Back when I was at ESPN, I had a discussion with a senior manager about how decisions were often made at a senior level and then passed down as gospel, but that happened without the reasoning behind the decision. Since the people ESPN hired at all levels were pretty smart, a lot of second-guessing of those decisions occurred at the lower levels in the hierarchy. Problem is… according to the senior manager, the reason why the thinking behind a decision wasn’t passed down was because there was no time for that, as it would lead to too much second guessing…
I felt this perspective was short-sighted, and that people are generally able to accept decisions they don’t like, if they’re involved in the process and understand all the data. I haven’t had data to support this until last week, when I read the comments in this post, detailing the recent community revolt on participatory media site Digg involving the publishing of a key that decrypts HD-DVDs.
Briefly, that “secret” code was published on Digg, got a record number of “Diggs” (aka votes), Digg removed it after receiving a take-down notice from the lawyers representing the MPAA, and the community went nuts: Diggers published the code over and over again on the site in songs, tattoos, encrypted forms, etc. Basically, the community revolted because it didn’t agree with the decision Digg made behind closed doors to take down the original post.
This Demand Satisfaction post describes how Digg should have made the decision about whether or not to take down the original post: transparently, with community involvement. This comment on the post sums it up nicely: if people feel involved in the decision-making process, they’ll accept a decision they don’t like, and then refers to this delicious HBS article from 1997 (!) called Fair Process: Managing in the Knowledge Economy.
This article is a treasure trove of data, but here’s the gist:
Individuals are most likely to trust and cooperate freely with systems–whether they themselves win or lose by those systems–when fair process is observed.
Much of current management theory is based on Frederick Winslow Taylor’s methods, which are based on economic theory that dictate that humans are rational beings. While those methods may have worked in the industrial age, we’re dealing with different inputs in the knowledge age, and thus the methods to best maximize the outputs differ:
Unlike the traditional factors of production – land, labor, and capital–knowledge is a resource locked in the human mind.
As the delightful Anna Farmery says,
People will forget what you said, people will forget what you did, but people will never forget how you made them feel.
In other words, this desire for fair process is a basic human need: the need to feel important, heard, respected, and not to be treated as a “resource”. It’s an important need to satisfy given that
Creating and sharing knowledge are intangible activities that can neither be supervised nor forced out of people. They happen only when people cooperate voluntarily. (emphasis mine)
Now, let me ask you a question. Which of these two types of employees would you like to have or work with?
Winslow’s old-school system of incentives, resources, and organizational structures that produces edicts from on high result in “distributive justice”, where the psychology goes like this:
When people get the compensation (or the resources, or the place in the organizational hierarchy) they deserve, they feel satisfied with that outcome. They will reciprocate by fulfilling to the letter their obligation to the company.
The alternative is fair-process psychology, which is also called “procedural justice”. It operates like this:
Fair process builds trust and commitment,trust and commitment produce voluntary cooperation, and voluntary cooperation drives performance, leading people to go beyond the call of duty by sharing their knowledge and applying their creativity. In all the management contexts we’ve studied, whatever the task, we have consistently observed this dynamic at work.
I damn well know what kind of company I want to work for (I’m building it at Education Revolution).
What about you?
Three Principles
The authors of the HBS article describe three principles that form the base of any fair process decision-making system. Here they are:
1. Engagement
Engagement is the first principle. Notice that it’s only possible to really engage your employees in this way by putting aside your ego and realizing that the best ideas may not come from you. Seems to me that you can’t just engage in asking people what they think if you’re not going to listen to them, either.
Engagement means involving individuals in the decisions that affect them by asking for their input and allowing them to refute the merits of one another’s ideas and assumptions. Engagement communicates management’s respect for individuals and their ideas. Encouraging refutation sharpens everyone’s thinking and builds collective wisdom. Engagement results in better decisions by management and greater commitment from all involved in executing those decisions.
2. Explanation
Explanation of the ins and outs of why a decision was made is the second principle.
Explanation means that everyone involved and affected should understand why final decisions are made as they are. An explanation of the thinking that underlies decisions makes people confident that managers have considered their opinions and have made those decisions impartially in the overall interests of the company. An explanation allows employees to trust managers’ intentions even if their own ideas have been rejected. It also serves as a powerful feedback loop that enhances learning.
3. Expectation Clarity
Clarity about expectations after a decision has been made is the third principle.
Expectation clarity requires that once a decision is made, managers state clearly the new rules of the game. Although the expectations may be demanding, employees should know up front by what standards they will be judged and the penalties for failure. What are the new targets and milestones? Who is responsible for what? To achieve fair process,it matters less what the new rules and policies are and more that they are clearly understood. When people clearly understand what is expected of them, political jockeying and favoritism are minimized, and they can focus on the job at hand.
Do you use a fair process to make decisions at your company? Why, or why not?
BTW, if you want to read the whole article, which is excellent, here’s the PDF, and here’s the web version.
5 responses so far ↓
Ray Ortigas // May 12, 2007 at 8:16 pm
Hi Kareem,
Great post.
