Why Decent People In Good Companies Do Terrible Things
Since Nuremberg people have posed the questions “How could good decent ordinary Germans have done this?” and those sufficiently humble asked, “Might I have done the same?” Ordinary decent people placed in the wrong context can make terrible decisions. Perhaps not as gruesome or terrible or direct a decision as those made in Auschwitz, but decisions that are still terrible in their own way.
If you were to meet the board members of a major multi-national trading firm they would for the most part be kind, gracious, highly intelligent men and women who treat their friends and families well, dress nicely, speak clearly and work very hard. Many of them would give substantial amounts to charity on a regular basis. A few would be “complete predators” but most would not be anything of the kind. Most of the people who oppress the poor have no intention of doing so. (A few do, such as the people who seize the land of Indian tribes in South America). Mostly they just want to make a profit, cut costs, and have their firm survive in a tough global economy. And somehow this goes terribly, terribly wrong.
Over the last few years I have worked as a careers and management consultant and one of my most popular seminars has the title “Why Leaders Don’t Do What They Know And Agree They Should Be Doing”. I see this as one of the central problems of the business world. People go to seminars, make plans, listen and genuinely consult business ethicists, and do courses of servant-leadership and devolution of authority, and so many other good things. Their heart cry is for a better, kinder workplace. Magazines like Fast Company present an alternative future. People want an ecologically sustainable and socially appropriate investment strategy. Buzz words like “social sustainability” and “diversity management” abound. But things stay the same, the same terrible decisions with the same terrible results keep on being made. Why?
Why Its No Use Blaming “The Fall”
The neat theological answer, “its human nature, people cannot always make right decisions, its all just due to the Fall” – is a useless piece of information that does nothing to improve a situation that is costing millions of lives each year. To blame the Fall is to say: “Adam stuffed up my decision-making ability, that’s why I oppress the poor”. That is an excuse that neither God nor man will find acceptable.
Sure, no-one makes right decisions all the time or implements ideal policy all the time. But it is quite possible to improve our batting average. Besides history shows us that fallen people often do make lots of good decisions otherwise there would be no progress. Bad decisions are not just due to the Fall, they are due to poor management information systems, overly hierarchical and controlling structures, tired and busy people, business myths, fear, panic and politics and a host of other things that can be corrected. The aim of this chapter is to start a dialogue about the problem of why good people make bad decisions and why these bad decisions end up hurting so many people. I will provide the answers I know and point out where a few other answers may lie. However this topic is a book on its own. I do not have all the answers on it yet, so this chapter is a formulation and proposing of the question “Why don’t leaders do what they know and agree they should be doing.”
Assumptions about “what leaders know and agree they should be doing”
· Their work is congruent with their values and is important.
· It is work they are supposed to be doing.
· They are reasonably sane and not involved in too many self-destructive behaviors.
The State We Are In
My original academic background was in chemistry so I see the “chemistry” of organizations as important. One of these chemical analogies is about “state” – such as solid, liquid, gas, plasma, frozen, acidic, alkaline. The analogy also involves times of state transition – boiling, solidifying, evaporating, reacting, being neutralized, or undergoing dissociation. Organizations have a “state” they are in – solid, liquid, meltdown etc. The state affects the reactions that are possible. Reactions occur in a liquid that cannot occur in a solid and different reaction are possible in a acidic solution that a neutral solution. This applies to organizations in that say an organization is “frozen solid” than little change in its policies can occur. The well-intentioned executive is trapped in an unyielding matrix. On the other hand during times of rapid transition in a “fluid” organization a single person can have a disproportionate influence.
