It's time to reinvent management. You can help.

FreshMIX

daily dispatches from the management vanguard
gary-hamel's picture

Imperious Institutions, Impotent Individuals

I live a half mile from the San Andreas fault—a fact that bubbles up into my consciousness every time some other part of the world experiences an earthquake. I sometimes wonder whether this subterranean sense of impending disaster is at least partly responsible for Silicon Valley’s feverish, get-it-done-yesterday work norms. Build your company quick ’cause tomorrow we might get flattened.

Like many sorts of change, major tectonic events happen very slowly and then all of a sudden. The earth’s wandering plates are held in check by friction for decades or centuries, and then one day the forces of change finally break through to the surface and the planet erupts.

Social convulsions aren’t usually as abrupt as earthquakes, but they can still be startling—particularly to those who haven’t been paying attention. Years of repressed resentments and bottled-up frustrations can suddenly burst forth and fracture long-standing relationships. It happened in 1773 when angry colonists dumped 300 chests of British Tea into Boston Harbor. It happened in 1965 when determined civil rights campaigners marched from Selma, Ala., to the state capitol. It happened in 1989 when euphoric Germans tore down the Berlin Wall.

And it’s happening right now along the fault line that runs between individuals and the institutions.

Over the past few years, we have seen a fundamental breakdown in the trust that individuals are willing to place in large organizations and in the people who run them. When asked to rate the ethics of various professions in a recent Gallup poll, Americans ranked those who represent big business and big government near the bottom. Only 12% of respondents rated the ethical standards of business executives as “high” or “very high.” Members of Congress fared even worse at 9%.

Percentage of respondents who ranked each profession “high” or “very high” in ethical standards:

Nurses 83%
Doctors 65%
Engineers 62%
College teachers 54%
Clergy 50%
Chiropractors 34%
Bankers 19%
Business executives 12%
Members of Congress 9%
HMO managers 8%
Car salesmen 6%

In the recently updated Edelman Trust Barometer, barely one-quarter of Americans said they would regard the information they receive from a company CEO as “highly credible” or “extremely credible.” Neither do employees place much trust in their managers. In its 2007 Global Workforce Study, Towers Watson found that only 38% of employees believe their managers communicate openly and honestly.

While some might argue this trust deficit is simply the byproduct of a few high-profile scandals, like Enron and Lehman Brothers, I believe something deeper is going on. The tectonic plates of individual interests and institutional interests are moving in different directions and have been for some time—at least from the perspective of “ordinary” workers and voters.

When a politician bends the truth or a CEO breaks a promise, trust takes a beating. Nevertheless, I think the disaffiliation of individuals and institutions is the product of something more fundamental than a few inadvertent fibs or even the occasional Dick Fuld-scale delinquency.

It’s not just that individuals have lost faith in the integrity of their leaders, it’s that they no longer believe society’s most powerful institutions are acting in their interests. As I write this, only 11% of Americans believe their legislators in Washington are doing a “good job.” And in the Towers Watson study, fewer than 4 out of 10 employees said they believed their managers were genuinely concerned with employee wellbeing.

Trust is not simply a matter of truthfulness, or even constancy. It is also a matter of amity and goodwill. We trust those who have our best interests at heart, and mistrust those who seem deaf to our concerns. Deceit and dereliction can undermine a relationship, but so, too, can a slow erosion of affinity and goodwill.

If legislative bodies are dominated by politicians who consistently put the interests of their financial patrons before the interests of their constituents, or who blithely sacrifice their country’s long-term economic security for short-term political advantage, then the institutions of government will be mistrusted—whether or not any ethical guidelines have been breached. Likewise, if business leaders treat employees like expendable “resources” while rewarding themselves handsomely, or hack away at employee benefits while retaining their own lavish perks, corporations will be viewed suspiciously—whether or not any laws have been violated.