I think a great companion text to the Fair Process paper–and what would help explain the flip side of the dynamics in some situations–is “Beyond Reason” by Roger Fisher, another Harvard guy. (He’s the guy who wrote “Getting to Yes”.)
The thesis in “Beyond Reason” is that emotions play a role in negotiation–for both participants in a given relationship.
If I’d talked with your senior manager at ESPN, I also would’ve found it short-sighted had they told me that explaining decisions would encourage second-guessing. That said, if I guessed at the psychology behind the manager’s comment, one plausible explanation is that engineers–and I am very much one of them–tend to be aggressive with feedback, to the point where second-guessing is sometimes taken to be, or plainly is, wanton rejection.
I think if management knew that they could trust their workers to give them constructive feedback–and it is everyone’s responsibility to do something as simple as set the ground rules for such conversations–then we would see more transparency.
So what are the ground rules? In “Art of Project Management” and his presentation at ETech, I think Scott Berkun brings up good points with respect to creative thinking, or just problem solving in general. The line was, “Creativity/flow demands intimacy more than intellect”. And the way to achieve that is to borrow some ground rules from Improv comedy: the two most relevant ones, I think, are “Yes and…” (vs. “But…” or “No…”) and “Make the other guy look good” (the corollary being “Don’t make them look bad”).
So for example, if management shares rationale and data and the options they are considering, engineering must be willing to build upon those options, or at least offer constructive criticism and not dismiss them indiscriminately. And of course the converse holds. At the end of the day, workers don’t want to feel uninformed or excluded from decision-making, and managers don’t want to feel stupid or rejected outright for considering particular decisions.
I guess this is my long-winded way of saying: Fair process is great; in my mind, it spurs collaborative, creative problem solving that fuels success and makes people happy. To get there, the team needs intimacy, and workers should feel just as empowered as managers to make that happen.
Cheers,
Ray
Phyllis Roteman // May 12, 2007 at 11:07 pm
Kareem,
Fantasic, well-researched post! As you know, I’m still on the fence about whether I believe there can be pure democracy in companies (particularly in larger ones)…but this post clearly lays out democratic principles I agree with whole-heartedly. There’s no question that Engagement, Explanation and Clarifying Expectations are key to motivating teams and gaining buy-in to decisions. I think executing those three principles is the practical difficulty.
I think Ray hit it right on. Time is one issue. It takes time (and patience) to explain, engage…and then deal with the emotions and rejection of ideas that often come from employees.
Even more important about Ray’s comment is that democracy in the workplace, as in society, is a contract involving all parties. Leaders must let people be involved, but with that comes a responsibility on the part of employees (which often doesn’t happent). This responsibilty is to treat leadership with respect, engage them in dialogue and ask questions to really understand - before judging the decision or outright rejecting it. Only when the entire team - leaders and employees - accept their responsiblities and stay open can this democratic decision-making process work. At least that’s my opinon.
Thanks for ENGAGING me in this discussion! Phyllis
Kareem // May 13, 2007 at 6:38 pm
Ray and Phyllis, thank you for the FANTASTIC and insightful comments.
Ray, I think your point about a social contract speaks to not only the trust that should exist between mgmt and their people, but also the need to have transparent systems in place that people can trust in to produce the right outcome.
Phyllis, I love that you share your real-world perspectives–thanks! Would love to hear more about how you dealt with rejecting ideas and the ensuing emotions.
Also, agreed re: responsibility to engage on both sides. If it doesn’t happen on the employee side, I have to put the responsibility with management: either they hired the wrong people, or they are providing reinforcement that tells employees that their feedback isn’t important. I’ve got a post on this coming up soon, would love your thoughts
Ray Ortigas // May 14, 2007 at 10:50 pm
Hi again,
Thank you Phyllis for concisely expressing what I wanted to say, that there is some social contract that accompanies democratic ideals and a democratic environment in a company or organization.
Kareem, I do agree with you in that ultimately, management is responsible for creating a democratic environment. And maybe we will see more of that in the future. As things stand now, my personal challenge would be how to inject more of that into a contemporary organization where I am lower down the food chain. Like Phyllis, while I love the notion of a democratic environment, I’m not sure how easy or practical it is to implement when it involves such a cultural shift in many companies or organizations. Now I’ m not saying that, because it’s difficult one shouldn’t pursue it, but I know how challenging it can be and understand why one might be inclined to get away from it all and just start from the ground up.
If I were to be really cheeky, what would round out your next post would be to answer, as a lower-level employee, how can I, I mean, one, gently suggest change into the system so that things do swing more democratically?
Maybe you can find someone to co-write that post!
Ray
kareem // May 14, 2007 at 11:01 pm
cheeky monkey, ray!
the challenge with a democratic company is that it takes a holistic approach. you can’t really do open-book salaries when performance measures aren’t also open book (so i know what everybody is making, but i don’t have any context for understanding those decisions. that = bad.)
i would suggest taking a look at this post about running a company without managers (make yourself unncessary, so you can be promoted, yay!
) but seriously, my buddy alex ran his company democratically and in that post describes how he did it. perhaps there’s something you can take, experiment with, and report back to the class 
(seriously, i’d love to hear how things work out…)
i will
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