At its essence, the employment relationship is an economic exchange, an exchange of work for wages. Framed in this way, like any business transaction, we might see it as a situation where the overriding objective of both parties is to maximize their respective "takes" from the exchange.
Most of us in HR and related fields realize, however, that the relationship is more complex, nuanced and multi-dimensional than this. To support to this point of view, comes an interesting piece of research from the Wharton School at the University of Pennsylvania.
An intriguing Knowledge@Wharton article In the Game of Business, Playing Fair Can Actually Lead to Greater Profits highlights the research of Wharton marketing professors John Zhang and Jagmohan Raju. Their experiments and consequent transactional model, which are rooted in the emerging field of behavioral economics, demonstrate that people can and will value the idea of fairness over sheer profit maximization.
And the condition necessary for this to happen? Transparency.
What takeaway can those of us in the HR and reward professionals draw from their work and conclusions? I think it boils down to this: Don't underestimate the value of transparency in reward design, implementation and communication.
While most of us may wish to earn as much as we can for the work that we do, we also realize that the exchange has many elements and is rarely as simple as that - for us or for our employers. I do think, however, that most of us do share one overriding priority in the relationship, and that is the need to feel assured that we have been treated fairly.
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