Editor's Note: Theories comes in handy sometimes, even in the real world and with real people problems. Classic truth this. Make sure you have one or two in your everyday toolbox.
Theory can come in handy for our day-to-day compensation work. This is particularly true when we find ourselves dealing with situations beyond the reach of our usual tools and where we can't benchmark our way out of trouble.
I was reminded of this recently in addressing compensation concerns surrounding a unique role in a unique organization, the kind of situation where external data driven guidance was not available and not really appropriate. There was, however, a motivational theory we could draw upon to guide our examination of the problem and our development of a solution: Adam's Equity Theory.
Most of you are probably familiar with Adam's Equity Theory, even if the name itself doesn't ring any bells. Named for John Stacey Adams, a workplace and behavioral psychologist, equity theory asserts that employees seek to maintain equity in the workplace between the inputs they bring to a job and the outcomes they receive from it. The theory holds that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress and that this distress will prompt efforts to restore equity in the relationship with their employer.
Certainly we are all familiar with employees who, correctly or not, believe they are underpaid and who approach their managers and/or Human Resources in an attempt to rectify the perceived imbalance. Alternatively, employees perceiving their rewards to be out of balance with their contributions but who are unwilling to confront management about their pay may seek to restore equity to the relationship by quietly reducing their outcomes. More than a few of you have likely encountered this scenario as well.
In the real-life situation I described at the beginning of the post, all parties acknowledged that there quite likely was an imbalance in the ratio of inputs to outcomes for the affected employee, but for reasons I won't take the time to detail there was no possibility of increasing individual cash compensation (at least in the short term). And so we used equity theory, along with a broad definition of what might constitute inputs and outcomes, to search for a solution to the distress the employee was experiencing. On the inputs side, we explored whether some of her assignments or accountabilities could be shifted over to someone else as a means of lightening the burden. On the outcome side, we discussed things beyond cash that we could add to the package to address the imbalance including paid time off and development opportunities.
Bottom line, Adam's Equity Theory provided us with structure and language to understand, discuss and - ultimately - start identifying potential solutions to an unusual reward dilemma.
How many of you have found practical help for a real-life conundrum in this or some other motivational theory?
Ann Bares is the Founder and Editor of Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time. Follow her on Twitter at @annbares.
Creative Commons image "Balance" by tourist_on_earth
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