Like a good neighbor, State Farm is there. Fly the Friendly Skies. You’re in good hands with Allstate. Talk to Chuck. You have a friend at Chase Manhattan. (I know, I’m dating myself with that last one.)
For a long time, companies have sought to be our friends, neighbors and companions. Many tell their workers that they are all part of the family. Or at a minimum playing on the same team.
Is this all marketing b.s. or can companies care? I believe they can. My 2004 book, Faith and Fortune: How Compassionate Capitalism is Transforming American Business argued that smart companies (Herman Miller, Timberland, UPS, Southwest Airlines and Starbucks, among others) are driven by an ethic of service—to their employees, their customers and their shareholders, frequently in that order. This ethic of service generates loyalty and creates a powerful competitive advantage: Happier and more fulfilled employees mean satisfied customers, and satisfied customers generate long-term value for shareholders. Caring is good business.
The thing is, companies that say they care need to behave that way. In tough times, that’s tough: Starbucks eliminated more than 6,000 jobs when its business went south last year. This doesn’t make Starbucks hypocritical when it cames to be a good employer, but, at the least, it puts a burden on the company to treat people well on the way out.
A provocative and lively book I’ve been reading, called Predictably Irrational: The Hidden Forces That Shape Our Decisions, explores these question in a chapter called The Cost of Social Norms: Why We Are Happy to Do Things, but Not When We Are Paid to Them. The author, Dan Ariely, argues that we live simultaneously in two worlds, one characterized by social exchanges and the other characterized by market exchanges. The first is the world of family, friends, neighbors and community, the second the world of business, wages, prices and rents. “When we keep social norms and market norms on their separate paths,” Ariely writes, “life hums along pretty well.” But when they collide, look out. Think about what happens when a guy tries to persuade his wife or girlfriend to have sex with him because he just bought her an expensive dinner—Ariely’s example, not mine.
Businesses gain when they bring social norms to the marketplace, Ariely says:
If customers and a company are family, then the company gets several benefits. Loyalty is paramount. Minor infractions—screwing up your bill or even imposing a modest hike in your insurance rates—are accommodated. Relationships of course have ups and downs but of course they are a pretty good thing.
I’m willing to bet that Southwest customers are less grumpy about flight delays than those on United or Delta because they have a sense that the company wants to treat them right. When I buy something at Nordstrom or L.L. Bean and something’s amiss, I’m okay with that because I know they’ll happily take the merchandise back.
Trouble arises when companies don’t deliver what they promise. We know that we can’t literally “talk to Chuck” but Charles Schwab had better make sure that the people who answer its phones are friendly, responsive and knowledgeable. State Farm has to act like a neighbor when a customer submits a claim. As Ariely writes:
If you’re a company, my advice is to remember that you can’t have it both ways. You can’t treat your customers like family one moment, and then treat them impersonally—or even worse as a nuisance or a competitor—a moment later when this becomes more convenient or profitable.
Just to be clear, Ariely isn’t saying that companies should only operate by market norms. He believes in the power of social norms, and his experiments in behavioral economics back him up.
“Cash will only take you so far,” he writes. “Social norms are the forces that can make a difference in the long run.” Money, he goes on to say, is “very often the most expensive way to motivate people. Social norms are not only cheaper, but more effective.”
Put simply, we’ll all work hard for a cause – or a company – that we believe in. Look at the success of open-source software or Wikipedia, where creators don’t get paid at all.
Much of this dovetails (pun intended) with the work of one of my writing/consulting clients, Dov Seidman, the founder and CEO of a company called LRN and author of a book, HOW: Why HOW We Do Anything Means Everything in Business (and in Life). Dov talks about how companies need to inspire, rather than coerce or motivate, their workforce. He also says that the best businesses need to “out-behave” their competition. I agree, but Ariely reminds us that this is a risky way of doing business.
Those who say that they care create high expectations that they had better meet.