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I'm in the middle of Daniel Ariely's Predictably Irrational and having great fun with it.
Ariely is the Alfred P. Sloan Professor of Behavioral Economics at MIT, so he is a bit of a misfit among economists. He doesn't believe that humans behave in a strictly rational (and easily mathematically "modelable") fashion. Rather, we're quirky. Our behavior is often guided by strange emotional responses and is embedded in a social/cultural context that defines right/wrong and appropriate/inappropriate in ways that sometimes defy pure reason.
In the middle of the book, Ariely gets into market vs. social norms and how we respond to them, and he draws some very stark conclusions with regard to how we treat people in today's organizations.
In turns out, according to Ariely's research, that we tend to respond very generously to requests for help when the rewards stay within the realm of "the social." For example, we tend to readily volunteer our time and work hard for others when offered a gift in exchange for our efforts or even no compensation at all.
On the other hand, market signals, such as an offer of money payment or even just mention of money, seem to flip a switch in our minds telling us this is a formal exchange. We will put in as much effort as we believe the payment merits.
There is nothing particularly new or shocking in this. But the current economic environment and the limitations that it imposes on our ability to retain and motivate employees with monetary rewards makes his message especially poignant. Market-based comp schemes are expensive. Compensation wrapped in social norms? Not so much.
Not only that, but the messaging usually associated with downsizing and restructuring tends to emphasize the employee-employer relationship as a market exchange. "It's just business," after all. Those signals are great motivation- and loyalty-killers,according to Ariely's research.
So it seems that it's time to go "back to basics" when it comes to keeping employees engaged and boosting productivity in this down economy. As a profession, we need to be thinking about how we can get back to the business of increasing the intrinsic rewards of people's work, and we need to get creative in rebuilding the human and social aspects of our organizations.
In short, instill meaning in people's work and use rewards that mimic social exchange and build community (and are cheap!). Do those things, Ariely suggests, and you'll weather this downturn just fine.
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