August 29, 2018
More than a paycheck
The AEA interviews Stephan Meier about the nonmonetary rewards of work.
For a lot of us, a job is more than a paycheck.
It is a way to contribute to the world, to put our talents to use, to form relationships with other people, to find meaning in our daily lives. Financial compensation is important, of course, but money isn’t the only reason why we show up to work each day.
Economists have only just begun to study the nonmonetary rewards of work, research that could yield important insights into how companies motivate their employees, says Columbia Business School professor Stephan Meier.
He and co-author Lea Cassar published a paper in the summer issue of the Journal of Economic Perspectives about how economists are thinking about nonmonetary aspects of work. We spoke with Meier about the different ways that a job can provide someone with a sense of meaning, how it can be measured, the implications for workplace policy, and what it could mean for companies and HR professionals.
A transcript edited for length and clarity is below. An extended audio interview can be heard by clicking on the media player below.
AEA: Can you tell me when and how economists started to consider this question of meaning and work?
Meier: Economics more traditionally was much more interested in how monetary incentives affect people's productivity and motivation to work. … Economics has been a little slow in thinking about meaning or nonmonentary attributes of the job outside of risk. There is a longer history of compensating wage differentials which look at if a job is very risky, I need to be compensated more for that extra risk, that physical risk I incur. That I actually get some pleasure and joy from doing something impactful has started [to be studied] only a couple of years ago.
AEA: How do economists understand nonmonetary incentives? How do you measure “meaning” in work?
Meier: It is very tricky. In our paper, we make this distinction which I think is important. The meaning of the job can come from two sources. One is just the dimension of the job. So I'm working in a children's hospital, and I'm obviously saving kids lives. And that creates for me, personally, probably more meaning than if I worked for a tobacco firm or a gun manufacturer. What I'm doing has a positive impact on the world.
The other aspect of meaning has to do with what I'm doing on a day-to-day basis, whether I'm actually having an impact on what I'm doing. Even within a tobacco firm, I could have a job which is very meaningful in terms of what I'm doing has a direct impact on what the company does, I get recognized, my skill level is exploited in an optimal way, and I'm not wasting any of my competencies. Both aspects are going to be important.
How that is measured is often very difficult. One easy way is to have someone work on a task and, in addition to getting paid for that task, for each output the employer will donate to a charity. Those empirical studies look at whether you just get paid for yourself, or you get paid for yourself and it also triggers that donation, whether that affects people's motivations. And it does.
I'm not arguing at all that people just work for nothing and just for good feelings. I think monetary incentives are still very important. But if we limit ourselves to think that everything people care about is money, I think we're missing a huge part of what motivates people to show up for work, to work, and to be engaged in the work.
AEA: In the paper you outline four basic categories for deriving meaning. You've got mission, autonomy, competence, and something you call "relatedness," which I took to mean people's social connections at work. Can you briefly go a bit deeper and describe each one of those and what you mean by that.
Meier: Mission is what I meant with the larger impact of what the organization does: whether you save children's lives or whether you produce guns. The other three have more to do with how the job is designed. You can work in a tobacco company and you still have a lot of autonomy in your job. Autonomy being that people have that desire to make their own choices. People want to have some control over what they are doing and get some autonomy in their job. Autonomy, I think the more you have, the more you get meaning.
Competency is like the desire of individuals to use their skills in an optimal way. You often hear that if people are frustrated at the job, their full potential is not utilized. That's a short way of saying, my competence level is not fulfilled. Often feedback that I actually tell an employee, "Look I really appreciate what you're doing," also creates that feeling of competency.
The relatedness is exactly what you mentioned, the social connection. Humans are very social animals. Having a corporate culture almost where I feel like I have a social connection is very important for people to show up and be motivated.
AEA: Can you talk about how demographics come into play in terms of measuring meaning?
Meier: What I strongly believe is that there is first of all relatively large heterogeneity in how much people care about meaning and money or not. And sociodemographics has a play in that. Just think about income. If you live, if you're extremely poor and you just have to make your ends meet, money is very very important.
If we limit ourselves to think that everything people care about is money, I think we're missing a huge part of what motivates people to show up for work, to work, and to be engaged in the work.
Age is an interesting question for which I personally don't think there is much evidence. You often hear that millennials care about meaning a lot. Definitely my MBA students who are millennials talk about wanting to have an impact. They want to work for smaller firms, not necessarily for social enterprises but for smaller firms because they want to change something. It's possible that younger generations have more of that meaning, but I personally haven't seen rigorous evidence that can support that.
But it can go in the other direction. When you get a little older, you have a family, you have financial responsibility, suddenly income becomes maybe a little more important so that you can fulfill yourself and have an impact in the world. On the other hand, it could also go the other way, once you realize that money isn't everything, you start to be more picky and might then choose even based on more meaningful jobs... with less income.
AEA: Is there any cautionary advice for firms that might misinterpret what makes work meaningful and create systems that could backfire?
Meier: First of all, what is important to realize is that we still don't know that much about how much people really care about meaning. I don't think that means money is unimportant. So firms have to be a little careful in thinking about how to create that meaning. The other part about meaning one has to be careful about is that if it's introduced in a very instrumental way, then it can actually backfire.
I have a related paper that looks at this whole "CSR" corporate social responsibility. If employees realize that the firm is just introducing that as a way to motivate them, to kind of squeeze out more money and effort out of the workers, it actually backfires. It has to be authentic and not added on. For certain firms, it's just very difficult for them to do that. Think about Walmart. Whatever Walmart does, I think even if they have the best intention, it gets interpreted, maybe rightly so, that they're just doing it to increase their bottom line. That just doesn't create that much meaning, I think, for a lot of the employees.
AEA: How do you think this changes our understanding of the costs of unemployment?
Meier: I do think that unemployment becomes a much more severe life event than just the loss of a paycheck. You're losing not just the income, which is terrible enough and this is definitely one of the worst things that happens when you lose the job, but you also lose the meaning.
To think about what that means for unemployment going forward where there is a lot of talk about how machines or automation will reduce jobs, how that affects not only how many people will not have a job but also what that means for how people think about the meaning of life when the job is lost.
Now I'm not saying that you can only create meaning from work. There is a lot of meaning that you get in leisure time. People who read or they volunteer, they play soccer, or they're active in church or in other activities. But I think meaning from work is important. So that definitely affects how unemployment is not just the loss of income, but people lose much more when they're out of work. We have to take that into account when we're thinking about the cost of unemployment and also when we think about the future of work and how that affects people's lives.
"Nonmonetary Incentives and the Implications of Work as a Source of Meaning" appears in the summer issue of the Journal of Economic Perspectives. Music in the audio file is by Podington Bear.