A very powerful illustration of this is what chemists call an “acid-base titration”. You may have done one in high school science, where you add the acid in a burette to a beaker containing alkali and litmus solution indicator. As you add the acid nothing seems to happen for a while. If your school was rich and had a pH meter you would notice only a small decrease in pH from 14 to say 12 over many drops. Drop after drop would go in with little noticeable change. Then each drop would start doing a bit and from 12 to 10 the change with each drop speeds up but the solution is still in the same state, it is still alkaline and it still reacts the same way despite all the input and changes. Then suddenly with a single drop the pH goes from ten to four, the solution goes from alkaline to acid and the whole nature of the solution changes. An acidic solution reacts differently to an alkaline solution. Its all new, different, and a single drop “changed it all”. But note, that single drop came from the same burette, was the same concentration and the same size as all the other drops. In fact it was not special in any way at all. It just fell into the solution at exactly the right moment. “Sudden” social transitions such as the Reformation and the collapse of the Berlin Wall often follow this pattern of many drops, sudden change, then a new structure and limits.
Organizational change is like that. First you seem to get nowhere, your “drops” of wisdom seem lost in the beaker. But you are preparing the way, putting in the input that will gradually add up to change. Then some “drip” of a consultant comes along, says what you have been saying all along, and everyone takes notice and everything changes. If you graph such changes they look like the letter S and are called “sigmoidal curves” (which is the long way of saying “looks like the letter sigma” which has become the letter S). Sigmoids are flat along the bottom, rise up with a slow curve, then go very steep and vertical and then curve round and flatten out. The flat bit at the bottom and the horizontal bit at the top are the upper and lower limits of change in that system.
A Sigmoidal Curve
As you enter a point where the state of the system is undergoing change then you can expect the change to look something like the curve above. The trick is get your input in at the bottom just as the change is taking off but before it goes vertical. That is the point of greatest influence. After that you are just surfing the change as it takes off. The other critical point is where the curve bends over at the top. This is where a limit has been imposed on the change. In our experiment above that limit is imposed by the chemistry and structure of water. In organizations the chemistry and structure of organizations places a limit on change – even good, desired and necessary change. Thus bad decisions are made by good people in an organization that is n the wrong “state”; where the chemistry and structure do not allow the adoption of optimal policies.
Obviously organizations need to look at their chemistry and structure to see what “reactions” are occurring. Are they “boiling” with creativity? Is this limiting responsibility? Are they ephemeral, gaseous and structure-less zooming everywhere like many of the high-tech start-ups that lasted a nanosecond on the stock exchange and were gone. Are they a once solid corporation in a financial meltdown? Whatever the state of the corporation is that “state” will make certain things possible and certain others very difficult. For instance the rigid conservative power structures at the top of the Roman Catholic church place very real constraints on the radical elements among the priests below.
How do we overcome this? Most real organizational transformation starts from the top down with a change of attitude by the members of the board. There has to be a decision to examine the structure, ethos and “chemistry” of interactions within the company to see how bad and unjust generations are being generated. For instance old-fashioned missionary societies used to genuinely believe that “the decision of the mission board is God’s will for your life”. It was only when reports came back from many directions over many years showing how these remotely made decisions were often wrong and hurtful that policy began to change. Now more decisions are being made by the people on the scene and by those who are directly affected by them. Team-based rather than office-based decision making is now normal. The board sets policy and major financial decisions. The system is now more just and less hurtful because people took a hard look at what they were doing and how they were using power.
It Doesn’t Pay To Be Good
Another major reason that good people end up not doing what they know and agree they should do is that “it doesn’t pay to be good”. According to behavioral psychologists we are hard-wired to do more of what is reinforced and rewarded and less of what is ignored, punished or belittled. If being good, ethical and creative is punished or ignored within the organizational structure (as it often is) then this behavior will occur les often and the proponents of it may become demotivated or even leave the organization. If enough of such people leave an organization then it can lose all the “good-hearted people” and just be left with the “sharks”. I read a penetrating analysis of this in a business book some years ago that pointed out that the rounds of ruthless restructuring and downsizing were causing the people who made offices human and pleasant to leave. When there people, who are actually the human glue of the organization depart the place tends to “fall apart” and recent analyses have shown, in the words of Tom Peters, that “you cannot shrink your way to greatness.