I don’t know if institutional leaders have become less honest in recent years, but it does seem that they have become less responsive to the interests of their citizens and employees. The causes of this disconnect are many. In the case of government, they include a campaign finance system that turns legislators into special interest lapdogs, gerrymandered voting districts that shield incumbents from challengers, and a candidate selection system that gives undue influence to party extremists. In business, the misalignment is the result of competitive pressures that create incentives for wage arbitrage, of executive compensation systems that discourage long-term thinking, and of authoritarian management practices that undermine morale and frustrate contribution.

Another more insidious culprit is the centralizing impulse of both corporate and public sector leaders. Those who have power often want more of it—and are usually skilled at concocting arguments for why they should have it. Who can argue with the need for a “comprehensive solution,” for “harmonization,” “shared services,” “best practices,” or “economies of scale?” Yet as power moves away from the periphery and toward the center, individual influence wanes and policies become less attuned to local circumstances. The result: a population that feels aggrieved and impotent.

I believe the growth of the Internet has also been contributing to the rift between individuals and institutions. In recent years, millions of us have rushed to take advantage of the Internet’s open and meritocratic architecture. We have used the Web to express our opinions, to expose the misdeeds of the powerful, to build online communities and launch new, grassroots initiatives. And as we have done so, we have become less tolerant of the closed, top-down power structures we encounter in the offline world.

Whatever the cause, the data are clear: More and more of us feel that our institutions are run for the benefit of those who are leading them. Loyal Catholics around the world feel dishonored by their church’s laggardly response to the cancer of sexual abuse. Tea party activists feel disenfranchised by politicians who seem to take their orders from Beltway lobbyists rather than hometown voters. And frontline employees feel marginalized by managers who view them as semi-programmable robots.

When viewed from the bottom of the pyramid, the problem at the top is less blatant dishonesty than imperial disregard. It’s hardly surprising, then, that populism is an increasingly potent political force in the United States, or that job-hunting MBA students now rank “caring about employees” almost as highly as “starting salary” when evaluating a future employer.

As the economy has tanked, employees have become more concerned with job security. In the 2010 edition of the Global Workforce Study, Towers Watson found that employees are more willing than ever to trade employment perks (like training, bonuses and regular pay hikes) for job security. Problem is, it’s unlikely that any additional security will be forthcoming. Companies that didn’t reward fidelity and devotion in a tight labor market are even less likely to do so in the midst of a recession, when employees have fewer choices. Instead, it’s more likely that executives will use their newfound bargaining power to further trim employee benefits. The faltering economy may push turnover down, but resentment is likely to go up—a psychological phenomenon familiar to any parent whose college-educated children have been forced back home by a wretched job market.

Whatever happens to the economy, the threads that weave individuals and institutions together will continue to fray until leaders of all sorts rethink their fundamental assumptions about the relationship between human beings and organizations.

I think there’s a way of reconnecting individuals ands institutions, and in my next post I’ll throw out a few ideas on how to get started.

Now, dear reader, a couple of questions: Why do you think individuals have lost faith in their organizations? Are other factors at work besides the ones I’ve mentioned here?

This post was originally published on MLab.

You need to register in order to submit a comment.

krishnamurthy-prabhakar's picture
Thanks for a highly thoughtful article. I think one of the major reason is loss of values. The basic human values are replaced by greed, avarice, wanting money for which no work is done etc. These loss of human values combined with highest greed with total disregard to sustainability of performance has given rise to these issues. The big organizations are likely to face challenges from large number of social entrepreneurs who in my opinion will be able to turn the crisis into an opportunity for redemption of the world.  Dr.K.Prabhakar
raj-kumar's picture

Hello Gary,

I last sent a message to you on your Leader Meter hack instead of updating a comment as I am unhappy with the inadequate norms for Feedback in the MIX Sketches space. The norms in place are sufficient for Feedback in this blogs section. Response is the only need.

Was floored by the exactness of the imagery of your post.

