I recently had a conversation with one of our senior managers about our company’s new banking division; he told me that only 21% of our cardholders account for 80% of spending. That skewed situation worried him greatly, and he wondered what we could do to spread our lending book more evenly. I’ve had similar conversations with the fundraising manager of a nonprofit I chair: The bulk of the funding comes from some 20 donors, which she tells me is unsustainable. The way she sees it, the organization is heading toward a cliff. Both of these reactions reveal a common cognitive error that has profound implications for leadership.
Like the banking manager and the fundraiser, most of us view the world as largely Gaussian, which means we believe most things are distributed, or should be distributed, according to bell curves. In this world, most cardholders and donors, for example, would spend or contribute close to the average, and the remaining people would fan out symmetrically on each side of that average amount of money. The mean, median, and mode would all coincide; half the people would fall below the average, and the other half above. In this world, variables are independent and do not influence each other.
Why do we think that way? First, our brains are hardwired to find fairness rewarding and uplifting and are averse to inequality. A Gaussian world, with most people clustered around a stable average, feels fair and predictable. We also find symmetry particularly pleasing, whether in faces, art, or statistics. Moreover, most of our schooling is still based on “normal” distributions and Newtonian thinking, which breaks down reality into independent variables and cause and effect. This view of the world has permeated multiple disciplines, from medicine to statistics and management. Finally, there are indeed phenomena that follow Gaussian distributions. Take test scores, for example. The variables measured (the test scores) are the outcome of additive processes (the sum of the scores on each question).
Even though I learned about a multitude of other statistical distributions when I studied statistics and probability theory, I too held the intuitive view that most things follow a bell-shaped distribution.
Yet they don’t. Let me tell you why, and why it matters greatly.
About 10 years ago, after reading about cognitive biases, I was surprised to find out that most human activities, as well as many disciplines — from physics and biology to linguistics, finance, and computer science — follow a Pareto distribution instead of a “normal” Gaussian curve.
In Pareto distributions (named after economist Vilfredo Pareto, who in the early 20th century observed that 20% of people in Italy owned 80% of the land), a small change in one variable is associated with a large change in another, because it reflects variables multiplied with each other rather than added to each other, as in the normal distribution. This is also referred to as a “power law.” Instead of a symmetric bell curve, the distribution of observations or outcomes looks like a hockey stick with a long tail, as shown in the figure below. There are many observations of low values, and a small number of high values, or outliers.
Once you start looking, you’ll see that pattern almost everywhere, almost all the time. The frequency of words we use when we speak, the magnitude of earthquakes and hurricanes, the size of companies and cities, book sales, and the pattern of countries winning Olympic medals all follow power laws. Social media is no exception — for example, a U.S. study showed that just 25% of the most active Twitter users accounted for 97% of tweets. In our short-term insurance business, Discovery Insure, the worst 30% of drivers account for 60% of serious accidents. Covid-19 also spreads in a Pareto fashion: In two Indian states, 60% of new infections were found to be caused by less than 10% of people carrying the disease — a few “super-spreaders” — whereas another 71% did not infect anyone at all. (This transmission pattern has been observed in other countries as well.)
Why is the Pareto distribution the actual norm, instead of the “normal” Gaussian distribution? Perhaps even more importantly, why is it becoming even more so? Most things follow power laws because this is how interconnected complex systems behave. And power laws are becoming ever more ubiquitous because our world operates in increasingly interconnected complex systems. The more interconnected the complex systems, the more pronounced the power law.
Economies, supply chains, trade, and markets have become more intertwined and global. Information technology and transport have exponentially deepened the interconnection of the multiple systems we’re part of. In these networks, variables are not additive but instead influence each other, creating dynamic, reinforcing, and cascading processes that are nonlinear, multiplicative, and far less predictable. In fact, these systems are capable of “black swan” behavior, because in most Pareto distributions (unlike in Gaussian ones), the variance — which measures how dispersed the data points are around the mean in a distribution — is not well defined.
