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Organizational Behavior
Equity and Justice Theory
What is the Equity Theory?
A workforce needs to feel motivated, in order to keep productivity levels high. There have been
several motivational theories, sought and experimented to achieve motivation within the
workforce, and one of these include the Equity Theory.
The Equity Theory, established by Stacey Adams in the 1960s, is based on the concept that
workers are motivated by fairness; The higher the perception of an employee in being treated
fairly, then the more motivated they would feel.
This fairness is measured through the employee’s ratio of inputs to outputs, and whether or not
those ratios are similar to their peers. Inputs are defined as things an employee does, in order
to achieve an output. These can consist of skills, enthusiasm, and responsibilities. Outputs are
referred to as the benefits an employee would receive, in turn for their inputs. Outputs may
include salary, bonuses, and recognition. Outputs would then be divided by inputs to find the
employee’s ratio.
The Equity Theory defines that employees would compare these ratios with others around
them, to find if there is fairness. Employees would seek for comparisons in various situations:
Self-inside: Comparing an employee’s experience within the current organization
Self-outside: Comparing an employee’s experience with other organizations
Other-inside: Comparing others within the same organization
Other-outside: Comparing others in a different organization
If an employee feels their equity ratios are lower compared to their peers, they will become de-
motivated. This would lead to an employee increasing its inputs, if their peers are receiving
more output doing the same job. Consequently, the aim of the Equity Theory is to keep a
balance between an employee’s input and output, and keep it fair within the organization.
What is the Justice Theory?
Organizational Justice Theory is a branch of the Equity Theory. Discovered by Greenberg, in
1987, the theory focuses on how employees perceive the behavior of an organization which
ultimately affects the employee’s attitudes regarding the firm.
The idea of justice will depend on factors such as fairness, equity, law, and ethics. An
employee’s perception of justice will impact the way they perceive their organization’s
decisions, which would lead to reactions from the employees.
Organizational Justice can be divided into three components: Distributive, Procedural, and
Informational Justice. Combined, all of these justices play a key role in the organizational
outcomes of a firm, such as motivation.
Distributive Justice: This occurs when employees believe that outcomes given to all
employees, are equitable. The outcomes can either be tangible (pay) or intangible
(positive feedback). Distributive Justice will be achieved when employees feel they are
being paid and treated equally.
Procedural Justice: This type of justice focuses on the fairness of the decision-making
processes. Procedural justice will be high when employees feel they can voice out their
opinions. In addition, procedures will be considered fair when they are consistent,
accurate, and lack bias in nature.
Interactional Justice: This form of justice is centered upon how an employee is treated
when decisions are made. There will be a fair view when an employee feels they are
treated with dignity, respect, and sensitivity, when they are provided explanations for
decisions. International Justice can be divided into two types: Interpersonal Justice, the
way in which an organization is treating their employees, based on respect and
courtesy, and Informational Justice, where employees are provided with adequate
explanations with emphasis on time, specificities, and the truth.
The aim of organizational justice theory revolves around the perceptions of what just/fair is to
employees, and how they will perceive actions of an organization, and hence how they will base
their attitudes and behavior towards it.
Applicability of Justice and Equity Theory in organizations
Adopting motivation theories in firms can improve motivational levels across the organization,
and ultimately maximize productivity levels. Not only can there be an increase in performance,
but employees can work with high morale and have a positive perception towards the
organization.
The organizational justice theory states the various ways in which employees may develop a
negative attitude towards the organization if there is unfair treatment. For example, in order to
increase Interactional justice, employers must lay off workers, due to redundancy issues, with
dignity and fair treatment. Moreover, to increase job performance and satisfaction, managers
can allow employee participation in decision-making processes. This would also increase
perceptions on procedural justice, as employees would feel a fairness when their views are
given an opportunity to be voiced out.
Furthermore, managers should adopt the functions of the Equity Theory, to keep the
organization’s employee’s motivation high. Since the ratio of input to outputs is considered,
and how employees measure the worth of their work, employers can be more aware of the
different ways they can keep a balance in the equity ratios. Managers should understand that
they can reduce an equity inequality by changing inputs and outputs of an employee, or
changing the perceptions of inputs and outputs. For example, an employee who believes they
are being overcompensated, they may themselves increase their effort (input), in order to keep
a balance.
The Equity and Justice theory can ensure to provide an optimum environment at the workplace
that can, in turn, motivate workers to keep their productivity levels high.
Justice and Equity Theory in Pakistan
It is important for the justice and equity theory to be prevalent in any organization, to ensure
high motivation within the workforce. Managers should adopt the contents of these theories to
be able to have a positive impact on their employees, and hence the productivity levels in the
organization. Several organizations in Pakistan, such as Engro, do adopt these theories in their
firms. Employee participation and equal pay are a part of the values of such companies, which
allow employees to perceive their organizations as just. Employees are further rewarded
equally, and there is no discrimination in respect to age, gender, or race.
However, small-scale firms in Pakistan may not all be adopting these values. Due to corrupt and
disregard towards lawful practices, many businesses do prioritize their profit-making goals over
the responsibility of keeping their employees satisfied and motivated. Poor workers may settle
on poor working conditions, as little pay is better than no pay, but that does not nullify the fact
that favorable conditions for employees will lead to a better workforce and better production-
results.