Common and not so common ways this occurs are through:
- The dominance of a hard and ruthless elite in the organization.
- Sensitive egos that react in arbitrary ways to new suggestions or which think of the new suggestions as implied criticisms.
- Constant change that undermines the personal safety and security needed for the strength to be just and ethical.
- Deep inefficiencies in the system that mean that the system can only cope with the routine (and barely at that). In such places “the wheels fall off” any creative initiatives and soon people are discouraged and give up trying when their efforts go nowhere.
- An over-focused organization that rewards only one kind of activity e.g. a missionary society that only rewards evangelism and neglects administration or the pastoral care of its staff and which discounts suggestions along those lines..
These dynamics are best changed by the leadership, and the CEO in particular, and require a commitment to being an organization that makes doing good things possible.
It Involves Difficulty, Urgency Or Complexity and We Are Overloaded
One of the main reasons that good people make bad decisions is that they don’t have the time to make good decisions. Good, wise, just and fair decisions take time and may require extensive gathering of information beforehand. This is next to impossible if the person is “too busy”. Having too large a span of control, too many tasks, or too little delegation to teams and subordinates can result in the executive having to make many decisions that they know very little about. This is further complicated by the mind’s dynamics which automatically withdraw the person from situations that are overloading them.
The reticular formation is that part of the brain that processes incoming signals for relevance and decides what we will pay attention to – the music, the computer screen or the color of the wallpaper or the strange sound behind me. The reticular formations sorts the flood of data that hits our senses much like a web search engine sorts millions of pages for relevance. It asks “Is there danger?” “Is this urgent?” “Is this important?” “Does this meet a biological need such as food or sex?” and “Is this really complex, does it require my full attention?” (like a game of chess). We can easily overload our reticular formation by having work that is too much, too complex, too important or too urgent.
When the executive is overloaded he or she will mysteriously “switch off” on very important issues with high emotional content and in issues of high complexity. Since ethical issues are frequently both complex and emotional they get put in the “too hard basket” and tuned out. Underneath the person may wish to tackle such issues but they mysteriously cannot cope with them. This is the brains shutdown mechanism protecting them from “crashing” like an overloaded computer that runs out of memory.
Paradoxically the less urgent that you make tasks; the more likely they are to get done. This is because if everything is urgent simultaneously the reticular formation overloads, people get that “locked up/clogged up” feeling and everything just freezes. Students who panic over all their exams at once just freeze, play the guitar, find themselves unable to study and fail. Students who study systematically and limit urgency to the next exam do much better. If everything is vital, important, urgent and totally necessary and must be done immediately then very little will happen at all. A calm, planned and unhurried workplace will actually accomplish far more of what really needs to be done than a frantic one.
The value of off-site seminars is that the environment is less complex, the phones are not ringing, and a pile of paperwork is not in front of them. In such seminars people often think clearly, creatively and ethically. However when they return to the world of complexity they overload once more and the good, creative, just but complex ideas simply fall off the plate. They do not get done because there is not the brain space to ensure they get done. If good ideas are to happen the office environment must be simplified.
Justice is served by simplicity and quietness and these can only be generated for the leadership by a very deliberate structuring of the organization away from clutter and muchness. This can in part be accomplished by:
- Moving real decision-making on lesser matters to delegated teams. Free up your brain.
- Eliminating bottlenecks, ensuring that no one person has too many complex decisions to make
- Accept mistakes. If mistakes are a matter of life and death or personal salvation then every small decision will be of cosmic importance thus making real thinking and progress impossible. Thus grace enables thinking which enables wisdom and justice.
- Define power as the ability to accomplish good, worthy things on a large scale. Contrast this with defining power as doing many things or doing big things that are of little real value - “building haystacks out of straw” to use Paul’s analogy from 1 Corinthians 3.
- Reducing information overload and bombardment with trivia. Filter emails.