Besides being pervasive, these power laws are also remarkably stubborn. Regardless of what we do, a small number of data points — people, decisions, or other observations — still account for most of the results. Political systems designed to produce greater income equality, for instance, struggle to shift Pareto out of the way. Take China, which, despite its greater focus on income equality than most other countries, has a higher Gini coefficient than Germany and the United Kingdom. Such distributions also repeat themselves like Russian dolls, as we see in our health insurance business: The sickest 20% of people generate 79% of health care costs, and the same skewed distribution can be found within that 20% group (with the sickest 20% within that group responsible for nearly 60% of health care costs). If you keep drilling down into the numbers, you’ll keep finding that a relatively small number of people account for most of the costs.
This disconnect between our Gaussian perception and the Pareto reality is not an obscure intellectual point, but instead carries serious practical consequences. Because of this error, our approach to most problems is, at best, suboptimal. Malcolm Gladwell, for example, has written about how the typical solutions meant to address homelessness — shelters and soup kitchens — have been ineffective because they’re based on the mistaken assumption that the majority of homeless people follow the average: average number of days without a roof, average cost per person to the public purse, or average reasons for being homeless. Yet on all these dimensions, homelessness follows a power law, too. In the words of Nobel laureate physicist Philip Anderson, we need to free ourselves from “average” thinking, or focusing on the mean, which, in most cases, is misleading. The joke that when Bill Gates walks into a bar, everyone in that bar becomes a millionaire on average, illustrates the point. Outliers and tails are dismissed as aberrations, when in fact they have the most impact — good and bad. A small viral event, for example, snowballs into a global coronavirus pandemic and economic disaster.
The realization that we live in a largely Pareto world — inherently unfair, asymmetric, and unpredictable — may feel unpleasant at first. The upside, however, is that systemic change in such a world is much easier and faster. In a Gaussian world, all elements within a system must shift for the entire construction to change, which is laborious, time consuming, and often impossible. In a Pareto world, on the other hand, a change in the tail shifts the entire system — for better or worse.
What does this all mean for business leaders? Here are three practical implications for innovation, risk management, and people.
Focus on bold decisions in the tail, rather than incremental change.
In a Pareto world, seemingly intractable problems become solvable through a positive change in the tail. This is how some cities like Denver have been able to make inroads on homelessness. They designed specific interventions focused on the chronically homeless, who account for most of the social services and health care costs and are the hardest cases to solve, but who make up a tiny fraction of the entire homeless population.
In a Pareto system, one individual or one decision can make an enormous difference. The vision and leadership of one entrepreneur like Steve Jobs, for example, can end up shaping an entire industry. To stretch this illustration further, imagine what impact Apple would have had if Jobs had started the company in Johannesburg instead of Silicon Valley; the company’s gross income today is equivalent to roughly half of South Africa’s GDP.
Similarly, the kind of radical innovation that can transform entire companies and industries happens in the tail. This is why the creation of the Vitality program was a game changer for Discovery: One outlier decision had, and continues to have, an enormous impact on our entire business. A few years after we launched our insurance business, an initial conversation with a chain of gyms about cross-selling sparked an entirely different idea: What if we created a program that rewarded people for doing healthy things? What if members who were part of this program could go to the gym for free? I still remember vividly the 10 minutes it took for that idea to take shape. The decision to implement it profoundly transformed our business. It laid the foundation for a new insurance model based on behavioral economics and shared value — a business model in which it makes good sense for Discovery, its customers, its suppliers, and its local community to give Vitality members the knowledge, tools, and incentives to live healthier lives.
A lot of smaller-tail decisions have contributed to turning the initial idea into what it is today. But Discovery’s success can be traced back to that initial tail decision, which remains the core of our identity and growth and has had an enormous impact through creating multiplicative shared-value benefits for members and for shareholders. It was the root of a system that connected behavior change with risk and reward.
I’m not saying that incremental improvements aren’t important — they are. I’m saying that radical innovation that can result in systemic and profound change starts with bold decisions in the tail, therefore that’s where leaders should focus their time and attention.
Embrace rather than fight the power law and identify tail problems early.
The shift of perspective toward a Pareto world also has implications for how we deal with risk and uncertainty. We spend enormous time and energy trying to “correct” nonlinear phenomena — like asymmetric fundraising and bankcard lending — that we perceive as abnormal and risky. There may be moral and fairness considerations to account for, but since power law distributions are the rule rather than the exception, and since they’re remarkably stubborn, they call for different solutions to deal with risk and a focus on the dynamics in the tail.
