Fairness, trust, commitment, are all essential social variables that serve as foundations for effective organizations, whether new or established. But what is the basis for your commitment to your employer, or for your team’s commitment to you? What logic do you use to evaluate fairness? According to one perspective (Relational Models Theory, developed by Alan Fiske at UCLA), there really are only 4 ways in which we make such calculations:
1. Kinship – the family bond: we are all in this together. There is no differentiation among us. I am committed because being a member of the group defines who I am. Group unity is the number one basis for evaluating relationships. If you hurt the group, you hurt me and if you help the group, you help me.
2. Authority – the hierarchy: there are those who are superior and those who must follow. The chain of command has one direction and that is downwards. Obedience is the watchword, but in exchange, you can expect protection and security.
3. Equality – one person, one vote: our community is the result of our shared commitment, which comes with an obligation to participate in shared decision making. Democracy. Balance. Everybody is equal under the law.
4. Market – Our contributions can be valued and rewarded in purely economic terms. The watchword is equity. Norms of fairness under equity say that each should receive according to their contributions.
Different social institutions can call on different ‘equations’. It is clear that in families, kinship norms dominate, in military organizations (and bureaucracies) authority relations are the dominant model, for community institutions we rely on equality, and in business it is the market model that is used to coordinate action. But this is overly simplistic.
The strongest organizations (family, military, community, or business) are those that can call on more than one social equation. Consider the archetypal dysfunctional family: a family that relies solely on kinship norms at the exclusion of authority relationships might soon find itself facing problems with out of control kids. Similarly, the overly strict family that only emphasizes authority relationships between parent and child will likely become alienated and disparate. On the other hand, the family that emphasizes kinship and authority will function better than one which only leverages one of these forms of connection.
The military certainly has command and control, however conscription is never likely to produce an army that is as cohesive or committed as a volunteer army. While a conscripted army relies upon authority to organize and motivate, a volunteer army must also motivate through community and kinship. Consider the role played by motto’s such as semper fi (always faithful) in creating a shared identity. The notion of communal caring is required to motivate new recruits. It also helps ensure mutual trust in the field in a way that supplements the power of authority rather than usurping it.
In a different social sphere, community organizations are largely dependent upon equality norms. Yet, more recently they are learning to leverage kinship and unity as well as democracy in order to motivate commitment to common goals. The Big Society (see here for a nice summary) is more than a political slogan or meme. It is a way to insert a broader range of social calculus into the relationship between society and the government. Motivation to participate is enhanced through a return to community ownership: neighbors as kin.
Even within the domain of business organizations there is variation in what norms may be dominant. Researchers in the Stanford Project on Emerging Companies (SPEC) studied a large sample of new companies in the ‘silicon valley’ region of Northern California in the mid 1990s. They found a wide variety of models (‘blueprints’) for social relationships in start-ups. In fact, it is relatively easy to find businesses that prioritize different norms: some are democratic, some autocratic, some are familial and so on.
There are at least three important reasons why you should understand the exchange norms in your business:
1. Have a broad repertoire: different social equations suit different circumstances. When we face crisis, we may want to emphasize that ‘we are in this together‘ (kinship). When we must make decisions and are faced by uncertainty, then encouraging everyone to exercise voice (democracy) may help us understand our alternatives. When we must act fast, and the goal is understood, then authority may be most efficient. Having a broad repertoire for relating with members helps an organization adapt and respond to competitive threats and changing circumstances. It provides greater resilience, and access to more resources in your community, your tribe.
2. Meet expectations, or else: The culture that you build reflects preferences for these different forms of relationship. But culture also builds a cage: it creates expectations, and sets norms for how people in an organization expect others to behave – to be familial, authoritarian, participative and so on. If you break the pattern, you break expectations. This can shock, upset, and create negative emotional reactions. The people in your team who have been there for any length of time have built expectations of how to behave, and implicitly agree with these choices you make on how to relate to them. So, even if you think that it might be well received to be consultative when you have always been authoritarian think again. Changing the pattern requires time and great care.
3. Beware heavy reliance on economic exchange: If you rely upon money as the primary basis for coordinating and motivating, then this can undermine or overwhelm all of the other forms. It will reduce long-run commitment. It will narrow focus to specific measurable goals. Exchange based upon market rules is likely to work only in predictable environments where objectives are clear and stable – if you are in a situation where customer needs are changing, or new technological opportunities are emerging, then it becomes quite hard to coordinate purely with money. You need to balance this with community, democracy, and perhaps a little authority.
These ideas are important both for new and established businesses. As the results of the SPEC project revealed, once an exchange blueprint is set, it becomes very hard to change. In fact, trying to change midstream can undermine organizational effectiveness. New businesses have a blank slate: it is the founder’s choices that establish the norms of exchange. Beware of the significance of the choices made in start-up for the business in the long-term, especially when it is not always apparent that choices are being made. Decisions such as who to hire, how to manage performance and how to reward, all establish norms for how the organization will relate with its members (and implicitly how members must relate with one another).
For established companies seeking to be entrepreneurial, the first question is what is our culture? Understanding where you are helps to determine if exchange norms are a potential barrier. Entrepreneurial firms tend to have more complex internal social relationships than non-entrepreneurial (bureaucratic) organizations. Building a rich social environment can be helped by understanding the four basic equations of the social math.