I have been speaking to a few of my friends lately who regularly lament the machinations of their top management. Apparently a lot of their actions are not "the right thing" for the employees. A lot of them (the senior management) seem to be doing things that don't seem to be in the benefit of the company as a whole.
I can understand their anguish and frustration. What I do not understand is their surprise.
See doing the right thing requires altruism. You have to want to do something that is good for others, without a regard for what benefit or cost it may bring you. Altruism is a scarce virtue among humans in general, and given the fact that the echelons of senior management are populated mainly by conniving weasels, we can safely assume that in that rarefied atmosphere it is, even more dismayingly, absent.
For all the talk of values and shareholders, the thing that drives managers is 'what's in it for me?' (And in this post when I say managers I mean the top two or three levels of the company)
Every one of them is out to further his own fief, and satiate his giant ego. There are three reasons why these people will not do the right thing. I tried to explain these three items to my deluded friend yesterday, and I will repeat the gist of them here.
One point per post coz otherwise it's too long...
And today's point is:
1. Doing the right thing is hard
A lot of what is touted as the "right thing to do" is simple to say but very difficult to execute. For example - take maddening phrase "Pay for performance". Sounds deceptively simple and seems hard to think of an argument against it. But what a bitch to execute! The devil, as usual, is in the details - residing in the weeds where these philosophies are implemented, not in the clouds where they are formulated. Consultants and their management books often talk about promoting your stars and weeding out your laggards. Great idea. But there are a few complications in implementation.
First is identifying the stars. Who is a star? Someone who did a good job this year? This past six months? Think about the Indian cricket team. Who is your star? Ask ten people to cut the Indian team into the common five performance categories. I bet you get at least 5 different answers or categorizations. Same thing in organizations. Although all the books and papers tell you that you should define the job, set objective goals and so on, all that is terribly difficult to do in a business. Situations change, goals change, and frankly if managers were to do a fair enough job, that would take about 50% of their time. And they just don't spend that much time on it. So they go by gut feel and recency effects - see one admission here.
Second problem - how to rate. Forcing a normal (Gaussian) distribution for the 5 categories is hogwash. The groups that the distribution are forced upon are neither random, nor independent, and sometimes not even large enough to justify the expected fit even in theory (see Central Limit Theorem). Even if the distribution expected is not Gaussian, How much thought do you think your organization put into your distribution? Can they explain to you why 10% of the organization should be in the bottom category while only 5 at the very top (or vice-versa?)
Third problem - How much to differentiate. Say you got 5 categories. You're giving your top category guys a 20% raise, and your bottom guys a 0. What about the guys in the middle? 10? 15? 18.6? It's not a trivial discussion. Sure you should love and nurture your top guys and weed out your bottom performers, but what should you do about the bulk in the middle? The last thing you want to do is shit on them because they provide the raw horsepower that your stars need to get their results. I think you should love them too. Maybe not as much as your top guys, but hey, share the love.
So the point is, it's all nice to say the managers should do the right thing. But given how hard it is, do you think they will do it? That brings me to the next point.