Just as innovation in the tail can shift entire systems for the better, a negative tail decision can bring down an entire system — a scenario that keeps me awake at night. So how do we deal with a Pareto world’s uncertainty and chaos? How do we make decisions? How do we avoid bad tail decisions, or correct them quickly before they become catastrophic?
One promising avenue is to combine extreme outcomes and the plausibility of various future scenarios — economist George Shackle’s Potential Surprise Theory — to help grapple with decisions in extreme uncertainty. Using traditional probabilities is problematic because they rely on predefined and mutually exclusive outcomes that are supposed to cover all possible scenarios — which, of course, no one can predict. A decision maker using Potential Surprise Theory, on the other hand, chooses among various possible scenarios based on a combination of the degree of disbelief or implausibility of possible outcomes and the expected potential gains and losses associated with each. This approach, unlike traditional probabilities, leaves room for surprises and new possibilities. So, think about plausibility and consequences, rather than probability. Think in a much broader way about the bad things that could potentially happen.
We indeed cannot predict or prevent black swan (i.e., bad tail) events. But learning to recognize and contain them early can avoid a disaster. When Covid-19 first broke out in South Korea, for instance, authorities’ early and decisive test-trace-isolate reaction contained the spread of the disease, compared to countries like the United States or Brazil. Similarly, we can learn to recognize and reverse dangerous tail decisions. Imagine what could have been avoided if Lehman Brothers, for example, had identified as a tail decision expanding its subprime mortgages and mortgage-backed derivatives business to the extent that a small decline in real estate value could wipe out its capital.
Create an A+ team to leverage A+ players’ impact.
First, recruit and retain the best possible people across the board. The stars in the tail will still account for the largest impact on results — remember that power laws are stubborn — but this doesn’t mean that all recruitment and retention efforts should focus on them. Consistently attracting and retaining exceptional talent across the entire organization will lift the entire talent curve, with profound impacts on results. So, although a small percentage of people still account for a relatively large proportion of results, having better talent across the board can lift results in absolute terms.
Second, focus on improving team environments and dynamics at all levels. When the complex system that is a company gets more and better interconnected, the multiplicative impact of the star performers in the tail becomes amplified throughout the entire system.
. . .
Recalibrating our perspective from Gaussian to Pareto might sound arcane, but the practical implications are profound. Shifting the lens through which we understand the world impacts how we approach systemic change, how we make decisions and handle risk, and how we lead. And because our lives are made up of intricate and complex webs of human connections, from families and professional networks to the communities we live in, our entire lives follow power laws: A few key decisions — from whom we marry, to what careers we choose — end up having an enormous impact on our future. I believe our thinking follows the same power law. By correcting a handful of cognitive errors, starting with this one, we can radically transform our performance, our impact, and our entire life.
3 Strategies for Managing an Understaffed Team
Thanks to continuing resignations, many employees’ workloads have increased to untenable levels. There are a few common solutions for staffing shortages: redistributing work, hiring replacement employees and outsourcing lower-level tasks. But amid the Great Resignation’s persistent talent shortage, many managers are finding that their usual go-to solutions aren’t enough. The author presents three strategies for managers struggling with understaffed teams.
With job resignations still up 23% above pre-pandemic levels, many organizations are short-staffed. When just a few employees resign, their workloads can usually be redistributed among the remaining employees. Indeed, resources abound to help managers fairly divide workload and to help employees manage the increased workload. However, as departments of 50 become departments of 35 and teams of 10 become teams of seven, workload redistribution is an untenable long-term solution.
In addition to redistributing work, there are a couple common solutions for staffing shortages: hiring replacement employees and outsourcing lower-level tasks. But amid the Great Resignation’s persistent talent shortage, many managers are finding that their usual go-to solutions aren’t enough. Here are three strategies for managers struggling with understaffed teams.