- Getting rid of “hurry as a virtue” in the corporate culture. The hurried and harried are inevitably poor decision-makers. Honor calm, clear-thinking people. Promote wisdom, discernment and good judgment as cardinal virtues. Instead of the quick thinker promote the deep thinker. Save on mistakes. Do it right the first time.
- Analyze with simplicity and complexity in mind. If a course of action is going to lead to a very tangled and complex time for the firm then question whether it is really necessary.
- Develop tough priorities and well-guarded boundaries so that you do not permit trivia and nonsense to invade your thinking space.
- Create clarity whenever you can. Think clarity, notice confusion, notice things that bombard and confuse people. Clear up organizational relationships. Clarify rules and policies. Have tidy and uncluttered offices. Make sure the physical environment is not bombarding the person with powerful sensory data. Eliminate trendy jargon and other unnecessary sources of confusion.
- Creating empowered specialists to research certain issues and break down the complexity for the decision-makers, make sure the empowered specialized are clear communicators.
- Work only six days a week and then completely unwind on Sundays. Have real holidays, mini-holidays and brain breaks.
- If you are a Christian then don’t over-complicate life with too many church committees as well as work. Give yourself the mental breathing space to really think about your responsibilities and to do justice on the earth.
If the good decent executives can think more clearly they will also think more compassionately and justly. Ethical issues can only be incorporated if brain space is made for them. If we simplify we will succeed at the big tings – both professionally and ethically.
Its Against Our Inner Paradigm of Work Or Our Actual Inner Agenda
Sometimes being ethical and just can disagree with deep ideas we hold about the nature of the way business should be run. This comes from being trained in two value systems. Our Christian value system says one thing and the business environment seems to teach us another. Mentally we agree with the ethical course of action but we also feel “odd” about it and uneasy. It “doesn’t seem to fit” with work and business. When this happens we need to identify the beliefs that are being contradicted and rework tem a little. For instance some people are told “Business is for the strong and the tough, you cannot be sentimental in business”. This may need to be modified to “Business is not a charity, but it does need to be fair, honest and just. Business is not there to give away money but to make a fair and ethical profit. Being socially and ecologically sustainable is about treating others and the environment justly and will actually help us survive in the long run.” Thus the useful part of the old belief – the business is unsentimental, is kept, but it is modified so it sees the pragmatic values of justice and a clearer understanding is developed that will allow room for good, just and fair initiatives to be developed.
Inner resistance to ideas needs to be explored. Asking “Why am I feeling this way about this suggestion” can unlock valuable information and help you clarify your thinking about the issue. Sometimes our idea of our job stops us being comfortable with certain suggestions e.g academics are often uncomfortable with marketing and artists tend to be uncomfortable with detailed administration. If a task or suggestion is too outside our self-concept we may have to delegate it to others. Delegating ethics and justice issues may be much better than dropping them entirely.
There are numerous other reasons why good people make bad decisions other than the above “big four” and they include:
Lack Of Advocacy By Justice Organizations And The Church
There is very little real interaction and discussion between those involved in trade and the church. A few protest rallies and petitions do not constitute a productive and meaningful dialogue. By entering the business world as a consultant I can talk to decision-makers about their ethics and help government departments and corporations move towards more just and fair models of business. The church needs to aim at developing an intelligent ethical dialogue with the business world and in particular with the areas of speculative trade that are almost completely unaccessed at the moment. If people are not informed, exhorted and encouraged they cannot take the first steps towards fair trade.
The Business Decision
Most people are trained into seeing business decisions as separate from other decisions and as governed by pragmatism and necessity rather than by ethics and justice. This is partly habit, partly expediency and partly just mental laziness. It is my experience from working in HR that 90% or more of “tough business decisions” are unnecessary if just ten minutes are spent thinking of a creative alternative. Does division X have to be closed or can their market share be increased or a new product line developed? Can the staff be put on other projects? Can the employees of division X be consulted, the situation explained and can they come up with a proposal for saving their jobs? “Revenue is down, cut jobs” has become a business reflex. Yes, business must be realistic; but it need not be cruel.
