Dan Ariely’s book, Predictably Irrational, is a really eye-opening read. He deconstructs a number of traditional economic constructs with humour and insight. Most importantly, he uses careful experimentation to demonstrate exactly how irrational we are.
In the video above, Ariely talks about the difference between people’s behaviour in a situation governed by social norms by comparison with market norms. He examines this difference in Chapter 4 of the book: “The Cost of Social Norms.” Reading this chapter, I thought I had found the answer to why incentives do not work in knowledge management initiatives.
Ariely’s argument is that in a situation governed by social norms, people will help without thought of a financial reward. On the other hand, interactions governed by market norms are very different.
The exchanges are sharp-edged: wages, prices, rents, interest, and costs-and-benefits. Such market relationships are not necessarily evil or mean — in fact, they also include self-reliance, inventiveness, and individualism — but they do imply comparable benefits and prompt payments. When you are in the domain of market norms, you get what you pay for — that’s just the way it is. (p. 68)
The trouble is that whilst knowledge sharing is at its heart a social activity, it takes place in an environment governed by market norms — the workplace. Naturally enough, there is an inclination to want to recognise good knowledge behaviours in the only way that an employer knows: financially. As Neil Richards has explained, this just does not work. Ariely describes an experiment in which people were asked to perform a mundane and fruitless task on a computer. One group was paid $5 for the task, another group just 50¢, and a third was asked to do it as a favour. The productivity of the $5 group was slightly lower than the ‘favour’ group, but the 50¢ group was over 50% less productive than the others.
Perhaps we should have anticipated this. There are many examples to show that people will work much more for a cause than for cash. A few years ago, for instance, the AARP asked some lawyers if they would offer less expensive services to needy retirees, at something like $30 an hour. The lawyers said no. Then the program manager at AARP had a brilliant idea: he asked the lawyers if they would offer free services to needy retirees. Overwhelmingly, the lawyers said yes.
What was going on here? How could zero dollars be more attractive than $30? When money was mentioned, the lawyers used market norms and found the offer lacking, relative to their market salary. When no money was mentioned they used social norms and were willing to volunteer their time. Why didn’t they just accept $30, thinking of themselves as volunteers who received $30? Because once market norms enter our considerations, social norms depart. (p. 71, my emphasis)
It is possible to use gifts to thank people for their efforts, and still stay inside the social norms. However, if one suggests that the gift has a monetary value, the market norms reassert themselves. Although Ariely doesn’t say so, I suspect that using small-scale rewards on a regular basis (such as a box of chocolates for the best contribution to know-how every month) would also be regarded as market-related. Gifts need to be a surprise to be valued as part of a social interaction.
Later in this chapter, Ariely describes how a social situation can take a long time to recover from being drawn into the market. He tells a story of a childrens’ nursery that had previously used social sanctions (guit, mainly) to control parents who picked their children up late. When the nursery started to impose fines for lateness instead, parents applied market thinking and the incidences of lateness increased. When the fines were removed, the parents continued to pick up late as they had done in the fines era — guilt no longer worked as a sanction.
One problem for some law firms is that they have given knowledge management responsibilities to a specific group of people (Professional Support Lawyers, or equivalent). Because those people (rewarded according to the market) have a defined role, it can be difficult to motivate others in the firm to share knowledge as a social obligation. Unfortunately, the market value of effective knowledge sharing is almost certainly more than most employers could afford. “Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but often more effective as well.” (p. 86)
Having established that the balance between social and market norms is a very senstive one, Ariely is still convinced that there is a real place for social norms in the workplace.
If corporations started thinking in terms of social norms, they would realize that these norms build loyalty and — more important — make people want to extend themselves to the degree that corporations need today: to be flexible, concerned, and willing to pitch in. That’s what a social relatinonship delivers. (p. 83)
As well as these thoughts on knowledge sharing in the enterprise, Ariely’s chapter explains much to me about the success of so-called social computing tools (and also why they are well-named). They play on the genuine human desire to comply with social norms of exchange, assistance, generosity and collaboration. The challenge is to import this desire into the organisational context, without running into market norms.
6 thoughts on “Social norms and knowledge sharing”
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Macronormative theory is where our energies should be focused. I would learn more from your comments above if they were contextualized a little more broadly, within a theory of when norms work and when they don’t. Sociologists should not help pop culture economics appropriate the term “market norms” without demonstrating that it isn’t what economists think it is.
Your comments are off the Mark, if I may be cheeky. As it is not helpful to reduce norms to calculations, it is also not helpful to reduce real means-ends calculations to norms.
Sociologically, market norms are valid only in situations where the normative meaning of money is stable. In other words, market norms, e.g. cognitive comparisons of what one’s time ought to be worth, can become “calculations” only when money’s value is symbolic and not real, that is, not really immediately important as a resource. The lawyer’s dignity is offended by a wage cut because she already has enough money in the bank.
Put differently, market norms only operate when one’s consciousness is captured by his class location and not by his real needs (which are, in his class position, already systematically organized) or by another social structure (family the usual example).
From your micro perspective, the perspective of employers, incentive structures should be designed to circumvent market norms entirely, as these norms always admit some kind of compromise on their part (however unfair, some standard of fairness). The best outcome for principles is to know and select among the things that their prospective agents actually need or want, and to then select as an incentive the thing that is least costly. Ariely assumes too much that this thing that people want is dignity, or social recognition, and you are guilty of this as well in your comments about “genuine human desires”. Maybe I have spent too much time around undignified grad students, but most of us are lusting after something which if recognized by those around us could be used to motivate us beyond our own sense of self-potential. Social structures should be evaluated in terms of the psychocultural potential to destabilize them.
This sounds like knowledge managers should use random combinations of cultism, sex and chocolate to motivate their employees. That would create a highly productive workforce, but we have a sense that it might not last long. So we have a catch-22: norms protect us and restrict us in equal measure. Your solution to the problem of motivating employees is to operate within the boundaries of the normative system, to take the social structure for granted, and to decontextualize it from its environment and development. Is this kind of microanalysis really defensible?
[…] Social norms and knowledge sharing March 2009 4 comments 5 […]
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