Rethink Project Calendars
One of the fastest ways to turn high performers into low performers is to allocate their time to so many different projects that they don’t have time to think deeply. For example, in my work with a global insurance company, as the number of treasury managers dwindled, one historically high-performing treasury manager found herself spending 10% of her time on each of 10 major project teams — with no time to spare for her individual job responsibilities. The result was weekly calendars full of double-booked meetings, multiple frustrated teams, and poor results.
It’s critical to prioritize projects and defer what you can. For example, does there really need to be a system upgrade every year, or is every other year actually fine? What you can’t defer needs to be implemented more strategically and scheduled more carefully — preferably sequentially. If the treasury manager had four weeks allocated for each project, with a slack week in between for overages or previous project revisions, each of the 10 projects could have been accomplished within the year, and with two weeks to spare for some well-deserved PTO. Although it can be tempting to fight over scarce resources and demand your projects are the priority, as a manager, it’s more important to get employees’ focused effort rather than clock time. Stated differently, don’t just grab for whatever you can get — help employees be their best.
Prioritize Core Client Needs
Traditional business teaching emphasizes the importance of having a diverse portfolio of clients and products to minimize risk and make your business stronger. Indeed, focusing on only a few big clients is potentially precarious. However, when you’re in a situation where you can’t manage your entire client base well, giving everyone a little may prompt important unsatisfied clients to move on.
It’s a reoccurring theme across industries (e.g., investments, insurance, and health care) that the number of policies, customers, or patients that an employee is expected to manage has significantly increased — sometimes even doubling or tripling. For example, an asset manager I worked with at a multinational financial services company who two years ago was expected to call about 60 clients per week now has a client load of 246 per week. That comes out to fewer than 10 minutes per client with no time allocated for anything else, like meeting with new clients or conducting market research. No client was getting great service and the employee was working long hours and constantly under tremendous pressure. Unsurprisingly, they just accepted a new job.
Sometimes prioritizing clients involves firing clients, but there are less-drastic measures to try. For example, does every client really need a personal phone call every week, or might some be satisfied with a call every quarter accompanied by automated weekly emails or monthly newsletters? Also consider whether algorithms or even simple group sorting/filtering in Excel could be introduced to determine which client should be a priority on a given week — for example, those whose investments are currently experiencing market volatility. Ideally, a mid-range solution will be effective at reducing employee workload while maintaining your client base. But if not, you may need to prioritize your core clients over having a large portfolio of clients.
Find Quick Interventions
Look for interventions that can substantively improve employees’ daily work and be mastered in less than a week. For example, are there ways to automate data entry, such as converting paper forms into electronic forms that clients enter themselves? Could teaching employees a few formulas in Excel or creating report templates save hours of manual computations? Could three levels of approval be reduced to one, or could the dollar amount requiring approval be increased? Could a shared document repository be used to save the project lead hours of integrating feedback from 10 people’s emails?
Alternatively, if it’s the less-frequent tasks — for example, monthly financial or operational reports — that are the bane of your employees’ existence, try to make any process improvement interventions even shorter (ideally, a day or less). If you can, bring in external consultants or human resources to manage much of the design and rollout of the interventions to avoid further overwhelming an already overstretched workforce. Although investing in process improvement may be expensive, it’s likely much cheaper than recruiting, training, and managing a revolving door of employees who are all frustrated by broken processes.
. . .
Thanks to staffing shortages, many employees’ workloads have increased to untenable levels. For the workplaces running on a skeleton crew, now is the time to implement process improvement interventions, prioritize your core clients and products, and assign your employees to fewer concurrent projects — not more.
Balancing Autonomy and Structure for Remote Employees
As major companies like Google and Apple have begun mandating a return of all employees to the office for a certain number of days per week, the debate about flexibility and autonomy continues to develop. More organizations are taking a firm stance on where they feel their employees should work, once again casting the spotlight on the question of how much say employees should have in determining their own work arrangement — whether they should be able to decide where and when they work, or whether their organization should make that decision for them.