The Power Of Habit
Bad decisions can become a habit and a way of life. This is particularly so in bureaucracies where the power of bad habits can be stifling. Decent people have to struggle to think of new ways of operating with justice and integrity.
Social Sustainability Not Yet Grasped
Some firms have not grasped that “what goes around comes around” and that being too tough and businesslike can backfire. After a difficult incident disposing of an old oil rig in Europe Shell caught on to the idea that they did not only need to be good, they needed to be seen to be good and to develop policies that were manifestly just and fair to all. All business operate in a social context that can turn on them with lawsuits and bad publicity. Reputation is important and a reputation for ruthlessness is working to slow corporations like Microsoft and Newscorp down. They are running out of friends and if this continues over time they may eventually run out of money as well.
An Over-Reliance On PR
Good people are more prone to make bad decisions if they think that PR can sanitize things and that their spin-doctors and lawyers can get them out of it. PR can create illusions and one particularly tempting illusion, that snares even decent people, is “we are so cool we can get away with murder”.
Ignorance / Blind Spots
Many executives are completely unaware of what working conditions are like in the international subsidiaries. Or they may be oblivious to the effects that trading a particular currency down will have on that nation. Without this information effective compassion, justice and fair-trading are impossible. With modern documentaries this is getting less and less of a realistic excuse.
Cultural And Class Differences
Does an executive understand what it is like for a blue-collar worker to have a 10% pay cut? Are other cultures valued at the same value as our own culture? Do Chinese people value Africans as equals? Do Americans value Filipinos as equals? Do our prejudices subtly affect our decisions? Why are 1500 people dying in Zimbabwe because we made them work in an asbestos mine more acceptable than five people dying in Boston HQ?
Lack Of Systems/Disorganization
Do our systems include information on justice and HR issues or do they just include financial data? Does human information reach us with the same speed as financial information? Have we under funded, overloaded or undermined HR so that it has a tough time raising the issues with us?
Are we axing division X because we hate the manager of division X and this is payback time? Does organizational politics and revenge justify putting off all those people? Did we send our most annoying and incompetent manager to Zululand? Are the deaths in the Zululand factory partly our fault because we sent such an incompetent person to a complex cross-cultural situation?
This is often based on lousy logic that goes “If we - then he - and his brother owns - and that might cause - so we’d better not”. It’s a fear-based extrapolation that says doing the right thing might offend someone who knows someone who is very powerful. If real political consequences might flow from being just, fair and honest then perhaps just explaining the issue to the politicians involved may defuse any potential threat. Politicians are quiet easy to talk to most of the time and want to meet their business constituents.
Sometimes trade agreements can stop the right thing being done such as when the WTO made the USA stop its ban on long-line fishing in California. Changing international agreements will take extensive advocacy at the highest level by participating nations and corporations. Prayer is about all most of us can do – but why not start with that!
In this chapter we have seen many reasons why good decent people end up making poor decisions; some of which end up also being unjust and unfair decisions. It is hard to continually make wise, good fair and just decisions on a day-to-day basis. Economic justice is not easy or automatic; it has to be deliberately planned for as a part of corporate life. It must be aimed at very deliberately. I hope this has whetted your appetite to explore this area. I hope that as you look at your areas of responsibility you will find out why decent people are not making good decisions and you can help fix the problem rather than being part of the problem.
However not all the misery that results from trade is unintentional. Some is highly intentional oppression carried out by cold and ruthless types. The next chapter will look at those who oppress the poor intentionally; the “heart of darkness traders”. This is the area of deepest darkness, the arms trade, sex trade, illegal wildlife trade, drugs trade and slave trade. These people know they are bad, know their operations are illegal and know the suffering they cause. They are just in it for the money and that’s all.