Adams, J. S. (1963). Towards an understanding of inequity. The journal of abnormal and social psychology, 67(5), 422.
todo: insert links to 2 Festinger papers, insert other link
Summary
Inequity is related to unfairness. When a person feels that what they provide as an employee (their “inputs”) is not matched by what they receive from a job (their “outputs”), the person feels that they are being treated unfairly. Inputs can be many things: level of education, social network, experience, intelligence, and effort (among others). What makes something an input is that either party in an exchange perceives it as having value. Outcomes can also take many forms, such as pay, job status, fringe benefits, and other “formally and informally sanctioned perquisites” (like having a reserved parking spot). What makes something an output is that the receiver perceives it as having value. If the receiver does not view something as having value (for example, a company t-shirt given upon hiring), then it is not an output. Most times, the exchange also involves a third party, called a reference group. This is often a coworker to whom a person is comparing their situation.
Citing Festinger’s theory of social comparison (1954), Adams states that a person, when looking for a reference, will look for someone who is socially similar. Once identified, they will analyze that reference group’s specific inputs and outputs, and compare them with their own. Again citing Festinger (this time his 1957 theory of cognitive dissonance), when a socially-similar reference has similar inputs and differing outputs (or differing inputs and similar outputs), dissonance will be experienced. Attempting to minimize this dissonance can take place via one of eight scenarios (see p. 427 – these are very much worth reading but beyond the summary scope of this paper). For example, if a person sees a reference with similar inputs and a higher output, they might request a wage to match that of the referent. A case study amongst grocery workers showed that higher inequity resulted in higher operating costs (one way that people reduced inequity was by purposefully working slower, hence the higher operating costs). Experimental findings showed that people who felt positive inequity (meaning they felt that they were overpaid or underqualified) attempted to increase their productivity to match their rate, resulting, in one case, in higher work rates. In another scenario, overpaid subjects reduced their rate of output because they increased the quality of their outputs (again, attempting to reduce dissonance).
Application
When an employee is asking for a raise, it is because they feel inequity. There might exist other things, aside from a raise, that can dissipate that inequity (see list from [insert link to Graen 1987]). Inequity in the workplace can be controlled by controlling salient reference groups. In some strange scenarios, paying an employee more might actually increase their work rate (or decrease it, depending on the nature of the task).
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