Equity Theory out the factors that affect employees' evaluation of their efforts for the company. People often tend to evaluate their own efforts as worth it or not and compare it with others. Based on that mentality, Stacy Adams proposed the theory of fairness to help businesses human resources management more effective. Let's see how equity theory is applied to help businesses manage more effectively through the article below!

Equilibrium Theory by Stacy Adams

Justice theory (Equity Theory) is the theory of employee motivation proposed by psychologist John Stacy Adams in 1963. Like other well-known motivational theories, he proposed variable factors that affect the evaluation of employees. employees' prices of their jobs and businesses.

Contents of the theory of equilibrium

John Stacy Adams speaking Justice theory (Equity Theory) As follows: Employees always compare what they put into the work (input) with what is received when completing that work (output - output) and also compare this ratio with others.

The comparison is based on the ratio of the following factors:

• Remuneration: salary, bonus, commission, company benefits, etc.
• The effort they put into the company includes capacity, knowledge, attitude, time, etc.

If the ratio is equal, employees will find it fair and will maintain their productivity and efforts. On the contrary, if the ratio is skewed such that the remuneration received is not commensurate with their efforts, they will reduce their efforts at work. And if employees see that their colleagues work less but receive more wages, they will speak ill of their colleagues or ask for a raise or reduce their work. In the event that they find the remuneration received is higher than what they put in, they will feel motivated to work. Therefore, they will increase their efforts and improve work results.

However, each employee has a subjective view, so it is difficult to fairly evaluate the efforts of themselves and others. Therefore, enterprises should be an objective side, offering solutions and handling if the balance is skewed.

Factors to evaluate employees in equity theory

Justice doctrine is a popular tool used to evaluate and improve the quality of employees' work. When you understand the balance theory, the time management and work are shortened more time. The inputs and outputs of this doctrine are as follows:

Inputs:

• Hard
• Commitment, Loyalty
• Professional knowledge and skills to complete the job
• Complexity of work
• Adaptability
• Personal sacrifices
• Support from colleagues and superiors
• Everyone's recognition and encouragement
• Willpower determination, enthusiasm, enthusiasm

Output element:

• Finance: salary, bonus after each task, allowances, commissions, incentives, benefits, ..
• Spirit: reward, trust, recognition, achievement, open promotion path,...

» More information: How to Build a positive working environment?

Advantages and disadvantages of equity theory in business

Advantage

Can see, equilibrium theory It helps businesses a lot in managing human resources, especially increasing their satisfaction. Besides, this theory also has the following advantages:

• Motivation to work: Equilibrium theory shows that the firm's expectation that employees will see the output received. From there, employees will try and make efforts to complete the work to achieve the desired benefits.
• Employee retention: employees will be convinced by the company's reasonable policies and remuneration. For the most part, they will agree and continue working with the company. In addition, the career progression route will encourage employees to work more actively.
• Cut down the costs: long-term employees will help the company save on recruitment costs. In addition, the costs of recruiting middlemen and brain investment such as training new people are also reduced.
• Create a good relationship between employees: employees will be made clear that the remuneration received is based on their own ability. When the equilibrium is established, employees will have a healthy competitive attitude and help each other to achieve the desired benefits.
• Reduce employee exploitation: Successfully applying the equilibrium theory, the company will have no bias towards any employee. Employees will feel fair and motivated to do their best.
• Increase profits: Company revenue increased thanks to the productivity of employees. Employees and businesses identify the expectations of both parties and seriously implement them. Among the employees there is solidarity and mutual help for the common good. Every individual seriously strives to improve efficiency, achieve desired benefits. The aggregate result will be enhanced corporate profits.
• Resource Optimization: In a state of balance, employees always perform well, so the enterprise does not need to renew personnel. Therefore, businesses save a large amount of recruitment. In addition, employees will create a long-term commitment to the business and contribute their best to the company.
• Attracting talent: Talents always want to work in an environment that pays them well with their ability and effort. Applying the equilibrium theory to build a fair compensation policy, businesses will attract many potential talents.

Defect

Besides advantages, there are some disadvantages of equilibrium theory need to be fixed, specifically as follows:

• Each individual has a different perception: Each individual has different expectations and standards of assessment. So, with the same job and salary, they will have different comparison rates with their colleagues or with their superiors.
• There is no exact comparison: Comparisons are approximate only. Especially the benefits and level of job completion of employees depend on many factors such as job difficulty, difference in knowledge of each individual, etc. So it is difficult to compare the main input and output ratio. corpse.
• Ignoring other factors: Equilibrium theory provides inputs and outputs for evaluation. However, there are many other factors that have not been mentioned. This affects the assessment and management process.
• Unpredictable at all: Equilibrium theory is based on psychological factors, so it is difficult to predict everything. Each person's psychology is different, so the way to receive equilibrium will be different. Therefore, equilibrium theory is only relative to help businesses cover and give appropriate treatment.

How to motivate employees in the theory of giving-receiving balance

If you are a business administrator, you should know equity doctrine applied to the management model to understand the psychology as well as the needs of employees. From there, develop effective strategies to motivate and motivate employees. Content included:

Set goals and direction for employees

Understanding employee expectations and measuring key outcomes is critical, detailing a framework that pre-defines inputs and outputs. Help employees clearly know the goals and strive to achieve, in addition to helping businesses closely monitor and manage the growth chart of employees to pay them a decent salary.

Implement 3P salary system

Calculating salary for employees based on 3 factors: position, capacity and results achieved. The salary calculation solution helps to balance employee output against input in the most objective way. Employees will follow to receive what they bring and contribute to the business, no need to follow the standards of the market. The more results and achievements they bring, the more they deserve to receive what they contribute. In addition, they also receive respect from bosses and colleagues.

Therefore, the business has built a balance, the increase in input will lead to the output automatically increasing and decreasing.

See more: What is C&B?? The role of the C&B specialist in the business 

Implement policies and regimes on remuneration and rewards

It is very helpful for enterprises to implement internal communication about the reward and criticism regime. To motivate employees to try and develop further when seeing good examples being honored. Moreover, honoring employees for their efforts, progress and commending their achievements will make them want to stick and be loyal to the business.

Therefore, an attractive reward and remuneration regime will be the main motivation for employees to try harder and dedicate themselves to the business. The company's working efficiency will increase many times.

In short, equity doctrine is a tool for businesses to use in their assessment and human resources management mine. Good application of balance theory helps leaders reduce dissatisfaction and envy among employees. Hope this article has helped you get more useful information in human resource management.

OOS Software has more than 15 years of research and development, is a reliable partner to support human resource management, accompanies many large enterprises and corporations in the market. Contact now to get advice on Recruitment Software for your Business.