It is possible that the long simmering problem at the root of Management travails is the duality of knowledge and the sustained helplessness to resolve it. Thus today both Knowledgeable people and collectives repeatedly fall into the vicious Knowledge trap of wishful thinking and the obvious that waylays all Knowledge work and exchange. The trap is activated by choice among multiple interpretations fitting the same facts and human folly in being guided by self-interest instead of reality. The growth of Knowledge interactions has enhanced the viciousness of the trap. So Knowledge emerges as the real adversary of Management! How many Managements are willing to accept this and work on skills to apply Knowledge? Perhaps it is this blindness that makes them imperious. The great difficulty in negotiating the trap alone may also be responsible for rendering individuals impotent.

System theorists have found continuous Feedback provides safe passage across the Knowledge trap that waylays all Knowledge work but personnel have perhaps run out of the time and energy to practice the organization and discipline required .

My hack ‘Compelling Energy for a quantum jump in organization performance with the same resources  is devoted to resolving the problem.  I have suggested that fear of opportunism by peers, the reluctance to participate or commit, build-up of hierarchies for control, inability to progress the ‘And’ over the ‘Or’, rise of individual incentives, rampant cynicism of management wisdom, executive action disconnected with the Reality, apart from self-aggrandizement are some of the major symptoms that may be traced to the problem.  I have reasoned these symptoms arise due to the suppression of Trust & Teamwork and stagnation of Collective ability caused by the problem.

This feedback is based on hindsight post my success in harnessing IT to organize and drive free-flow of Knowledge in context, i.e., Feedback, in a compelling way on each business event. My work effectively converts IT from a mere tool for Knowledge work and interactions to inexhaustible intelligent energy for driving free-flow in context. My hack Solving the ages-old problem of the 'ignorant diagnosis' provides a perspective of my work and introduces my contribution of hacks and barriers to the MIX that explain Feedback, its importance and my IT infrastructure for inducing the culture to assure it.

paola-de-vecchi-galbiati's picture
This interesting article for me pointed out two crucial aspects.
The first one, the cultural and social changes (including "disruptive"revolutions like in France in 1789 or in Russia in 1917) are defined like tectonic events: they move slowly for many years and they disrupt the environment in a short time. And the human being has to adapt itself... The external events generates internal changes? Of course...
The second point is related to trust: I believe that trust is generated by the integrity (Probity). I have trust in a person, in an institution, in a project only if they do goods or services in line with the principles of fairness, transparency, honesty.
And fairness, transparency and honesty do not think should be disclosed, but they must be applied every day, constantly, consistently.
And  also if we move slowly, as tectonic events, sooner or later will bring together a disruptive change in our way of being.
with my best regards,
Paola De Vecchi Galbiati
ellen-weber's picture

Wow – this discussion is headed out of the innovation gates at breakneck speed. Dan, all that I tried to say in a recent Hack about a radically different approach to assessment, you said here far better than my attempt.

 

Like you, I’ve been thinking a great deal about what our intuitive or intrapersonal approaches to leadership have done to us. Perhaps more importantly I’ve been imagining the fully changed innovative discourse that could burst open gates for sustainable growth.

 

Totally agree with you, that “the problem is that  blood also leaves our brains in the process.”  The awesome part of this discussion - for those of us who’ve survived tsunami-wave-opposition to change, we now find ourselves with others willing to ride the crests also. That support is the start of another day.

 

Is it possible that – “To get that confidence back” and to “ take risks, become vulnerable, become real, learn by going right into the middle of the awkwardness and cowardliness and discomfort of our situation in order to question it, challenge it, and ultimately deal with it,” takes a different language.  It takes new approaches to how we both work together and measure growth.

 

Yes, I too agree wholeheartedly with your assertion, “We can change our institutions. We can change our society. ” In fact intrapersonal intelligence, you allude you here – holds more equipment than we need. Think of that added to the interpersonal intelligence that accompanies our genuine collaboration!  

