What is the Social Exchange Theory and Can it Help Your Business?
Social exchange theory is a comprehensive social framework for the relationship between employer and employee. Social exchange theory suggests that when an organization provides resources to its employees, this initiates a social exchange process in which employees respond with behaviors and attitudes that benefit the organization. According to this theory, when there is a positive social exchange relationship, there exists an interdependence between employer and employee that results in positive outcomes; and when there is a negative social exchange relationship, it usually results in withdraw, absenteeism and turnover.
The mutually beneficial effects of a strong social exchange relationship were recently studied by the American Psychological Association in order to evaluate the perceived organizational support, affective organizational commitment, job satisfaction and well-being in light of various employee benefit availability.
It is no secret that benefits can impact employee attitudes and wellbeing. However this study, specifically examines empirical findings on relationships between benefit experiences and key outcomes in order to offer evidence to better support strategic benefit decisions.
Benefits are concrete, tangible resource that can influence employee commitment and retention through the norm of reciprocity and through strengthening mutual interdependence in the employee–organization relationship. Benefits include, but are not limited to, health care, mental health care, leave, retirement benefits and training. Because benefits are discretionary, it is important for organizations to regularly review and assess what is offered and utilized.
The recent study found that the relationship between benefits availability and outcomes is comparable to the effects associated with pay and job design characteristics. To put it another way, researchers have found that the positive social exchange resulting from benefits is on par with the positive social exchange resulting from pay and working conditions.
According to the study, while better benefit experiences are generally related to positive employee outcomes, the employee’s subjective evaluation of their benefits is more important that benefit availability in predicting those outcomes. Therefore, it is recommended that when considering what benefits to offer, organizations should evaluate not only the benefits themselves, but the perceived support, to ensure that the benefits are fostering a strong social exchange relationship.
The results of the study confirmed that personalizing and customizing benefits can help to increase the perceived value of those offerings. One way to personalize a benefit is to consider the particular needs of the employees. For example, top performing professionals in high-demand careers, often have higher levels of anxiety and depression. As such, offering mental health services, such as employee-sponsored individual counseling and career coaching, can build a strong positive social exchange relationship, thereby profiting the organization.
AB In-House Counseling offers individual counseling and career coaching as an employee benefit to high performing professionals by a qualified expert. To learn how AB In-House Counseling can help your business utilize the social exchange theory to grow your relationship with your employees and increase positive outcomes, contact us.
Resource:
Hong, Y., Ford, M., & Jong, J. Employee benefit availability, use and subjective evaluation: A meta-analysis of relationships with perceived organizational support, affective organizational commitment, withdrawal, job satisfaction, and well-being. Journal of Applied Psychology. 2024, Vol. 109, No. 12, 1921-1927.
