HR Glossary
Equity Theory
A motivation theory stating employees compare their input-to-output ratio with others to judge fairness.
Definition
Equity theory suggests employees assess fairness by comparing what they put into their job (effort, time, skill) against what they get out of it (pay, recognition), relative to their peers — and adjust motivation based on perceived imbalance.
Why It Matters
It's a foundational idea behind why transparent, consistent compensation structures matter for morale.