This theory states that individuals compare their level of job inputs and outcomes with those of others and then actively seek to eliminate any inequities. In other words if we believe that we are being correctly rewarded for our efforts in relation to others a state of justice exists, however if we perceive ourselves as being unjustly treated in relation to others we experience ‘equity tension’.
The benchmark that is chosen by each individual is important for the leader/manger if he or she is to uncover an individual’s motivation. These benchmarks or ‘referent comparisons’ are:
Self-inside, experiences in other positions inside the organization
Self-outside, experiences in other positions outside the organization
Other-inside, other employees within the organization
Other-outside, other employees outside the organization
Another interesting aspect of this theory is that comparisons can be made on the employees past treatment in relation to another’s current treatment. This particularly comes into play when you are hiring new staff. If the entry-level wage for an existing employee hired two years ago was $1,000.00 per month and today you offer the same position at $1,200.00 per month it is likely that existing employees will see this as inequitable. This situation will occur, even if the existing employees are paid in excess of the $1,200.00 you are now offering.
IT IS HUMAN TO COMPARE OURSELVES WITH OTHERS SO BEWARE OF PERCEIVED INEQUITIES