Equity theory is a psychological concept that suggests individuals strive for fairness and perceive fairness in the distribution of rewards and resources in the workplace. It posits that people compare their inputs (e.g., effort, skills) and outcomes (e.g., salary, recognition) to those of others, and they seek to maintain a sense of balance or equity.

Example

If an employee perceives that a coworker with similar qualifications and experience is receiving greater rewards or recognition for the same level of effort, they may perceive inequity and feel demotivated or dissatisfied.