Even since before the post-pandemic return-to-office discussion, there had been many diverging opinions about the best approach for leaders to take. This has resulted in headlines ranging from “Let Employees Choose Where, When, and How to Work” to “Don’t Let Employees Pick Their WFH Days.” In this wide-ranging debate, advocates for leadership control over employee work arrangements are often seen as insensitive to the needs of employees. Similarly, advocates for full employee control over their work arrangements are perceived as blind to the needs of the organization. However, in many cases, both of these arguments miss the mark. If executed correctly, allowing employees to choose where and when they work can both boost the employee experience and give leaders the structure and predictability they need to make key strategic decisions for the organization.
Here, we present a roadmap showcasing how leaders can use office spaces and technology to empower employees to create structure in their work arrangements, even when they have full autonomy to choose where and when they work.
Employees want to choose where and when they work
The new Jabra Hybrid Ways of Working 2022 Global Report shows that employees with full autonomy to choose where and when they work unanimously report a better work experience than those with limited or low autonomy. Below, you can see how we’ve defined these various groups:
- High autonomy: “I have full autonomy to choose where and when I work, with the ability to come into the office if I want.
- Limited autonomy: “I’m required to work remotely full time and can choose to work anywhere but the office”;
“There is a minimum number of days required in the office, but I can choose which days to come in.”
- Low autonomy: “I’m required to work in-office full time”; “I work from home and the office, but the days are chosen for me (e.g., required in office on Tuesdays and Thursdays, and from home on Mondays, Wednesdays, and Fridays).”
In the study, we define work experience as an aggregate of eight different metrics: sense of belonging, motivation, productivity, trust in team, trust in leaders, impact, work-life balance, and mental well-being. When asked how their work arrangements impact various aspects of their work experience, high-autonomy employees report the highest levels of belonging, motivation, productivity, trust in team, trust in leaders, work-life balance, and mental well-being. In some cases, these scores are more than 20% higher than their low autonomy counterparts. Interestingly, the sense of impact that employees felt they had in their organization barely varied across any of these groups. In the future, leaders and managers will need to find alternative ways to boost employee sense of impact, such as through increased reward and recognition.
In today’s battle for talent, employee experience has become a key focus for many leaders. Empowering employees to choose where and when they work can be one of the biggest drivers of a better experience at work.
Flexible location choice will continue to grow as a priority
The shifts of the past two years have given employees good reason to reprioritize their lives to focus more on their health and well-being. So much so, in fact, that our research last year found that the majority of employees had come to value flexibility more than salary and other benefits. This flexibility has given them the opportunity to find newer, better ways of doing their jobs from anywhere and on their own terms.
Employees believe that these new, better ways of working are here to stay. In fact, our latest data shows that 64% of Gen Z and 63% of Millennials consider their office to be their laptop, headset, and wherever they can get a strong internet connection, compared to only 48% of Gen X and 43% of Baby Boomers. It’s clear that the future of work — a future made up primarily of these younger generations — will prioritize having the freedom to work from anywhere.
Leaders are concerned about letting employees choose location
Despite the major motivation, productivity, trust, and well-being benefits of increasing employee autonomy, many business leaders may find relinquishing all location decision-making power to employees to be a disconcerting thought; after all, it’s leaders who need to make important decisions about what to do with the organization’s physical infrastructure. CBRE, a global leader in commercial real estate, released a report in 2021 indicating that “corporate real estate professionals are being tasked with developing more agile strategies in the face of portfolios that are bound by contractual obligations, depreciation schedules, and cultural norms.”
This same sentiment is leaving many business leaders asking themselves important questions about the future of their organizations in a hybrid working world. Should we sell off some of our real estate? What do we do with our desk arrangements or meeting rooms? How do I service our technology needs if I cannot predict how many employees will be working in the office? If leaders are to make informed decisions on these crucial questions impacting workplace investments and overhead costs, they need to have a predictable and stable overview of how their employees plan to work. They need to understand how buildings, spaces, and technology will be used.
Employees seek habits, structure, and predictability
We’re creatures of habit. In much of what we do, we strive for balance and structure, not least between work and life. It’s this predictability that offers us more certainty and allows us to get the most out of our lives. And just because employees can choose where and when they work doesn’t mean that they’ll override these inherent human tendencies. They’ll still try to create structures and habits in the day-to-day that allow them to optimize their time.
