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Executive Decisions, Culture and Social Capital

Executive Decisions, Culture and Social Capital

23 May 2017 | Namibia Business Journal Leadership

by leonard kamwi

What would you have other executives learn from the movie “the Gladiator”? There are pretty good lessons in my opinion, both about executive thinking and leadership styles. Marcus Aurelius, a sage by some standards, at some point makes a list of virtues leaders must endeavor to develop and communicates it to his son. Later he makes an executive decision and informs the son he will not be emperor.

Marcus Aurelius: Are you ready to do your duty for Rome?
Commodus: Yes, father.
Marcus Aurelius: You will not be emperor.
Commodus: Which wiser, older man is to take my place?
Marcus Aurelius: My powers will pass to Maximus, to hold in trust until the Senate is ready to rule once more. Rome is to be a republic again.
Commodus: Maximus?
Marcus Aurelius: Yes. My decision disappoints you?
Commodus: You wrote to me once, listing the four chief virtues: Wisdom, justice, fortitude and temperance. As I read the list, I knew I had none of them. But I have other virtues, father, Ambition. That can be a virtue when it drives us to excel. Resourcefulness, courage, perhaps not on the battlefield, but... there are many forms of courage. Devotion, to my family and to you. But none of my virtues were on your list. Even then it was as if you didn't want me for your son.

Conflicts and disagreements are everywhere humans are. In fact often times, decisions well intended for the common good of society are misunderstood and have unintended consequences. This is not confined to family relations though, as it is pretty much alive in corporations as well.

Are there universal tools for all leaders, whether in Government, in Business or Civil Society? All leaders make executive decisions. One of the peculiarities about executive decisions is that they are more susceptible to reprisal. And here I find Aurelius’ list of executive virtues to be itself instructive. In coming up with this list, he appears to be making a distinction between management and leadership. At lower managerial levels, the job is to sale more goods (or, in the case of services, to solve glitches on the spot). Action is at a premium hence ambition and decisiveness or speed is critical. At executive level, the job involves making decisions about which cause to pursue, what policy to introduce and how to develop it. Here caution is key. It is no longer fast lane. In communicating a list of virtues to his son, he might have been attempting to communicate to his son that to assume the highest office and be effective in that role, he would need to develop new virtues and behaviors—to change the way he interact with people and the way he create and evaluate options. In fact, Commodus missed the point, it is dangerous for an emperor to be ambitious though we are inclined to think that it can be the mortar to success. It’s just as destructive for an executive to act like a fast-lane car driver after being elevated up to drive the whole system, a truck by metaphor. Wisdom, justice, fortitude and temperance becomes key. Frederic Bastiat’s lamentations (1801-1850) might paint a better picture, “there is only one difference between a bad leader and a good one: the bad leader confines himself to the visible effect; the good leader takes into account both the effect that can be seen and those effects that must be foreseen. …the bad leader pursues a small present good that will be followed by a great evil to come, while the good leader pursues a great good to come, at the risk of a small present evil.”

It is often said that leadership is lonely. As you move up the ladder, you move further and further away from where the action takes place. In the process there is some loss of touch with what’s really going on in the organization. Yet, it is at this level where decisions with universal impacts are made. Marcus’s point appears to be that, because executives are still working with others, it is imperative they become integrative decision makers, considering lots of input from others and willing to explore a wide range of viewpoints, including those that conflict with their own, before arriving at any conclusion. Decision making for the integrative executive is not an event, but a process.

By definition an executive decision is one made and implemented by a person in power or of authority, without the agreement of others. Thus by the very nature of executive decisions, they can easily be non-collaborative and hence have high risks of unintended effects, even that of killing the organizational spirit. Although policies and procedures are created by well meaning people and teams who are trying to prevent problems in the future, trying to protect
their companies or governments, simply trying to do their best. As Geoff Smith of EllisDon once noted, “When problems arise, the question gets asked: How do we make sure this never happens again? Create a policy, initiate a required process, set clear limits. It happens at every level. Set up a cross functional team to solve a problem, and they will create a policy dictating future behavior of employees.”

