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Males and females prefer same sex comparison. Thus, they are likely to compare themselves with the outsiders. Individuals with greater and higher education are more informed. Moderating Variables: The gender, salary, education and the experience level are moderating variables. An employees choice of the referent will be influenced by the appeal of the referent and the employees knowledge about the referent. Other-outside: Another employee or employees outside the employees present organization.Īn employee might compare himself with his peer within the present job in the current organization or with his friend/peer working in some other organization or with the past jobs held by him with others. Other-inside: Another employee or group of employees inside the employees present organization. Self-outside: An employees experience in a situation outside the present organization. Self-inside: An employees experience in a different position inside his present organization. The referent chosen is a significant variable in equity theory. Referents: The four comparisons an employee can make have been termed as referents according to Goodman. A comparison has been made between 2 workers A and B to understand this point. J.Stacy Adams called this a negative tension state which motivates him to do something right to relieve this tension. While if this ratio is unequal, it leads to equity tension. Negative Tension state: Equity is perceived when this ratio is equal. D/I ratio (output-input ratio) is used to make such a comparison. While evaluating fairness, employee compares the job input (in terms of contribution) to outcome (in terms of compensation) and also compares the same with that of another peer of equal cadre/category. Higher is individuals perception of fairness, greater is the motivation level and vice versa. As per this motivation theory, an individuals motivation level is correlated to his perception of equity, fairness and justice practiced by the management. The core of the equity theory is the principle of balance or equity.