 

The first key is to act on what we know, and folks here already did that. The next key is to facilitate great innovative ideas and to negotiate an intelligence-fair way to measure these – so that we begin to track and build on real progress together. I have a few ideas that will make a post in future. In fact I’ve been invited to share insights on CEO Hour at WCEOhq Radio on Friday from 1 - 1:30 ET, and I’d love to hear wisdom on renewed leadership from others here in that venue too!

 

Like many of you, I too am deeply energized by the insights emerging as old structures crumble in many areas of our worlds, and new life begins to emerge for many here in MIX. Thanks all!

dan-oestreich's picture
Really fabulous article, Gary, and also distressing.  It should be. 
 
One thing I have been thinking about a lot is the extraordinary sense of powerlessness and fear that underlie the rift between people and their organizations. Sometimes, that manifests in customer relations situations as helpless rage.  Sometimes, in employment as a grim willingness to hang on even through repeated violations of the boundaries of who we are, our sense of integrity and rightness, rationality and balance.  When people consistently experience helplessness and violation, it would be only natural to focus on self-interest in the same way blood is drawn in from the extremities when the body faces a physical crisis. Of course, the problem is that  blood also leaves our brains in the process.
 
So the deeper question is why such fear exists.  Why wouldn't we mutiny?  Is it just that we are paid well (and some of us very well) to keep our heads down and remain silent in the name of comfort and selfishness? Do we have so far to fall?  Does contemporary culture contain some kind of character flaw?  Is "lack of leadership" behind it all? I would say what we have here is a full-fledged lack of confidence, a lack of solidity at the core.  And to me the reasons for this don't actually have much to do with betrayals of trust by others or by institutions so much as a fundamental betrayal in self-trust.  We appear not to believe in people and the communities and the world we can build together and I'm arguing here that is actually symptomatic of a loss of deep faith in ourselves. 
 
We are not doing things to build each other.  Instead we are competing with each other as if we are all part of the television dramas, from Survivor on down, our current "reality shows," and that is a distraction from the genuine challenges we face and a mirror of a hole in the inner relationship of me to me.
 
To get that confidence back -- and its maybe a confidence that really hasn't been indigenous to the culture -- we have to go see the damage we've let our world do to us, let our institutions do to us, yes, and even more importantly, see the damage we have done to ourselves. We have to see how we've colluded in the very problems we say we want to solve, and at a personal level. We have to feel that pain very deeply before the counter-surge called growth will kick in.  And when we do feel that surge, we'll begin to do what you did in this article: call out as much truthful pain as possible onto the table, take risks, become vulnerable, become real, learn by going right into the middle of the awkwardness and cowardliness and discomfort of our situation in order to question it, challenge it, and ultimately deal with it.  We can change our institutions. We can change our society, but we have to learn how and it will be awkward.  It might not look very cool.  But we are not in a position anymore to pick an easy or cool way to do it.  I'm guessing the healing of a culture is like that.  It's not that we have no choice.  It's that we have to face up to the choices we actually have. And once we have our sense of choice back, because we've taken it back, the helplessness can begin to recede, and we'll feel a whole lot better about who we are.
 
I lost some weight recently.  The trainer at Weight Watchers said to my group:  "Look, being overweight is hard, losing weight is hard, maintaining a goal weight is hard.  Your job is to pick your hard."  Put that way, with a little self-confrontation and self-compassion, I'm hopeful we'll get out of this mess, return to ourselves with pride, and create an the extraordinary future that is actually within our means.
 
