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Resource exchange theory: a problem-solving tool.

Resource Exchange Theory: A Problem-Solving Tool

The theory that I reach for most often in dealing with management problems is the "Resource Exchange Theory" (RXT).(*) Although RXT deals with satisfaction of needs, it is also a theory about power. Some definitions of power imply an ability to influence to control the behavior of others. These views suggest that it is the power to control others that people desire. In contrast, the RXT view is that power is the amount of a resource that an individual can give to others. Power is the consequence of obtaining resources. Influence over others is gained by having a resource to give that they need.

People may be powerful in any of the six classes of resources: love, status, information, money, goods, and services. As the amount of a resource in possession increases, potential power in that resource is acquired. Through exchanges of the resource for other resources or for more of the same resource, potential power becomes actual power.

The motivation to exchange resources is the satisfaction of specific needs. Needs arise when people have fewer resources than they desire. On the other hand, if the amount of a resource grows too high for comfort, there is motivation to get rid of the excess (except with money, which has no upper limit). Quantities of resources above minimum needs can be exchanged for other resources, where the needs may be greater.

Love, status, information, money, goods, and services can be given or taken away through a variety of behaviors.

* Behaviors that express affection, caring, friendship, liking, and acceptance increase the amount of love in possession. Indications of disapproval, dislike, rejection, and hate take away love.

* Behaviors that convey admiration, esteem, respect, and recognition of competence give status. Expressions of criticism, depreciation, disregard, and condemnation decrease status.

* Information increases through communications of fact that do not refer to status of love, such as descriptions of events, statements of opinions, and offerings of advice. Information can be taken away, or knowledge decreased, through misrepresentation, cheating, and deceit.

* Exchanging good refers to the giving and taking of all material things.

* Money refers to the exchange of any form of currency.

* Behaviors that increase the physical comfort of receivers, or save them energy, give services. Harming the body, destroying property, or increasing the work load take away services.

An individual can give to or take away from him- or herself as well as others. Shared meaning is important to a successful exchange. RCT does not classify behaviors themselves. The giver and the receiver can interpret an event in different ways. The meaning of the behavior can also depend on the context. An expression of praise by a respected supervisor results in an elevation of status, but the same comment, in a relationship of distrust, could signify to the receiver a manipulative attempt to take away status--even though it still means praise to the giver. Such mismatched meanings can cause confusion. Where shared meaning is lakcing, successful exchange is unlikely.

Use of RXT involves knowledge of the resource properties of "particularism" and "concreteness." Particularism refers to how much the desire for a resource depends on who is available to give it. From lovers, spouses, and close friends, people want expressions of love and affection. With strangers, the desire for love is low and any such communications would be surprising, if not alarming. In contrast, money is likely to have the same value whoever gives it. Love is the most particularistic resource, followed by status and services, then information and goods, with money being the least particularistic.

Concreteness is a property of exchange behaviors. At the concrete end of the range lie tangible exchanges of goods and services. At the symbolic end are transmissions of status and information. In between are exchanges of love and money, which can be conveyed symbolically and concretely. The relationship between concreteness and particularism, as represented by the six resource categories, is shown in the figure at the right. Categories next to each other are more similar than those opposite each other and are more likely to occur together in exchanges. Because the boundaries between the categories are permeable, more than one resource may be conveyed at one time. For example, in the statement "I like working with you," we could see both status and love.

The logic of exchanges contains a paradox. Money and goods obey common sense and mathematically sound rules. If you excahnge money for goods, you have less money and more goods. But the more particularistic resources do not add and substract in the same way. The receiver of love has more after than before the exchange, but so does the giver. And if one person demands the love of another, the giver has less love remaining, but so does the receiver. Power in love can only be increased if freely given and freely received. Consider what happens with status. If employees express admiration for their employer, they also elevate their own status. Or if they see their organization as a disgusting place to work, they are likely to think less highly of themselves.

Managing Reward Systems

In my first major supervisor positions as medical director in a mental health care center, I quickly discovered that I had no control over the salaries of the people I was to supervise. I didn't know how I was going to get them to do what I wanted. (I was even more upset when I realized I couldn't fire them either.) Seeking help, I came across references to "nonmonetary rewards." This led to thoughts about alternatives to money, but left me about as puzzled as I was enlightened. It was not until I encountered RXT that I developed this practical understanding: Resources provide the stuff of which rewards are made.

RXT can be used to stimulate creative problem solving when you want to reward someone. Several conditions must be met in the exchange. The reward must be a resource you possess in sufficient quantity to give. The receivers must be in some degree of need for that resource--or at least not pushed about their comfort levels by the amount. And, if you are considering rewarding with a particularistic resource, you must matter enough to them that they want it from you. Failing these conditions, the experience may be perceived as empty or even punishing.

How will you know what resource to offer? By their conversations, complaints, and even direct requests, people will let you know which resources they need and how important it is to get them. Matching the rewards to the needs or desires of the person or group receiving them will increase productivity and your effectiveness as a physician executive.


A second use for RXT is in negotiating. One of the keys to successful negotiating is identifying what each party wants and how much it wants it. I find it helpful to question myself in RXT terms when involved in even simple negotiations. What's more important to me in the situation? Services I hope to receive? Respect for my competence? Is it just information I want, or am I hoping they will like me more after we've talked? And what do they want most in exchange? Am I prepared to give it? Assurance of a mutually rewarding settlement requires an awareness of one's own desires and a sensitivity to the needs of the others.

