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17 posts from July 2009

The 'Equity Factor': The Power of Perception in Employer/Employee Relations

July 11, 2009

(Just back from a week in the Midwest, where the weather was glorious and my Internet connection sporadic. Unfortunately, the economic outlook -- there or anywhere -- is as uncertain as when I left. The "official" unemployment rate, at 9.5 percent, is the highest it has been in a quarter-century -- and likely to go higher. Layoffs and furloughs have become a too-familiar story in many industries, and, as much as we'd like to deny it, nonprofits challenged by falling revenue and increased demand for their services are likely to face their moment of truth in 2010. As Carol Kinsey Goman suggests below, how nonprofit leaders choose to lead in those circumstances and the behavior they model will determine to a considerable degree whether individual organizations survive the economic mess we find ourselves in.)

LeadershipSQ Let's play a game. Here are the rules: We'll be asked to split a sum of money. I get to make the split and you get to choose whether to accept or reject the split. And if you reject it, both of us will walk away empty-handed.

Rationally, I should realize my advantage and offer a lopsided split in my favor and you should accept the uneven split -- because any amount of money is better than nothing. Right?

Wrong. If we're like everyone else who plays the game, we'll end up with an even split.

Here's why:

While the fairness of the split shouldn't logically affect the second player's decision, it nearly always does. If offered a lopsided split, the second player will reject the deal, and neither player will get any money. So most people end up offering a fifty-fifty split to the second person.

To find out why people react in this way, a team of Princeton researchers attached players to functional MRI machines. They discovered that when people are offered an unfair split, a primal part of their brains known as the anterior insula sends out signals of disgust and anger. It doesn't matter one little bit that rejecting the split -- regardless of how unfair -- is an irrational financial decision. It feels right.

That's the power of what I call "the equity factor." And it has everything to do with leadership in turbulent times.

A close look at the psychology of relationships reveals that most individuals automatically attempt to keep a mental balance between what they contribute to a relationship and what they get back from it. When employees believe that they are putting more into their company than they are getting back, or when they do not perceive the rewards distribution to be equitable, engagement slips dramatically.

When employees look for balance through equitable treatment, it is their perception of the treatment, rather than the treatment itself that defines reality. I once interviewed employees at a public utility where workers were negotiating a 2 percent raise that management was resisting. At that same time, the fleet of corporate vans was being repainted. Instead of viewing this as a necessary expense, the employees' perception was that it was unfair of the company to spend money on vehicles while it argued about a salary increase with employees: "How dare they throw money at those trucks and then quibble about a lousy 2 percent raise!"

The CEO of a chemical manufacturing company put it this way: "As a leader you must make it a routine part of your decision-making process to ask the question: Will this action be perceived as equitable?"

As companies [and nonprofits] downsize, restructure and refocus, employees are asked to do more and work harder. And they have, on the whole. But their resentment is most frequently seen in their reaction to executive compensation. Big disparities in pay between executives and the work force, especially in times of downsizing and plant closures, can destroy employee engagement -- just when it is most needed.

Here's how one employee sees it: "The biggest budget cuts were employee-focused. They eliminated all our merit increases, rewards and recognition programs. And then the top management got bonuses. I used to be a 'gung-ho' employee. Now I think my loyalty has been misplaced."

-- Carol Kinsey Goman

(Carol Kinsey Goman, Ph.D., is an executive coach, author, and keynote speaker who addresses association, government, and business audiences around the world. Her latest book is The Nonverbal Advantage -- Secrets and Science of Body Language at Work.)

Navigating the Digital Flood

July 02, 2009

Ab_blue_matrix_2 Last night, as we were cooking dinner -- refried bean and soy "beef" tacos -- my boyfriend, Ivan, and I got into a lively conversation about the difference between the information published on the Consumer Reports products testing site and the consumer-generated reviews posted on the Gizmodo blog.

Consumer Reports, which used to be a monthly publication before it was "Web-ified," is often criticized for being slow and outdated because Consumers Union, its parent organization, relies on an in-house testing lab to provide vetted product reviews. The process takes time. Here's how it's described on the Consumer Reports site:

Before a product even enters one of the dozens of labs at our Yonkers headquarters, it has been subjected to considerable research. We gather data about products and services, about consumer demand in the marketplace, and about what our subscribers plan to purchase. Editorial, technical, and research staff then scrutinize that material, along with suggestions from our subscribers, to develop our testing schedule.

After additional research to define a project's scope, staff shoppers -- assisted by a network of shoppers in 65 U.S. cities -- buy the products we use as test samples.

To supplement laboratory testing, the survey research department gathers the experiences that hundreds of thousands of our subscribers have had with products and services through an annual questionnaire. Those results are the basis of our well-known auto Frequency-of-Repair index and other product-reliability reports....

Impressive! And useful. But in our fast-paced digital age, consumers want to know as soon as a product comes out how it works and what others think about it -- not a month or two after its release date.

Sites like Gizmodo offer an alternative. On Gizmodo, informed opinions on products are posted much faster -- it often feels like mere moments after a new product has been released.

If you are shopping for a new mp3 player, a positive review from a Gizmodo contributor might be all the information you need to make a decision. But what if you're planning to spend $900 on a new flat-screen TV? Is an informed opinion on Gizmodo enough information for you to make a decision? Or would you want a vetted product review like the ones Consumer Reports produces? (Full disclosure: I was pleased to learn that Ivan checked Consumer Reports before we purchased our new TV last Christmas.)

As with tech product reviews and evaluations, so too with the social sector. Thoughts and opinion about philanthropy -- what it is, what it should do, how it should be measured -- are being shared on blogs and social networking sites by growing numbers of people. But with the stakes that much higher, how do we filter the mounting flood of news items, blog posts, and tweets to get to the stuff that really matters? In other words, is there a Web 2.0 Consumer Union for philanthropy, a place where new ideas and social innovations are being tested and reviewed?

It's a theme that Tactical Philanthropy blogger Sean Stannard Stockton explored in a recent Chronicle of Philanthropy column. More and more foundation leaders are engaging in public conversations about philanthropy and social change, Stannard-Stockton noted, and they are to be commended for sharing their "thought processes in regular Internet postings." But, he adds,

As the amount of available information explodes, the wisdom to process it and put it in context becomes exponentially more valuable. In this environment, information becomes a resource that is valuable only when we place it in context. Access to information is no longer a competitive advantage. It is the ability to filter and process the flood of information that sets effective people apart....

As someone new to the sector, I feel compelled to ask: How do others navigate and filter the flood of information that crosses their screens every day to find the information that is truly important? And once you've found it, how do you put it into a context that is useful. Have you found Twitter, Facebook, or any other Web 2.0 platforms to be helpful? Or do you stick to more traditional media like print publications and organizational Web sites? This enquiring mind wants to know....

-- Regina Mahone

Quote of the Week

  • "[L]et me assert my firm belief that the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance...."

    — Franklin D. Roosevelt, 32nd president of the United States

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