In recent years, businesses have began to strategically integrate their brand identity in a "social exchange" relationship as opposed to traditional "market exchange." A social exchange relationship leads its operation relying on trust, integrity and loyalty to make everyone better off in support of each other. For example, US Bank's slogan "Us helping you," or Home Depot's slogan "You can do it, we can help." These are examples of a value proposition fabricated by social pledge. In other words, "shop with us because we are your friends with helping hands, not a business here to take your money." Contradictory and traditionally, businesses have focused their brand relationship in a "market exchange" operating to turn the highest profits. Or, "you get what you pay for." The social market exchange is on the forefront of transactions in the 21st century. This is great, but forces a long term commitment many businesses may have trouble keeping. Lets dive into the architecture of both social norms vs market norms regarding employees in the work place.

In a recent expansion in the "intrapreneur," or entrepreneurial mindset within companies, businesses are focusing attention on employee task identity and promoting both personal and company growth. These days, the workplace is no longer a 9 to 5 punch in the clock setting. As technology develops, employees are expected to work even when not at work through mobile devices. How do you get your employees to work harder and longer with a set salary? Many may say the obvious of extrinsic perks. True, no one will work without pay, but the incentive to work harder is up for debate.

Companies can offer bonuses of $1000 (market exchange) or a vacation costing $1000 (social exchange); two very different ideas. This concept, cash vs. gift, effects employee behavior. A gift is a symbolic gesture. Similar to a dinner party, most of us will show up with a case of beer as thanks for the welcoming neighbor or friend.  This gift may have cost us say $20 but our recipient may only receive utility of $10; maybe they do not like this beer or rather have enough beer already. Although the utility isn't as high as if we were to just give them $20 (in this case $1000 vs. vacation), the psychology behind the gift creates a two way street of supporting each other through good will. People like working except when they are paid to do so. Their value comes from the social benefit of working with a community for a greater good. Contradictory, (a market exchange approach) by giving a neighbor $20 for hosting a dinner party you now inflict the idea that you are compensating them for their efforts. If you pay them they are no longer receiving social benefit and therefor next time you need a favor, your friend may expect payment rather than helping out of good will. You have left the social exchange and created a market exchange. By inflicting a social approach within a company, employees receiving intrinsic perks such as flexible schedules, free lunches, and high task identity, will develop a work ethic where employees want to help the company grow out of passion, loyalty and social bond.

What happens when a company needs strict output disregarding flexible schedules or can no longer afford hospitality perks? What if the economy begins to slow and money is thin? In a social exchange, where everyone is helping each other for a greater goal, to hold up their end of the exchange, the company would need to support their employees. Help them help you. By firing employees or reducing benefits, a company is moving back to a market exchange with focus on turning a higher profit rather than building social relationships internally.

This is all relative but something to think about as leaders in our respective fields. 

- Sam Lucas

 

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