Take one example from the workplace. In our research, 69% of high-autonomy employees said that if they didn’t have a permanent, regular desk or office at work, they’d still try to sit and work in the same spot every day anyway. This number is the same for low-autonomy employees and only 2% lower for those with limited freedom to choose where they work. Predictability triumphs regardless of the amount of autonomy you’re able to exercise at work. Similarly, knowing what your workday will look like can be a great motivator for coming into the office, and employees will be more likely to do so if they know what to expect.
We found that as the amount of time a given employee spends in meetings goes up, so too does their preference for their home workspace over their in-office workspace. With 80% of all meetings now fully virtual or hybrid, in-office meeting spaces aren’t being utilized to the extent that they were prior to the pandemic. And with the work-from-home shift of the pandemic, 42% of employees have reconfigured their home workspaces for a virtual working world (a number that rises to 68% for those spending more than half their time in meetings). As such, many are better equipped for today’s virtual workstyles at home. The reliability and predictability of their home collaboration experience offers more certainty about the trajectory of their day than the prospect of coming into an office that isn’t optimized for a virtual style of work.
Here, leaders are in a bit of a Catch-22. On the one hand, many are hesitant to reconfigure offices without mandating that employees use them. On the other hand, they can’t expect employees to want to go back into the office when their home setup is better for virtual work and collaboration. If office spaces are brought up to speed with the capabilities of many employees’ remote locations, the predictability of their office use habits will be easier to map out.
Three steps to leading a high-autonomy hybrid organization
With the right strategy, leaders can leverage the trust and well-being benefits of increasing employee location choice — both of which contribute positively to productivity — while still being able to make business-critical decisions about what to do with the organization’s physical infrastructure.
Step #1: Create spaces that actually meet the demands of a virtual-first working world.
Our data shows that employees recognize the value of having access to multiple places to work, both in terms of maximizing productivity and feeling a sense of belonging in the organization. The top two reasons for wanting to come into the office are focus and collaboration — two tasks that are often seen as diametrically opposed to one another. But the current state of offices leaves employees with a subpar environment to effectively complete these types of tasks.
For example, a recent Bloomberg piece reported that “one of [one employee’s] main annoyances is the echo when she’s seated next to a colleague on the same call as her.” “Sometimes,” writes the author, “she can’t even understand what’s happening in the meeting because of it.” Because workspaces aren’t purposefully thought out, employees are forced to blend the physical and virtual worlds in a way that reduces the value of both.
For both individual focus and group collaboration tasks, employees must be able to access spaces that reduce these types of disturbances and maximize the utility of virtual tools. One way to do this is by considering the acoustic and visual privacy offered by any given space. Our data shows that employees prefer spaces with acoustic privacy (61%) over visual privacy (39%). In other words, they’d rather work in spaces where they can’t hear or be heard by those outside of the space than spaces where they can’t see or be seen by those outside. And this makes sense, as acoustic privacy lends itself well to increased concentration as well as to virtual collaboration environments where audio quality oftentimes poses quite an issue for many.
The death of in-office collaboration is being driven in part by a superior remote experience with technology that is better suited to the environment in which it’s being used. Creating office spaces that allow employees to access virtual environments more easily will make their lives easier, consequently allowing them to create predictable work habits and space usage patterns.
Step #2: Supplement the diminished sense of belonging in the office space with an increased sense of belonging in the virtual space.
For a long time, many employees had a personal desk or office at their place of work. And oftentimes, these spaces were points of great pride for employees, spaces where they would keep their favorite coffee cup and proudly display photos of their children. With the rise of hot-desking — a necessary decision for many companies transitioning to a hybrid model — we know that personalized spaces are rapidly disappearing in many offices. Similarly, employees are resistant to the idea of not having a place they can call their own: four in 10 say they would feel less loyalty and commitment to their company if they didn’t have a regular, permanent workspace in the office. And why wouldn’t they feel that way? For many employees, that sense of belonging and ownership they had over a personal space was taken away and they were given nothing with which to replace it.
With our presence in the organization being primarily perceived virtually, that very same sense of belonging that employees once felt in the office space must be replaced with a sense of belonging in the virtual space. This is especially true for organizations proceeding with hot-desking arrangements. The personal artefact that was taken away from them — the desk or office — must be replaced with their own personal technology that offers them a sense of ownership and belonging in the new virtual world of work.
