How Social Exchange Theory Applies to the Workplace

by Sabrina Son on Mar 1, 2016 8:00:00 AM

How Social Exchange Theory Applies to the Workplace - by TINYpulseYou may remember learning about social exchange theory in Psych 101. Here’s a brief refresher: social exchange theory says that human relationships and social behavior are rooted in an exchange process. In any relationship, people weigh the risks and rewards. When relationships become too risky for folks, they decide to axe them altogether.

Let’s say you have a casual friend that you enjoy hanging out with. This person’s always been struggling to pay their bills and is often unemployed — but doesn’t seem to mind. When you go out, you may not mind picking up the tab every so often. But once you notice there’s a clear pattern developing — this person will never, ever, ever open their wallet when it comes time to settle up — you may decide it’s not worth maintaining the friendship if you always have to pay for everything.

Social exchange theory is also applicable to the workplace. In fact, according to a recent study, it’s one of the most influential conceptual paradigms in organizational behavior. This makes perfect sense, because we spend so much at our lives at our jobs. Work is a give and take. Everyone has hit the wall at one point or another and questioned whether sticking around at a company was worth it.

When employees hit that wall and decide to stick around, they’ve obviously determined that, despite everything that’s bad about their job, the benefits still outweigh the risks. On the flip side, employees who decide they’d rather not have a job have decided there aren’t really that many benefits to staying put.

There are all kinds of scenarios where social exchange theory looms large in the workplace. Let’s take a look at six of them.


1. Employees work extremely hard but aren’t recognized for their efforts

Even the most hardworking person in the world will be at the end of their rope sooner or later if nobody ever tells them they’re doing a good job. What’s the point in busting your tail if nobody notices? According to our research, less than 33% of today’s workers feel valued at their jobs. At any given time, no matter how hard they’re working, as much as two-thirds of your entire staff may feel as though they’re working really hard but not really getting much benefit out of it.

This is why employee recognition programs are so critical. They don’t have to suck up a lot of time or resources to make a big difference. By recognizing your employees’ hard work on a regular basis, you add more benefits to the social exchange theory equation.


2. Employees work extremely hard but aren’t paid well for their efforts

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The rent doesn’t pay itself. Even if your employees are very prominently recognized for their hard work, compliments and awards can’t be deposited in the bank. Yes, recognition is part of the puzzle. But money is usually a much bigger piece.

According to our report, nearly 25% of employees would take a job somewhere else if it came with a 10% bump in pay. Since it costs a lot more money to hire new employees than keep existing ones, you’d be wise to recognize your employees’ efforts with cold, hard cash.


3. Employees realize they’re in a terrible atmosphere

Ever had a job that you dreaded showing up to each day? Maybe there was a toxic environment. Maybe some of your coworkers were outright mean to you. Whatever the case may be, it’s safe to say that, unless you were making a killing, you probably daydreamed about getting a new job every day.

When employees reach the breaking point, there’s no turning back. This is why, according to eHow, organizations should do everything within their power to create and nurture a friendly, inclusive environment.

Believe it or not, coworkers are the number one thing employees love about their jobs, according to our report. The stronger the relationships between your employees and their coworkers, the better the atmosphere in the office will be.


4. Employees realize they are picking up way too much slack for their coworkers

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Even if your workers get along with their colleagues fabulously, there comes a point in time where slackers start really getting on the nerves of those who consistently produce. Nobody wants to work incredibly hard on a daily basis only to watch their coworkers do nothing — without getting punished for their lack of action.

Rather than letting lazy employees pollute the atmosphere in your office, survey your employees on a regular basis so that they’re able to let you know what’s wrong before it becomes an enormous problem.


5. Managers have rock-star employees who are the best at what they do. Thing is, they have a hard time following rules

From management’s perspective, hardworking employees who consistently overdeliver and can be relied on to get the job done are obviously desirable. But even the best employees in the world can’t get away with everything.

Managers can’t hold their employees to different sets of standards. There may come a point in time when some of your most highly skilled workers push the envelope a bit too far. In the interest of maintaining a happy staff — one where everyone is treated equally — you may be forced to sever ties with talented individuals.

To prevent a situation from ever reaching that point, make sure all of your employees know exactly what’s expected of them. If your rock-star employee is always coming in 90 minutes late and leaving an hour early, let that person know right away that the behavior is completely unacceptable.


6. Though they like a product, customers can decide dealing with a company is too much of a hassle

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Customers are not immune to social exchange theory either. Imagine a customer is in love with a certain brand. They love everything the brand puts out. The products are well made and affordable. Now imagine that shopper has a customer service issue. They call the company, only to be greeted with subpar service that’s quite frankly a bit rude too.

Rather than continuing to deal with the company, the customer might decide that it’s no longer worth it and take their business elsewhere.

As you can see, social exchange theory plays an enormous role in the workplace and employee engagement. The good news is that managers who understand the theory and actively manage relationships in tune with it are likely to have happier staffs and more satisfied customers.



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This post was written by Sabrina Son

Sabrina is the managing editor for the TINYpulse blog. A Seattle native, she loves her morning (or anytime) coffee, spending her weekends on the mountains, and of course, the famous rain.

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