A second aspect of payment that influences motivation is the perception that it is fair. According to equity theory, people want rewards to be equitable. In other words, the ratio between inputs and outcomes should be the same for the self as it is for others. Relative to coworkers, then, the more effort you exert and the more you contribute, the more money you should earn. If you feel overpaid or underpaid, however, you will experience distress and try to relieve it by (1) restoring actual equity, say, by working less or getting a raise, or (2) convincing yourself that equity already exists.
Equity theory has some fascinating implications for behavior in the workplace. Consider Jerald Greenberg’s (1988) study of employees in a large insurance firm. To allow for refurbishing, nearly 200 workers had to be moved temporarily from one office to another. The workers were randomly assigned to offices that usually belonged to others who were higher, lower, or equal in rank. Predictably, the usual occupants with the higher rank had a more spacious office, fewer occupants, and a larger desk. Would the random assignments influence job performance? By keeping track of the number of insurance cases processed and by rating the complexity of the cases and the quality of the decisions made, Greenberg was able to derive a measure of job performance for each worker before, during, and after the office switch. To restore equity, he reasoned, workers assigned to higher-status offices would feel overcompensated and improve their job performance, and those sent to lower-status offices would feel undercompen- sated and slow their performance down.