This then raises the question of which technologies best enable that increased sense of belonging and inclusion. Our data found that users of professional audio devices reported feeling more included in virtual meetings than those using either consumer audio devices or the microphones and speakers built into their laptops. In fact, users of professional headsets were 11% less likely to feel left out of the conversation in virtual meetings than consumer device or built-in audio users. Similarly, professional headset users were 14% less likely to report not being able to hear what’s being said in the meeting than built-in users and 12% less likely than consumer device users. If employees are to feel a sense of belonging in these professional virtual environments, they need the professional tools and technologies built exactly with those environments in mind.
Step #3: Let employees find the balance that matches their life’s new rhythm.
Now that the architectural and technological backdrop is all in place, leaders can focus on building a flourishing high-autonomy work culture. With this setup, employees have all the elements they need to build work habits that work for them. Over time, a picture of the organization’s average workplace occupancy rates will begin to emerge. Consequently, leaders can then use this information to identify that balance and make well-informed, strategic decisions about the company’s future real estate and technology needs.
When leaders give employees the freedom to choose where and when they work, it signals that they trust them to do the job they were hired to do. The data shows that that trust is then paid back to leaders and teams at a very high rate, building a tight-knit culture of inclusivity and belonging. With the right spaces and technology in place, employers enable employees to create structure in the way they work, thereby improving the employee experience. And by following these steps, a high-autonomy approach to work will create happier, healthier, and higher-performing employees who will be able to find a balance that benefits both themselves and the wider organization.
When Trust Takes Away from Effective Collaboration
Leaders should be aware of a counterintuitive risk of trust: A strong emphasis on trust can lead to inertia, as employees might prioritize appearing trustworthy over behavior necessary for good, collaborative decision making. For example, in order to maintain a perception of being competent and trustworthy, an individual might withhold information or share inaccurate information when things aren’t going well. The author has spent over a decade making research on collaboration useable for organizations ranging from scaleups becoming unicorns to incumbents embracing transformation. He explains how overemphasizing trust can hinder collaborative decision making and cause inertia — and how leaders can strike the right balance between trust and progress.
Research shows that it takes a long time to build interpersonal trust in organizations. When people from different groups come together to cross-collaborate on important strategic challenges, there will be low trust between the individuals who haven’t worked together before. The same is true when a startup brings in new executives to help scale the business, or when an incumbent organization brings in new individuals with new competences into their decision-making processes and management team.
Heuristics like “collaboration is all about trust” would suggest that the examples above are doomed for failure, and the low success rate of inclusion and cross-collaboration we see in organizations might, at first sight, appear to be the proof. Fortunately, contrary to common belief, trust is not a prerequisite for teamwork and collaboration. Research on teaming and collective intelligence suggests that if we focus on getting a few things right, new constellations of people can collaborate effectively before they’ve had time to build trust.
Successful transformation depends on the organization’s ability to bring people with diverse competencies together to make high-quality decisions. In such situations, shifting attention away from creating trust toward information sharing, perspective taking, and effective turn taking can help organizations make progress on and speed up change and transformation.
Building trust vs. proving trustworthiness
Leaders should be aware of a counterintuitive risk of trust: A strong emphasis on trust can lead to inertia, as employees might prioritize appearing trustworthy over behavior necessary for good, collaborative decision making. For example, in order to maintain a perception of being competent and trustworthy, an individual might withhold information or share inaccurate information when things aren’t going well.
I’ve spent over a decade making research on collaboration useable for organizations ranging from scaleups becoming unicorns to incumbents embracing transformation. Below I will explain how overemphasizing trust can hinder collaborative decision making and cause inertia — and how leaders can strike the right balance between trust and progress.
How trust and distrust interfere with decision making
Two things stand out as critical to collaborative decision making on complex challenges.
First, in a fast-changing environment, you need access to accurate and updated data in order to make good decisions. The data for simple decisions is relatively easy to come by. For example, most organizations I’ve helped can access real-time customer data that they can analyze and base quick, smart decisions on. But most complex strategic challenges — for example, cross collaboration to meet a changing customer demand — require humans to bring in most of the important information.
