that people learn to spot inequity through interactions with the environment and makes comparisons to others' interaction with the environment to thus shape one's own behavior. This is why organizations should strive for transparency and do what is fair. Creating a work environment where justice is predictable is a cost-effective way to prevent counterproductive workplace behavior while promoting organizational citizenship and increasing retention and engagement.

References

Adams, J. S. (1963). Toward an understanding of inequity. Journal of Abnormal and Social Psychology, 67, 422–436.

Adams, J. S. (1976). Equity theory revisited: Comments and annotated bibliography. In S. Freedman, Advances in experimental social psychology (Vol. 9, pp. 43-90). Academic Press.

Al-Zawahreh, A., & Al-Madi, F. (2012). The utility of equity theory in enhancing organizational effectiveness. European Journal of Economics, Finance and Administrative Sciences, 46(3), 159-169. Retrieved from https://eis.hu.edu.jo/deanshipfiles/pub105362403.pdf

Greenberg, J. (1988). Equity and workplace status: A field experiment. Journal of Applied Psychology, 73(4), 606–613. doi:https://doi.org/10.1037/0021-9010.73.4.606

Hattangadi, V. (2019). Adam's Equity Theory: What employees do when they notice inequity at the workplace. Financial Express; New Delhi. Retrieved from https://search-proquest-com.library.capella.edu/docview/2220159517/citation/661C2C7DAA3C4956PQ/1?accountid=27965

Huseman, R. C., Hatfield, J. D., & Miles, E. W. (1987). A new perspective on equity theory: The equity sensitivity construct. Academy of Management Review, 12(2), 222-234. doi:https://doi.org/10.5465/amr.1987.4307799