A cooperative culture featuring generous employees helping each other is a key success factor for innovative and effective organizations. The two mechanisms for such generosity is the pay-it-forward approach, where someone who has been helped helps another person, and reputation rewarding, in which employees with a reputation for helping others are rewarded with help when they need it. New research from the University of Michigan’s Ross School of Business shows that both mechanisms are effective, but paying it forward will have a longer lasting impact on the organization.
In a world of business in which cooperation is often the key to success, many companies overlook the damage that infighting, extreme competition or knowledge hoarding by employees can cause to sales, profits and effectiveness. At the opposite end of the scale are the organizations that encourage and facilitate employee cooperation and generosity. Employees look for ways to help each other — an approach known as generalized reciprocity: being helped and in turn helping others.
There are two types of generalized reciprocity. One is ‘reputation rewarding’ — in this case, someone who has a reputation as being helpful to others is going to receive more help from others than someone who does not have a helpful reputation. This can lead to some strategic generosity: you help others to build your reputation and ensure that you will be helped yourself in the future.
The second type of generalized reciprocity is ‘pay it forward’ — the concept of pay it forward is that someone helps you, and you in turn help a third person.
Both mechanisms can be effective. An important drawback to reputation rewarding, however, is that a person’s reputation is ephemeral. If it’s been some time since the person has assisted someone, the assistance becomes forgotten in the workplace and, rather quickly, the person is relegated to the ‘unhelpful colleague’ category.
A further drawback is that reputation rewarding is based on keeping track of your fellow employees behaviour (that is, whether or not they are being generous). With pay it forward, what counts is your own experience, which is simpler and more salient than keeping tracking of what others have done.
That said, the research shows that the two types of generalized reciprocity work well together. Pay it forward, motivated by the ‘positive effect’ of gratitude rather than by self-interest and strategic consideration, does have a longer and more lasting impact in building a generosity-driven culture. Nevertheless, the cycles among employees of reputation rewarding and of paying it forward lead to a sustained virtuous cycle of cooperation.
To enable and energize this virtuous cycle of cooperation among employees, companies need to put in place practices and systems that spark both mechanisms.
Create opportunities to establish and make visible the norms in your company for asking for help, giving help and reciprocating help. Scheduling regular employee meetings similar to IDEO’s, ‘brainstorming’ and ‘Monday morning’ meetings for example, can help set the stage for reciprocity.
Also, reward and/or recognize employees who have helped others. This can be as simple as publicizing acts of generosity or expressions of gratitude in a company newsletter, or ending meetings with an invitation to those in the room to express any appreciation for help they have received.
More formal programs, such as Southwest Airlines ‘agent of the month’ award given to those who have helped others succeed, are also effective. A peer-to-peer bonus system encourages helpful behaviour by allowing employees to recognize their peers. Google, for example, rewards those who has helped someone with a token payment, plus an additional payment that must be paid forward to recognize a third person, thus incorporating a pay-it-forward component to the system.
For large corporations, the challenge of encouraging helpful behaviour is compounded by a dispersed workforce. These barriers of distance — as well as the organizational silos common in large corporations — can be surmounted thanks to company-sponsored online communities in which your employees can share knowledge and respond to requests for help. Oil giant ConocoPhillips believes its knowledge sharing communities has saved the company up to $100 million. While ConocoPhillips offers some compensation for participation in the communities, employees also use the system voluntarily.
Monetary rewards, such as ConocoPhillips’ variable compensation or Google’s token payments, can encourage and recognize generosity, but through the mechanisms of paying it forward and reputation rewarding, the greatest motivation for employees to offer help is internal. The job of organizations is to facilitate such generosity in any way possible.
How Paying It Forward Can Help Your Company. Will Yakowicz. Inc. Magazine (7th July 2014).
The Paying It Forward Payoff. Gretchen Gavett, Harvard Business Review Blog (30th June 2014).
Ideas for Leaders is a free-to-access site. If you enjoy our content and find it valuable, please consider subscribing to our Developing Leaders Quarterly publication, this presents academic, business and consultant perspectives on leadership issues in a beautifully produced, small volume delivered to your desk four times a year.
For the less than the price of a coffee a week you can read over 650 summaries of research that cost universities over $1 billion to produce.
Use our Ideas to:
Speak to us on how else you can leverage this content to benefit your organization. info@ideasforleaders.com