The Foas refer to labor disputes in which both sides understand poorly the needs of workers for a sense of importance and "belongingness" within the organization. (+) The likely result of negotiations is that the workers get more money. The problem with this outcome lies in the exchange of dissimilar resources. (Status and money are not adjacent structures in the figure.) Where such an unsatisfying exchange occurs, residual aggression is high. This is not good for the health of the organization or for the welfare of its members. Information, as more similar resource, is more acceptable in this case, but an increase in status is the most appropriate response. Satisfaction in negotiations relies on the exchange of valued resources. RXT helps with confusing negotiations. For example, you ask Dr. Smith to take the minutes for a meeting. When he hesitates, you point out that you took the minutes last time, hoping to make it seem fair. He flatly refuses, with obvious irritation. Are you left puzzled? Or do you quickly hypothesize that he sees taking minutes as beneath the status of a physician and is rejecting your perceived attempt to degrade him? If this hypothesis is true, you will get him to take the minutes only if he sees your loss of status last month as a fair exchange for his degradation this month. What about your needs? Do you view this simply as a matter of convenience so you can keep your attention kn the conduct of the meeting? Or do you also see this activity as beneath you? What appears on the surface to be an exchange of services takes on a different look when the underlying values, needs, and meanings are known.

Managing Conflict

Another application of RXT is in conflict management. In early attempts to understand conflict, I often thought of it as "a power struggle." This did not lead readily to appropriate action. When I was directly involved, I tried to win the struggle by overpowering the opposition. When the conflict was between people I supervised, I tried either to intimidate them into giving it up or to declare one the winner. Because these efforts were ineffective, avoidance was also high on my response list. I did not develop a practical approach to successfully handling conflict, however, until I became familiar with RXT. Now I understand that a positive or constructive outcome for conflict resolution--and for negotiations--necessitates an increase in resources that are desired by each party. Everybody wins. If anybody has less of a desired resource, the outcome is negative or destructive.

In the language of RXT, are the parties in conflict fighting for love? Is one trying to obtain information that the other is withholding? Is the demand for increased pay at heart a request for increased recognition? Is an attack on your work simply disagreement with your approach, or is it retaliation for your overlooking a recent success ("If you're going to rob me of respect, then we can remain on equal footing if I do the same for you."). It is not your motivation that determines the outcome so much as it is the other person's perception of what you are doing.

Once you've stated the conflict in resource exchange terms, resolution alternatives should follow quickly. Let us suppose that you must demote someone, a decrease in the person's status. How can you manage the conflict that this step is certain to generate? Money is a possibility. But, if you recall how dissimilar money and status are, you will begin to think in terms of a lot of money. And that won't relieve your concern about the resentment remaining after such a mismatched exchange. Alternatively, what about offering an exchange in kind--something that will increase status? You could offer another position of equal status (the lateral transfer) or one of even higher status (the upstairs kick). Just to be safe, you might offer a substantial raise in the process.

The belief that a particular resource is in short supply within an organization will intensify competition for it. This is true as long as competitors see a chance for success. Without hope, they are likely to give up efforts to obtain the resource and become demoralized. (Consequently, a lack of conflict should not always be reassuring.) Alternatively, frustration in one resource category may lead to pursuit of another. Although a substitute affords some consolation, it will be less satisfying than the more highly valued resource. If the substitute is dissimilar enough, the frustration that remains carries the potential for disruption of normal activity. Physician executives ought to be aware of the resources most highly valued in their organizations and make sure they are available in adequate supply.

Empowering People

A fourth use for RXT is in empowering people. How can a physician executive effectively transfer power to a person or group? Give them a needed resource. Give a work group status by granting it the autonomy to solve a particular problem. Empower through information by keeping people up to date about changes in the external environment that affects health care, by telling them about alternatives you are considering as you make a decision that affects them, or by approving payment for an outside educational conference. Provide additional support staff and increase power through services. Greet people warmly and enhance both their status and affectional powers. Giving money and goods increases power in those resources. The added benefit of giving the particularistic resources is that you also empower yourself.

As with rewarding, what you give must match a need. Communications of need may be direct or couched loudly in a public complaint or disguised in the form of personal criticism, but if you listen actively you will know what to give to match the need.

After you know what people want, you must next ask, "Do they want it from me?" Are you important enough to them that they will seek the most particularistic resources from you? If, for example, a manager asks a group of staff to develop and implement a new procedure for their own use, but the manager's supervisor has overruled such efforts in the past, has this group been empowered? First we should question what they want from their manager. Perhaps they view him as a provider of services rather than status and prefer that he tell them what to do. If they do desire autonomy, do they want it from this person or from the one who really has the power to give it, the manager's supervisor?

The examples given so far are of empowering through giving. However, receiving also can empower in several ways. When the particularistic resources of love and status are freely given, not only does the receiver have more, but so does the giver. The corollary to this must be that accepting these resources from others can leave one feeling more powerful. If several people tell you they appreciate the skill with which you as chairperson focused the committee's discussion of a controversial item, and you show a genuine acceptance of their praise, several effects result. Your response has turned their potential power into actual power; it has confirmed that they have something of value to give; and, because giving status to another is the same as giving to self, the status of each person involved in the exchanges is increased.

To illustrate further, consider the receipt of information. In asking people for their views--i.e., giving them a voice--you are communicating to them that you need information that they possess. You thereby create circumstances in which they can turn the potential power contained in that information into actual power. You can also predict an increased sense of importance or worth. As adjacent structures, information and status are likely to be conveyed together in an exchange. In addition to giving resources, accepting what others have to give is an effective way of empowering people.

RXT can be a problem-solving tool to create more satisfying outcomes for everyone involved. It is an especially powerful tool for physician executives.

David W. Abbott, MD, is Director, Eating Disorders Clinic, Fargo Clinic-Meritcare, Fargo, N.D.
COPYRIGHT 1990 American College of Physician Executives
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Title Annotation:Human Resources Management; includes suggestions for further reading
Author:Abbott, David W.
Publication:Physician Executive
Date:Mar 1, 1990
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