Hidden Mojo

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.