A matter of perspective

Benevolent mistrust in people is deeply rooted and is costing organizations dearly

Here’s the problem: There is a huge gap between what organizations say they want and what they really do. They don’t mean harm in it, it’s just what they do. Companies say they want to empower, even enable people and they say they want to hire the best ones only. People who are self-driven, smart and creative. And then when they’ve got them on board the first thing they do is they enforce a performance management process on them which is supposed to make sure that these newly hired talents get their act together and get stuff done. But wait a minute: Were these people not selected because they have the will, skill and mindset to do just that? Then why do we think they need a carrot and a stick in order to be productive? This benevolent mistrust that organizations have in people – I find it difficult to understand.

If you think you got the right people on board then why not treat them like adults? There is scientific evidence that has been around for more than 20 years to prove that bonus payments are counter-productive. There are newer studies to confirm it. And what do leaders and HR people at these companies do? Read these articles that clearly summarize the scientific evidence, shrug their shoulders and start the next annual performance management cycle.

Industrialization brought separation of work, tight controls and an underlying mistrust in the capability and willingness of individuals. The result: People that serve processes instead of processes that serve people.

Being “professional” comes at a cost to the system

Another example: Financial planning and forecasts, as nicely described in this article here. Same underlying problem, same demotivating result. People get asked how much they think they can shift in terms of revenues. They give an ambitious but still doable estimate. Onto that another 5% or 10% or more is piled on. People say it will be difficult, markets are volatile and the number that was given was already ambitious to start with. No-one listens, figures are logged in and then a mere 8 or 12 weeks later that same guy that forced you to go with a figure that was too high turns around and challenges you why you’re 5% behind your forecast. So you spend time that you could use to look after customers’ problems for justifying why you are behind vs. a forecast that was unrealistic in the first place. Same underlying belief: I we don’t push people a little because they are lazy, they will not give their best, numbers need to be ambitious. And why?

You might say “Well, that’s the way we grow up, this is how the system works, how people expect it to be. If we got rid of these controls, how unprofessional would that be?

Well, if we got rid of them, guess how much energy and how many thousands of hours of productive time we could unlock and invest instead into things that generate value for the customers we want to serve. I have seen algorithms that are better than humans in predicting demand and market dynamics – get the machines to work, give the finance people new jobs, why not? I am not saying that forecasting is completley useless. Some of it is needed to document for the outer world that the company is being managed in a sensible and trustworthy way. The question is can we leave this exercise at the essential minimum and not invest millions in it?

What keeps individual bonuses and burdensome processes alive is the fact that the system in which they live has a natural will to maintain itself. That’s what systems do. They keep meaningless processes ongoing because they seem to be working. There are people who have jobs defined around these processes so they will of course not question the value. Until an outer force makes them stop and reconsider.

So if you find there are things happening around you which you do not want to be an accomplice to, think what it would take to “disturb the system”, ask a couple of “what if…” questions and see what happens.

There are a growing number of companies that operate with a very low level of forecasting effort and have switched to team goals instead of individual ones or they abandon bonuses completely. There are even examples where companies have successfully made salaries transparent and there are people like Sven Franke from https://www.coplusx.de/ who help them along the way. There is hope and there are good examples – well, if you trust them, that is … again a matter of perspective. 🙂

6 Comments

  1. Glad to see that you have started to reflect and expand on your manifesto. Really interesting questions posed to the large systems that trap free spirits. As an HR professional I would love to drop retainers but instead focus on quality discussions.

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    1. Thanks, Rochelle – fully agree with you that ratings lead the conversation and the attention into a direction that’s not useful. I have seen examples where the rating and the link to a bonus turns performance conversations into debates, justifications and fingerpointing

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  2. Although I don’t know if you can take it really for granted but one of the greatest quotes is:
    “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do. – Steve Jobs”!

    Maybe (or for sure) you heard about “zero based budgeting” – https://www.investopedia.com/terms/z/zbb.asp . I think that is really a powerfull method but I also don’t know any companies that use it ;-).

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    1. Thanks for your comment, David! Yeah, that quote is famous although the man himself, genius that he was, was not most known for treating his people particularly well…. but then again difficult to tell from a distance in time and space.
      Not so sure about ZBB – I saw a version of it in use, did not find it too convincing because especially if you work in an agile fashion you need to be able to gauge what works by doing it, so there will inevitably be things that pop up but you cannot account for everything in advance and thn you spend more time arguing and justifying than running your projects for/with your customers.

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      1. There is a nice quote which I learned in agile projects – terra incognita. The term is used for an amount of budget which you cannot specify in detail beforehand. Surprisingly this was also quite fine with the controlling/accounting department… 😉

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