 
chary-chigurala's picture
Excellent article Gary. In my view, this goes back to the foundations of leadership. While the need for high quality leadership has grown exponentially with complicated business models, the supply of leadership has gone backwards (not in quantity but in quality). As I see it, there are three key reasons for the deterioration of 'Trust Factor':
1. Lack of Personal Touch: The basic human instinct calls for 'personal touch' in whatever we do. In olden days, the corner shop owner used to know every individual in the village by name and build personal relationships, there by trust. Now a days, companies have grown so large that most of the  times the Managers do not even meet their employees in person. This impersonal relationship  transcends into decision making which leads to lack of trust
2. Divided Loyalties: The modern corporates have 'fractured' the collective nature of a corporation in to segments of 'one employee'. The concept of contract labour for instance has fundamentally altered the relationship between individual and the corporate. Every one focuses on looking after themselves as opposed to the collective benefit of the corporate. In some cases, we even branded collectivism as 'bad'. This inherently fast tracked individual greed. Similarly, employees of a MNC working in different countries may have divided loyalties (loyalty to nation Vs loyalty to company), which also leads to mistrust between employees and their ivory tower bosses
3. Too Much Rational Too Little Emotional: The modern management philosophy teaches managers (who in turn become leaders) rational decision making principles. Although emotional factors play its role in some instances, the overall thought processes are highly skewed towards rational arguments which breeds 'Personal Deficit' and there by 'Trust Deficit'

The irony is that when so many factors are working against trust as a multiplying force, while we need very high quality leadership to manage this, the quality of leadership is going the other way. This widening gap between the leadership we need Vs the leadership we have is glaringly obvious through incidents like Enron. I think every one has a role in this deteriorating situation. BUT, NOT ALL IS LOST - There is still HOPE. As a society, we seem to be realising these shortcomings, which itself is a good beginning

Best regards, Chary

maureen-kelsey's picture
Dear Gary,

I would like to leave all diplomacy aside and bear myself, why not?

This ariticle is much appreciated. From my personal and professional experience, none of this is a surprise or perhaps it is better stated that I have not been in nor continue to be in a repressed or supressed state.

Perhaps, it is because I left "institutions" in 1995 and have been an entrepeneur since that time. This has allowed me to freely create, connect with my passions, transfer knowledge ("know how") and experience living and working abroad with enterprises from Fortune 500s to European small businesses spanning 30 countries.

After returning to the US with a real kind of disconnect of 15 yrs, a day does not go by when I do not ask myself "what happened here"? Well, the point is that I understand all too well.

At the same time these "imperious institutions" close the door (profiled out) to those who have the skills that are so very needed, in particular at this time, really one could say critically needed.

So, I appreciate greatly any piece that offers "critical thinking" because the group think or, as Warren Buffet calls it "the mass delusion" is one that new blood from those who have been freely roaming the earth and crossing lots of culturals for a long time is truly necessary.

By the way, I do know how to do productive positive work even when environments are those that have the elements of, well, let's say "the organizations" such that exist in places like Sicily. Trust me, one can keep one's integrity if one chooses to do so!

When will they (ie. the imperious institutions and impotent persons) consider to open the door? They need poeple like us although I have seen and continue to see no want.

My best and warmest regards,

Maureen Kelsey

ellen-weber's picture

 

Thanks for this thoughtful reflection and comparison between the earth’s tremors and business tremors, Gary! Very timely post but shocking statistics! In your facts here, and in surveys recently completed,  we see an increasing lack of trust that tops the most prevalent problems modern workers face.  

Interestingly, it’s also the most desired trait according to most workers.  Trust reducers, include excessive concern for personal gains, mixed messages, responsibility avoidance by passing the buck or dropping the ball, opinions that hold few facts, and blaming others when problems arise, according to researcher Dr. Paul Bernthal.

Psychologist, Carl Rogers confronted trust in his best selling book, On Becoming a Person, and concluded that it’s tough to trust when one feels betrayed, annoyed, or skeptical. Trust, for Rogers, was less a matter of being rigidly consistent,  and more a matter of being dependably real.

Trust transforms backdoor deals into a rewired reality – one that draws from rewired brainpower to build together for the good of all! We run from it when we assign false terms like “socialism,” yet  we embrace it more when we consider it as “innovation,” for a wider reach of possibilities and prosperity. What do you think?

My 2-bits back in appreciation for many thoughtful triggers your post! Thanks!