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The Equity Theory in Business Management

Organizational Behavior

The retail industry is full of examples where organizational behavior studies can help to improve different dimensions of the workplace. For three years, I worked as a sales representative for the Target Corporation. During that time, I was required to perform a number of different tasks. Organizing store displays, assisting customers, and putting back returned merchandise were all part of my duties as a Target employee. The management at the store saw to it that all assignments were completed in a timely and accurate fashion, and dealt with problematic workers who had trouble meeting their demands. While these executives were certainly skilled at evaluating the performance of people like myself on the sales floor, they rarely ever left the comfort of their offices to assist in the various projects that they needed done in such a timely manner. While my coworkers and I made sales, cleaned the store and helped angry customers, the people we were working for lounged around the break room, eating their food and relaxing. It just didn’t seem right that management was getting paid more to do less, and then received recognition for the store’s great sales numbers, which they had very little to do with anyway. The actions that came as a result of this can be explained through one of organizational behavior’s process theories of motivation called the equity theory.

The equity theory states that people develop perceptions of the fairness of outcomes and become motivated to reduce inequities (McShane). To evaluate equity, one would need to establish a ratio of their inputs and outputs. Inputs are skills that an employee brings into the workplace, and outputs are what an employee gains as a result of his or her work, such as recognition, pay, benefits and rewards. If equity exists, then my equity ratio would be the same as the individual I’m comparing myself to. If there isn’t equality, then a number of effects can take place, depending on the situation at hand (McShane). If I’m being over-rewarded, then I’d be getting more output for contributing less input. As a result of this, I might work harder to correct the inequality and justify my high level of reward. It is also possible that someone in this situation could attempt to influence the behavior of the comparative other, possibly by advising them to do less work, which would also correct the difference in the ratios. It is also a possibility that an employee would view this over compensation as a positive event, and be content with his or her unjust level of reward.

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This situation, however, wasn’t the case while I was working at Target. Employees compared their ratio of inputs and outputs to the management, and found that they were being under rewarded. I and my fellow coworkers felt that our level of input was significantly higher, but the amount of output we received was minimal. To correct the situation, there were a number of events that could have taken place. Changing our comparative other, or comparing ourselves to someone else, would have been a solution. But that didn’t happen. We also could have been indifferent about the situation, and just continue working regardless of the unfairness. That wasn’t going to be the case either. What happened was actually quite detrimental to the company, because all of the lower level employees started to neglect their responsibilities in order to even out the equity ratio. The beautiful arrangements of merchandise started to transform into unorganized piles, and customers might be left waiting for unnecessarily long amounts of time when in need of help. I distinctively remember a coworker leaving the sales floor to check on the availability of an item for a customer in our storage area. When he came back, he told the woman that the item she was looking for wasn’t in stock. Afterwards, he approached me and said that instead of searching for customer’s item, he just went back to the storage area and wandered around for a few seconds – and eventually came back out to give her the bad news, without putting in any real effort to help her. He couldn’t wait for his opportunity to do it again, because he said it was a nice break from working at the electronics counter. This severe amount of slacking on the part of employees compensated the inequity that they were experiencing, but at a cost to the company that was probably more than they could afford. Long lines, upset customers, and a bad reputation are all consequences that are going to take place as a result of this type of solution to of inequality in the work place. However, as the equity theory states, if there is a problem regarding the fairness of outcomes, people will often gain a strong motivation to correct the injustices that exist (McShane).

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I have decided to write about this topic for a couple of reasons. First, I feel that it is a relevant issue that affects a large number of people. The events which took place in the Target store that I worked at for three years has the potential to affect any workplace where management oversees a group of people that are supposed to provide a service to customers. The results of the inequality that I described can be felt by management, employees, as well as the consumers, and hence should be recognized as a serious problem that needs to be dealt with for the good of everyone involved with an organization. Also, the equity theory is brand new to me. Learning about it now has opened up my eyes to one of the possible causes of individuals who walk around organizations feeling completely unmotivated, or frustrated about the way things are being run. People want to get what they deserve, and they determine what they are entitled to by comparing themselves to others. If there is inequality, then it should be addressed, or undesirable consequences could take place and disrupt a sound working environment.

Perhaps in the future companies such as Target will recognize the feelings of inequality felt by employees towards their executives. Through careful analysis of the situation, it would be possible for Target to rectify this problem and implement new, innovative ways of having employees and their managers interact with each other. Including regular employees in managerial decisions, or giving them the freedom to embrace new ideas, and sufficiently rewarding strong performance are all ways for this company to keep its staff content and the equity ratio of those in the organization as equal as possible. If the managerial staff feels that they can not change, they should consider relocating to an area where they can’t be the comparison other for an employee. The arrangement, as it is now, keeps employees content for their first few weeks, but over the long term, differences are noticed and eventually become intolerable to those being under rewarded.

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Works Cited

McShane, Steven. “Organizational Behavior: Emerging Realities for the Workplace Revolution.” 2003.