When industries transform, organizations need new competencies. Most often, those competencies come attached to a person, who may differ from established employees in terms of background, values, demographic characteristics, etc. Thus, being able to include new individuals and their information into teams and decision-making processes is the second requirement for collaborative decision making.
Trust is a vague term and has a vast number of definitions. To understand trust in regard to collective decision making, keep these two definitions in mind:
- In the organizational context, trust is most often defined as an interpersonal relationship that forms when a person shows consistent proof of competence, benevolence, and integrity. This kind of trust takes a long time to build and is easily broken.
- More broadly, trust describes the intuitive and immediate feeling we get when we interact with another person, especially new individuals. This feeling is based on past experience: If the new person looks, sounds, and acts like people we’ve had a positive experience of, we intuitively feel trust. If the new person is different, we feel distrust. The greater the difference, the more distrust. This kind of trust is closely linked to unconscious bias and has nothing to do with the new person’s competence or the quality of the information they bring to the table.
Problems arise when our intuitive feeling of distrust makes us more doubtful of the information brought by new individuals who haven’t had time to prove their trustworthiness. This puts us at risk of undervaluing important information that’s communicated by someone new and overvaluing other information. Since new individuals often possess crucial information, this can be detrimental to transformation and strategic progress.
Another problem is when feelings of distrust cause established individuals to challenge a new person in ways that they don’t challenge other established collaborators. This can trigger feelings of exclusion and defensive and provocative behavior between the parties, which in turn harms the productive exchange of information that collaborative decision making depends on. Excluding behavior often comes from individuals who believe they’re safeguarding and protecting their organization. Unfortunately, they fail to realize that their behavior is keeping the organization from accessing the information needed for strategic progress, transformation, and long-term survival.
Organizations that overemphasize trust risk triggering this kind of unproductive behavior. Of course, it’s important to know that people in the organization are trustworthy, but management meetings and strategic collaboration efforts are not the right time to perform such evaluations.
How our focus on trust drives inertia and poor decision making
Individuals naturally want to establish themselves as competent and trustworthy in the eyes of their peers and leaders. But it’s much harder for people to work together on high-impact, complex transformation challenges if they’re more concerned with appearing trustworthy than with effective exchange of information and ideas. Here’s what that can look like in practice:
- New individuals hold back information, challenging questions, and out-of-the-box ideas in order to establish themselves as competent, benevolent, and trustworthy.
- Individuals representing the old norm who are not experts in the area of transformation hold back questions and hide ignorance and knowledge gaps because they’re afraid to appear less competent and trustworthy.
- When things don’t go according to plan, individuals hide information or share an inaccurate picture of the situation to avoid looking incompetent or like a failure.
- In cross-collaborative settings, individuals withhold information, questions, and ideas because there’s a history of distrust between different departments.
- Individuals refrain from openly changing their mind, as they’re afraid of appearing inconsistent and unpredictable.
The more an organization emphasizes the importance of trust, the more the behaviors above amplify.
How to keep trust from getting in the way
To maximize productive behavior and strategic progress when gathering diverse groups to solve important, complex challenges, leaders are wise to communicate that:
- Trust is important to many aspects of organizational success, but interpersonal trust is not a prerequisite for collaboration. This is important, as the inaccurate notion that “collaboration is all about trust” is deeply rooted.
- Feelings of trust and distrust are natural when collaborating with new individuals. However, they’re intuitive biases and should be set aside. Consider the advice of Nobel prize winner Daniel Kahneman: “Delay forming an intuition too quickly. Instead, focus on the separate points, and when you have the full profile, then you can develop an intuition.”
- It’s vital to get the most accurate data on the table, even when that data is unpleasant to share. Everyone involved is responsible for creating an atmosphere where others can act with both candor and vulnerability when sharing their perspective.
- Our individual willingness to explore and take each other’s perspectives is key to progress and effective decision making on complex challenges.
When leaders focus on getting the conversations right, groups often improve decisions and progress quite quickly. The experience of shared progress often strengthens trust between collaborators. It might sound counterintuitive, but shifting attention away from trust might be one effective way to quickly build trust in new constellations.