Employment Interactions are a Mix of Market and Social

Posted on March 27, 2018 by Richard Goulter

One of the kindof interesting parts of Dan Ariely’s “Predictably Irrational” is where he points out some interactions between people are ‘social’, some are ‘market-oriented’; these two kinds of interactions have different protocols and don’t mix well.

The most striking example of this is something like lawyers who are willing to do pro-bono work; but not willing to do the same work if offered some compensation.
Rationally, adding money/reward to a task ought to increase the incentive.
But it seems that when money is involved, the consideration isn’t “I’m helping these people” so much as “this isn’t an effective use of my time”.

Or perhaps more briefly: you don’t reciprocate social interactions with money.

So, like: Market-oriented interactions are low-trust, and precise.
Social interactions rely on trust, and rely on vague reciprocity (or benevolence).

Norms of social interactions are how you interact with your family, friends or romantic partner.
Market-oriented interactions are how you interact with staff at big chain stores.

I’ve been thinking that the relationship between employer and employee has an interesting mix of these two.
It’s obviously market-oriented in that money changes hands. “Why do you want to work here?” is going to largely be “because I need money”.
But employment involves social norms too. – A company employees who are trusted with the responsibility to do their jobs is going to do better than a company without that trust.

This “Why I quit Google” blogpost touches upon the same idea: - The author did a good job by cleaning up some systems which were painful to interact with, and actively helped his colleagues. But, since this didn’t get measured, the company didn’t reward him for the job. - The straw which broke the camel’s back was when Google didn’t give him a Christmas gift. (“The Elves are Leaving Middle Earth” has another example of this). Ariely points out that gift-giving is a good tit-for-tat reciprocity mechanism in social interactions. – But at the end of the day, Google as an employer needs to make money, and the employer/employee relationship is a business one.

Every now and then I’ll see remarks along the lines of “it’s good to do the work you enjoy”. (e.g. FirstRound’s Recommended Reads for Managers Giving Feedback suggests that a manager can guide their managees better if they know their life stories).
I’m not quite sure what to think of this.
If there were a sorting hat, and it were possible that all jobs could be enjoyed, it’d be great.
– But “do what you want to” is a social interaction, whereas “do what you’re told” is a market-oriented norm. If the two happen to coincide, great.

The notorious “performance improvement plan” is another example of this.
From a market-oriented view, it seems perfectly sensible/rational. There’s a performance expectation, a plan to reach that performance. (It would be irrational for the planned improvement to be infeasible).
But I think the reason it’s notorious is that it’s perceived as an excusable means for getting rid of someone.
Even in a more ‘benevolent’ situation, (like, the employee actually is under-performing), the ultimatum of a PIP creates stress. (The First Round article above argues this).
– It’s a violation of social norms, even if it makes sense from a market-oriented perspective.

I like the idea of mutual improvement.
The employer tries to ensure their employees are the best at what they do, and tries to have the best workplace of any employer.
– I think this kindof approach can be had socially: I care that you improve; and you care to support me to improve.
But it also makes sense from a market-oriented perspective.

To me, the 40-hour workweek is a dumb example of market-oriented perspective in many cases.
I don’t think people are good at focussing for 8 hours a day, 5 days a week. (e.g. as SlateStarCodex points out in his discussion of risks of Adderall). Or the great admissions in Smart Guy Productivity Pitfalls.
I certainly think flexibility or allowance for part-time work would allow those who can’t (or don’t want to) work 40 hours a week to join the workforce.
– But I think salary already takes into account that 40-hours at work isn’t 40 hours of work done. A salary isn’t directly tied to tasks-completed.
From a market-oriented perspective, it makes sense to only pay for the work done (and provide incentive to remain on the team). From a social-interaction perspective, it makes sense to support employees even when they’re not directly producing output. (e.g. sick leave, vacation, maternity leave).

I kinda wonder if these functions of salary/compensation could be split up into a small ‘salary’ for company-affiliation (regardless of any work done), and larger commission packets for achieving units of work. Those who achieve more ‘work’ would earn more money.
– This would be a different balance of market-oriented interactions and social interactions. It’s mostly just a dumb, fun thought.

But to continue a dumb, fun thought a bit:
I wonder how mixing money and communication would work.
Money could be used as a tax-on-bullshit to reduce inefficient work communications and meetings. – If you were paying people for their time (as a salary already does now anyway), you’d want to make sure they’re spending their time in a beneficial way.
– That’s not to diminish the value of water-cooler type chats or other social interactions.

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