Sometimes people will work harder and more willingly for nothing than they would for a small amount. Perhaps this sounds odd; but it’s a phenomenon with which we are all familiar. Good friends will show up at a buddy’s house on moving day and work all day carrying couches and negotiating appliances on a stairway, all for nothing. Oh sure, they may expect a beer or two along the way; but they don’t do it for the beer. Would the same folks work as hard and long for, say, $2 an hour? Highly unlikely.

We are noting the difference between behaving according to social norms versus being guided by market norms. This topic is discussed by Dan Ariely in the book, Predictably Irrational. Owners, managers, and brokers of real estate companies could profit from paying attention to what he has to say.

“We live simultaneously in two different worlds – one where social norms prevail, and the other where market norms make the rules. The social norms include the friendly requests that people make of one another. Could you help me move this couch? Could you help me change this tire? Social norms are wrapped up in our social nature and our need for community. They are usually warm and fuzzy. Instant paybacks are not required… The second world, the one governed by market norms, is very different. There’s nothing warm and fuzzy about it. The exchanges are sharp-edged: wages, prices, rents, interest, and costs-and-benefits. Such market relationships are not necessarily evil or mean…but they do imply comparable benefits and prompt payments. When you are in the domain of market norms, you get what you pay for—that’s just the way it is.”

As long as the two worlds are kept separate, everything is fine; but when they are mixed, or we try to switch back and forth, disharmony may erupt. “…when a social norm collides with a market norm, the social norm goes away for a long time. In other words, social relationships are not easy to reestablish. Once the bloom is off the rose – once a social norm is trumped by a market norm – it will rarely return.”

Ariely observes that in recent decades many businesses have sought to institute social norms. “Today companies see an advantage in creating a social exchange…The partition between work and leisure has likewise been blurred. The people who run the workplace want us to think about work while we’re driving home and while we’re in the shower… In this 24/7 work environment social norms have a great advantage: they tend to make employees passionate, hard-working, flexible, and concerned.”

Many real estate companies – some consciously, others unwittingly—have been a part of this trend. Companies that treat (or who claim) agents are like family -- companies who create an atmosphere of mutual trust and respect -- not only receive more in return from their agents and staff, but also they are likely to find that this result comes at a lower dollar cost. More than a few agents will trade a higher commission split for an atmosphere in which they feel trusted, encouraged, and respected.

Leaders of real estate companies that have sought to foster a climate of social norms need to be especially careful in a market such as the current one – where profits and margins are shrinking, and where expense budgets must necessarily become leaner. In such circumstances it is easy to slip into an atmosphere of market norms. “Business is business, and this is the way it has to be.” Budget cuts are announced, split arrangement adjusted, and so-called “nickel and dime” charges are imposed.

Now all that may be necessary – I don’t question that – but the manner in which it is done is crucial. As much as possible, it should be done collaboratively. A “we’re-in-this-together” approach will pay off more in dollars and cents than will a management style that places primary emphasis on dollars and cents.