Can you imagine being charged by your board to look at a problem that caused a big loss and coming back with this answer: ‘I’m absolutely confident that everyone learned a searing lesson from this. Everyone grew as a result. Trust me, this will never happen again. The best course is to do absolutely nothing.’ No one really responds this way and if anyone did, it would be a stretch of temperance and fortitude. Yet it illustrates that there is often more than one option available. Policies and procedures though vital in managing behavior in complex systems, they beget bureaucracy, which begets inefficiency and unhappiness.

We often say government ministries, agencies and departments are so often mind-numbingly rigid and inefficient. Because every time a bureaucrat makes a significant mistake, the media blow it into a big scandal, governments react by creating more rules, eliminating both any creativity and (hopefully) the possibility of another scandal. So the natural response is bureaucracy. Who creates impersonal, inflexible corporate or government bureaucracy and the often unhappy people you find there? The leaders, no doubt about it.

There is an opportunity to improve on this front by capitalizing on a new buzzword on the run, now entering the business management realm, social capital. The term was coined by sociologists studying communities who where resilient in times of stress. Basically it refers to the reliance and interdependency among teams that builds trust. Just as equipment (physical capital) or a university education (cultural capital or human capital) can increase productivity (both individual and collective), so do social contacts affect the productivity of individuals and groups.

A team at MIT researchers were very keen to find out what makes some groups more successful and more productive than others? They invited hundreds of volunteers, and put them into groups. They then gave them very hard problems to solve. The results of their experiments are both unusual and interesting. They found that the high-achieving groups were not those that had one or two people with spectacularly high I.Q. Neither did they have the highest aggregate I.Q. Instead, they had three interesting characteristics. First, they showed high degrees of social sensitivity to each other (social capital) as measured by something called the Reading the Mind in the Eyes Test, which is broadly considered a test for empathy. Secondly, the successful groups gave roughly equal time to each other, so that no one voice dominated, but neither were there any passengers (Candor and Accountability). In other words, groups that easily developed trust amongst each other, were frank and accountable, were more successful.

You might ask, what is the connection between executive decisions and this culture of trust, candor and accountability? More often than not, inept leaders like Commodus do not anticipate and address the unintended consequences of their decisions on social capital adequately. The challenge most of the time is that the feedback loop between executive decisions and its impact on corporate culture and social capital is not always there. Sometimes the feedback only comes too late when the damage is done, perhaps in the form of super employees handing in his or her resignations. But then the employees simply say they have discovered greener pastures. They rarely say something in the corporate culture stinks and that they cannot bear it anymore. Sometimes the signal comes when employees are going on strike. When this happens, the general spirit among employees would have reached the trough, with the belief that the CEO and the board does not care about employee wellbeing or that they are simply greedy and useless. At the core of employees’ complaint would be feeling treated like components of a heartless machine.

The irony about this is that you would never hear a corporate leader, or manager who thinks that killing employee motivation or social capital is a good idea, or a politician who thinks increasing unemployment or poverty a little bit is a good idea so that some citizens become dependent on the state. Yet executive decisions often yield unintended consequences.

Is there a way of reversing social capital decay? The answer is a resounding yes. The first and crucial point is the awakening to the reality. Once the leadership is seeing reality fairly accurately and has to establish a certain performance culture, it should be manifest it through an organization wide conviction that there is a preferred mindset and code of behaviors that create the optimal environment for work. Then it becomes somewhat straightforward to chart the way forward. Decay in social capital occurs when fear is rampant in an organization. This is easily created through leadership styles. Temperance from leaders is critical because when employees get fearful, they go below the line, their ability to think and perform is greatly reduced.

Aurelius provides the secret formula to creating social capital in organisations through cultivating virtues that enhance a performance culture. Like Marcus Aurelius, leaders need to identify a preferred mindset and code of behaviors that create the optimal environment for workers and then “walk the talk”.

References
  1. Brousseau, KR. Et al, The Seasoned Executive’s Decision-Making Style, Harvard Business Review, February 2016
  2. Forget the pecking order at work: Margaret Heffernan, TedWomen, May 2015
  3. Gladiator. Universal Pictures: Ridley Scott, 2000. film.

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