Question

Describe the components of equity theory. What role does justice play in equity theory?

Answer 1

The components of equity theory are:

Inputs: contributions employees make to the organization (education, training, experience)

Outcomes: what employees receive in exchange for their contributions (pay, fringe benefits)

Referents: other people with whom people compare themselves to determine if they have been treated fairly.

Equity theory can be considered as one of the justice theories.  Equity theory focuses on distributive justice in the degree to ensure that outcomes and rewards are fairly distrusted or allocated.  However, in procedural justice, the fairness of the process used to make reward allocation decisions, is just as important.

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