Equity TheoryEquity Theory (continued)Levels of Equity SensitivityEquity Theory PredictionsAaron Feuerstein & Malden MillsEquity Theory & Malden MillsEquity Theory•How do you know if you are fairly paid/compensated at work?–Perceived outcomes (what we get) from a job in relation to what we put into it –In relation to a comparable “other”–Formula: Your outcomes divided by your inputs = ?.•If the ratio equals one, state of equity exists•If the ratio is less than one, state of negative inequity exists•If the ratio is greater than one, state of positive inequity existsEquity Theory (continued)•Psychological states –Equity: •Comfortable and satisfied–Negative inequity•Anger, frustration•Motivated to reduce the inequity (how?)–Positive inequity•Obligation to “repay”•Motivated to reduce the inequity (how?)Levels of Equity Sensitivity•Equity sensitives–Prefer that their outcome/input ratios be equal to comparison others and that the ratio is equal to 1.•Benevolents–Prefer that their outcome/input ratios be less than comparison others and that their ratio is less than one.•Entitleds–Prefer that their outcome/input ratios exceed those of comparison others and their ratio is greater than one.Survey calculation: Sum 1b, 2a, 3b, 4a, 5b.Less than 29: entitleds; 29-32: equity sensitivesabove 32: benevolentsEquity Theory PredictionsUnderpaid OverpaidSalary QualityQuantityQualityQuantityPiece-rate QualityQuantityQualityQuantityAaron Feuerstein & Malden Mills•How would you describe his approach to managing his company?–What might his critics say about his approach?–What might his supporters say?•What is his perspective on layoffs?•Do you think his approach is successful?–What specifically supports your argument?Equity Theory & Malden Mills•How might equity theory help to explain the success Feuerstein has achieved at Malden
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