In the book “Predictably Irrational”, author Dan Ariely cleverly illustrates the difference between social norms and market norms with a cringy moment at a holiday meal. After finishing a Thanksgiving spread with all the delicious trimmings, a guest takes out his wallet and earnestly offers the host $300 for a lovely meal. Should the host be offended? Would you want to hide if the guest were your spouse? If you answered yes to either of these questions you are not alone.

Social Norms Versus Market Norms

Ariely explains such discomfort occurs when one crosses from social norms into market norms. Market norms can be thought of as a straightforward exchange of value for value usually in the form of an amount of money such as salary, price, or rent. These interactions imply prompt payment and comparable benefit.

While social norms are more ambiguous. They are intertwined with our need to be a part of something bigger than ourselves such as a community, team, or purpose. They often come in the form of a favor, gift, or volunteer services with no expectation of immediate monetary payback. And as depicted, it can feel uncomfortable or even offensive when someone tries to put a monetary value on it.

Mixing Social and Market Norms

Ariely goes on to provide other examples which could easily become offensive if crossed from a social norm to a market transaction like putting a monetary value on a date based on the price of the meal or like undervaluing a neighbor’s time when helping move furniture. We’ve seen when social and market norms are better off separate. But, are there examples when both, if balanced carefully, can comfortably coexist and perhaps even enhance a relationship; such as in the workplace?

The Workplace as a Market Norm

In recent months, we’ve experienced a lot social media buzz around the great resignation and quiet quitting. No need to rehash what they are, but it is worth pointing out that both issues highlight the real need to keep employees engaged especially after the life shifting pandemic.

One could argue the workplace is a simple example of market norms. Employees are hired to bring value and benefit to the company and those same employees can expect prompt payment of comparable value in return in the form of a salary. So then it should logically follow, if companies want more value, work and benefit from their employees they just need to pay their employees higher salaries and bonuses and provide better benefits.

Unfortunately, as study after study demonstrates, it is not that simple. In fact, increasing salary exclusively has little if any effect on employee engagement levels. Some studies have gone so far as attempt to show a negative correlation between pay and engagement, e.g. solely increasing pay could actually have a negative effect on engagement. (Keeping in mind, there is a VERY important assumption being made here that the employees are already compensated at a fair market value. If not, by all means, please increase employee pay and benefits to market value. It may not fully solve an engagement issue, but it will at least get you to the starting block.)

Social Norms in the Workplace

When we hope employees think about work in their “off” hours, will answer an urgent email from home, miss a family event to travel for a meeting or be creative when solving problems, it blurs the lines of a simple exchange of value. And starts to enter the social norm zone. Employees may not expect immediate repayment for going above and beyond, but there is an unspoken agreement that when the need arises; when the employee needs time for personal well-being or support for mistakes made, they too should be able to expect the same loyalty and understanding from the company.

There are numerous ways companies can benefit from employees working within social norms. However, what leadership must understand is that not only are social norms a two-way street, creating relationships within social norms is a long term, underlying commitment by the company to build that level of engagement and trust. It is an investment made with no expectation of immediate return. When immediate return is expected, the relationship quickly becomes transactional and moves back into market norms. The good news is when nurtured, social norms make employees feel a part of something bigger than themselves, a part of a larger purpose, and they feel supported by the company. In return, employees will be more flexible, loyal and willing to extend themselves. They will be more engaged.