In an article by Adam Grant (Professor at Wharton) published on LinkedIn, he compares the behavior of those studying economics and those studying other subjects. The fact is that those studying economics show higher degree of selfishness – greater acceptance of greed, less charitable, less concerned for fairness and more deception for personal gain than others. It is the case that student with this belief are drawn to economics, but the study shows that the behavior is strengthen over time in economics studies. The article published on LinkedIn is really worth a read.
What is even more interesting is business economics is growing in popularity and is the foundation on many business degrees (+45% during a 10 year period) with effects of growing selfishness and less compassionate. The study referred to in the article also indicated those Directors, VPs and other Executives with economics background showed less empathy in difficult situations. Significant findings!
I cannot stop thinking about IT organization more and more run from a financial perspective by leader mastering the economics. A background in technology is combined with business economics for most IT leaders. To be successful, in many organizations, is about controlling the finance by ”control and command” machinery in traditional governance (planning, budgeting and performance management). But the combined competences create a culture based on selfishness and greed, which is hard to change – devastating from a value creation perspective where altruistic, cooperation and trust is needed. The unpredictability driven by digitalization is forcing a change in many organizations to a more agile steering of the IT organization to show contribution to business success. The agile steering focusing on business value is often opposing the economic steering focusing on command and control.
Jim Collins (“Good to Great”) questions the need for bonus systems to motivate people. Great companies have senior managers with a passion for this work to drive success – not working for a bonus to become motivated. If an extra payment is needed for doing your work – then you are probably in the wrong place. But the emerging selfish behavior, in an IT culture based on economics, craves bonuses to function sub-optimizing performance and removing passion. One can only conclude that organization based on economics (culture of control and selfishness) seldom becomes great companies but rather mediocre.
In performance management, we often are faced with selfishness in setting goals and targets for the year. It is often more important for senior managers to secure the bonus payment than actually doing good deeds for the company. We then create enormous control systems to ensure that our bonuses are paid out – as bonuses are the main source of motivation in many companies. But does actually bonuses have any impact on motivation or does it only strengthen a culture based on selfishness and greed?
What I understand is that there is no correlation between the performance of a senior manager and design of bonus systems. The fact is that bonus systems are only valid for repeatable manual work (assembly work in factory) but not in creative or management positions. Managers with bonus will not perform better than those without. But the implementation of bonus strengthens a culture based on selfishness and control that is devastating for the performance of the organization.
- Start by understanding what culture your organization has today – what are the main drivers of performance (for example – passion or bonuses). Is this working or not? What culture would be suitable going forward?
- Live your culture! Design what culture and values are needed in the organization together with senior managers and live the culture! These values will be automatically be transmitted to the rest of the organization.
- Understanding the effects of sending employees to business schools with high focus on business economics. It strengthens the wrong kind of culture avoiding business value creating.
Corporate culture is more important than corporate strategy in achieving business oriented objectives. Still, much of recruitments and employee investments focus on cost management strategy instead of creating a culture of business growth. Growth is often achieved by unselfish behavior, collaboration and learning – and not sub-optimizing one part in a business relationship. So, the next time you discuss strategic objectives for your organization – think of it in a broader perspective starting with culture and values.