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Illustrate the term Equity Theory

Briefly illustrate the term Equity Theory?

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The equity theory mainly focuses on individuals perceptions of how reasonably they are treated in comparison to the others. This was introduced by J.Stacy Adams, who found that equity is present whenever people consider their compensation equivalent to the compensation of the others who execute identical work. People judge equity through comparing inputs (like education, experience, effort and capability) to outputs (like pay, recognition, advantages and promotion).

Whenever the ratio is out of balance then inequity takes place. And inequitable pay can make an unfeasible circumstance whenever implementing salary and incentive systems.

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