June 12, 2009

Relativistic Comparisons

Posted in Business, Technology tagged , , , , , , , , , , , , , , at 12:44 pm by lindaslongview

FortuneCookieI had Chinese food with a good friend last evening.  My friend received the following fortune:  “Linger over dinner discussions this week for needed advice.FortuneCookieFortune

Specifically, we discussed the challenges of coping with isolated HR (Human Resources) actions that benefit a single individual/group, yet create long-term unintended consequences for other staff.   One example was a scenario where HR advocated offering a higher starting salary to recruit a new employee without adjusting other staff salaries for like positions.   The problem is that even if current staff salaries are economically fair (from an entirely objective perspective), the salary differential will be perceived as unfair when (not if) the details become known.  This is because humans are tightly bound to relativistic thinking.  Watch this great YouTube video by Dan Ariely from his work, Predictably Irrational, Ch.1, to demonstrate the point.

How people feel about their situation is highly dependent on comparison to others.  Thus, in order to achieve good staff morale, it is important to consider how to minimize negative comparisons now *and* in the future.

The question that my friend and I discussed is the WHY would anyone advocate for such a scenario?  I think that the biggest issue is that organizational policy-makers may not believe that negatives resulting from relativistic thinking are real.  Concerns are dismissed by otherwise thoughtful and well-educated policy-makers because they want to believe that we should not behave that way *and* because they don’t “feel” it themselves.  They are more likely to be insulated from accumulating these negatives, because their own (more senior) staff better model ideal behavior.  Thus, their mental models, based upon their current experience, allow them to apply idealized logic to the expected behavior of more junior staff when assessing positives/negatives.

Intentions are good, vis-à-vis accruing an immediate (short view) positive for the single/group (improve employment competitiveness by recruiting new employee at higher salary).  However, as noted by Jeffery Pfeffer in his book What Were They Thinking? Unconventional Wisdom about Management, pg.117, “…executives [can be] hopelessly out of touch and unable to empathize with or even understand the situation faced by front-line staff…,” underscoring the reality that long view negatives can be dismissed.  The situation is more acute if policy-makers believe that that actions/policies will inculcate ideal behavior – it won’t!  Humans are wired relativistically.

It is much better to avoid the conflicts than to have to deal with the unintended negative consequences. Thus, what is needed is for policy-makers to understand the effects that they are not currently considering.  My advice:

  • Teach Concepts: show the video clip to demonstrate the global concepts – Ariely has done excellent work to unequivocally demonstrate that relative thinking is universal and unavoidable,
  • Explain Specifics: describe the specific logical effects of the proposal under scrutiny, and
  • Gain Acceptance: get agreement that relativistic thinking causes significant negatives before you begin to discuss a direction for solution.

Are you taking time to teach concepts, explain specifics, and gain acceptance to those who do not “feel” them directly?

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