What Theory Can Management Apply in the Workplace for Motivation?

by Crystal Vogt

Among the many business theories that exist in corporate governance, one theory of motivation that management can apply in most situations is the Equity Theory on job motivation, which contends that pay and conditions are not enough to motivate a workforce.

Equity Theory

Unlike basic motivation that consists of offering a reward such as pay for an action, the Equity Theory looks beyond just the individual and includes factors in the individual's setting that may affect motivation through comparison. The theory states that when a person compares himself to his coworkers and finds the results to be fair, he will be more motivated. If, on the other hand, he compares himself to his coworkers and finds the results to be unequal or "unfair," he will be less motivated. The essence of the Equity Theory lies in this sense of motivation through perceived fairness.


John Stacey Adams, a workplace and behavioral psychologist, invented the Equity Theory in 1963. According to an article in the Academy of Management Review titled, "Equity Theory and Time: A Reformulation," Adams' Equity Theory has sparked the "greatest amount of research" on the subject and is the most "explicit and rigorously developed model of how individuals evaluate social exchange relationships."

How It Works

When one person compares her ratio of input and output to the ratios of input and output of those around her, she is supporting the Equity Theory. The comparison of these two ratios acts as a reference point for the person's motivation and whether that motivation will continue or decrease. The Equity Theory therefore works in two ways. The first involves the person assessing her ratio of input and out. The second involves the person assessing coworkers' or friends' ratios of inputs and outputs. Input can include loyalty, commitment and skill while output can include financial rewards, praise and increased responsibility.


The Equity Theory is an important tool for businesses to assess employee satisfaction, the relationship between motivation and productivity and how to increase motivation to better reach company goals and objectives. For example, a hard-working employee might believe he is paid a fair salary until he becomes aware of the fact that he is one of the lowest-paid people on staff. This knowledge may lead him to become unmotivated and will thus threaten the success of the company.

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