Academic journal article Journal of Managerial Issues

Equity Sensitivity Theory: A Test of Responses to Two Types of Under-Reward Situations

Academic journal article Journal of Managerial Issues

Equity Sensitivity Theory: A Test of Responses to Two Types of Under-Reward Situations

Article excerpt

Equity Sensitivity (Huseman et al., 1987) has proven to be a refinement of the original Equity Theory (Adams, 1963, 1965). However, if Equity Sensitivity (Huseman et at., 1987) is to prove more useful than the original Equity Theory (Adams, 1963, 1965) it must be more predictive and discriminant with regards to how subjects respond to feelings of inequity. Without this ability, Equity Sensitivity Theory risks the fate of being considered an interesting notion with little or no practical value and falling out of favor much as original Equity Theory (Greenberg, 1990).

The purpose of this study is to take a closer look at the efficacy of Equity Sensitivity Theory (Huseman et al., 1987). More specifically this study focuses on the ability of Equity Sensitivity to discriminate between the responses of three different classifications of individuals posited by the theory (Benevolents, Equity Sensitives and Entitleds) in response to two types of under-reward situations. Previous research has yet to examine the differences in how the three groups respond to situations in which the "under-reward" is the result of being paid the same as the "comparison-other" for doing more work. With globalization and hyper-competition characterizing today's business environment, firms are being forced to expect ever higher levels of productivity from their work force while simultaneously maintaining cost-controlling reward systems. Thus, this new type of under-reward situation may be more applicable to the current business environment considering the downsizing, flattening and job enlargement tha t have occurred over the past decade.

The following section provides a brief summary of the existing literature on this topic and identifies some weaknesses in the prior research that are addressed in the study described in the remainder of this article.

Relevant Literature

Since its origins in the 1960s Equity Theory (Adams, 1963, 1965) held forth the promise of helping to explain how employees respond to situations in which they perceive they are being rewarded more or less favorably in comparison to a referent doing similar work. Shortly after its inception, Weick (1966) deemed it to be one of the most useful existing organizational behavior theories. Subsequent reviews concluded that the empirical evidence supporting Equity Theory was generally strong (Greenberg, 1982; Mowday, 1991), especially with regards to how workers respond to under-reward situations.

Equity Theory (Adams, 1963, 1965) proposed that subjects respond to under-reward situations in various ways in an attempt to bring their equity ratio back into balance. For example, subjects may choose a behavioral response to help reduce their feelings of inequity. They may respond in such ways as reducing their inputs (i.e., not put forth as much effort) or increasing their outcomes (i.e., ask for a raise). Subjects may instead use a cognitive response to reduce feelings of inequity such as selecting another person to use as their referent. Ultimately the subject may choose to exit the situation by deciding to transfer or quit the organization.

Although previous Equity Theory research has concluded that under-rewarded subjects generally respond in a manner that is consistent with classic Equity Theory, it is not easy to predict which option they will select to bring their equity ratio into balance (Greenberg, 1990). This lack of specificity regarding what responses individuals experiencing inequity are likely to have is a serious shortcoming of the original Equity Theory (Furby, 1986). As such, the original Equity Theory eventually fell out of favor (Miner, 1984; Greenberg, 1987, 1990) due in part to this inability to predict exactly how individuals would respond to an under-reward situation (e.g., lower their inputs, attempt to raise their outcomes, cognitively justifying the situation, decide to leave the organization). …

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