INSEAD is big on “Fair Process”, a leadership mental model formulated by the creators of Blue Ocean Strategy W. Chan Kim and Renee Mauborgne, and I am in the camp. Here’s a primer on what Fair Process is.
Distributive Justice (Taylorism) vs Procedural Justice (Fair Process)
The article circles on a false assumption stemming from good’ol Taylorism, the factory model of organizations:
[In traditional economics,] “economists assume that people are maximizers of utility, driven mainly by rational calculations of their own self-interest. That is, economists assume people focus solely on outcomes. That assumption has migrated into much of management theory and practice.”
“Traditional management science … operate in the realm of outcome fairness or what social scientists call distributive justice, where the psychology works like this: When people get the compensation (or the resources, or the place in the organizational hierarchy) they deserve, they feel satisfied with that outcome. They will reciprocate by fulfilling to the letter their obligation to the company.”
“But it is an assumption that managers would do well to reexamine because we all know that in real life it doesn’t always hold true. People do care about outcomes, but … they also care about the processes that produce those outcomes. They want to know that they had their say—that their point of view was considered even if it was rejected. Outcomes matter, but no more than the fairness of the processes that produce them.”
“The psychology of fair process, or procedural justice, is quite different. Fair process builds trust and commitment, trust and commitment produce voluntary cooperation, and voluntary cooperation drives performance, leading people to go beyond the call of duty by sharing their knowledge and applying their creativity. In all the management contexts we’ve studied, whatever the task, we have consistently observed this dynamic at work.”
Good Outcome, Unfair Process
Kim and Mauborgne call out to pay particular attention to situations of “good outcome, unfair process”, which is where a rationally sound decision or strategy that benefits everyone is communicated by leadership in a way that is “unfair” to the staff; resulting in neutral at best, often negative to severely negative acceptance of the decision by the people.
It’s actually easy to spot remnants of an “unfair process” in the organization – my experience is that you just have to follow resigned and disgruntled behavior among people:
- “Yah sure, whatever.”
- “If that’s what the boss wants.”
- “No point asking why.”
- “Just following instructions.”
- “Do we have a choice?”
- “Same old, same old.”
- “My opinions don’t matter. I feel unheard.”
- “We’re never involved in the important stuff. I don’t feel valued. I feel undermined.”
- “There’s no transparency. We don’t know how the decision was made.”
- “I’m not convinced. I’m skeptical. I suspect there are ulterior motives.”
- “That’s not an ask, it’s an order.”
- “Why do we always have to carry the weight? It’s probably a waste of time and effort again.”
Of course, the top boss seldom hear these things and the middle bosses may hear them but they are most likely equally resigned and disgruntled, so likelihood is that no action will be taken. Yet it’s a precarious and risky situation: our experience is that once a certain threshold of “unfairness” is crossed, people can resort to logic-defying sabotaging behavior even against their own benefit.
Or worse, they will engage in “retributive justice“:
Not only do they want fair process restored, they also seek to visit punishment and vengeance upon those who have violated it in compensation for the disrespect the unfair process signals… Such is the emotional power that unfair process can provoke.
What is, and what is not, Fair Process?
Kim and Mauborgne define Fair Process as “fairness in the process of making and executing decisions.” And at the core is the issue of trust:
Fair process responds to a basic human need. All of us, whatever our role in a company, want to be valued as human beings and not as “personnel” or “human assets.” We want others to respect our intelligence. We want our ideas to be taken seriously. And we want to understand the rationale behind specific decisions. People are sensitive to the signals conveyed through a company’s decision-making processes. Such processes can reveal a company’s willingness to trust people and seek their ideas—or they can signal the opposite.
Meanwhile, the authors are very clear that Fair Process is not decision by consensus or democracy in the workplace:
Notice that fair process is not decision by consensus. Fair process does not set out to achieve harmony or to win people’s support through compromises that accommodate every individual’s opinions, needs, or interests. While fair process gives every idea a chance, the merit of the ideas—and not consensus—is what drives the decision making.
Nor is fair process the same as democracy in the workplace. Achieving fair process does not mean that managers forfeit their prerogative to make decisions and establish policies and procedures. Fair process pursues the best ideas whether they are put forth by one or many.
Understanding this distinction is particularly important in practicing Fair Process – I consider it largely a practice of psychological safety, trust and Emotional Intelligence and not an internal adjustment mechanism or power dynamics balancing tool.
Engagement, Explanation, Expectation Clarity
So how do we practice Fair Process? Kim and Mauborgne recommend the application of “three mutually reinforcing principles” of Fair Process:
Engagement means involving individuals in the decisions that affect them by asking for their input and allowing them to refute the merits of one another’s ideas and assumptions. Engagement communicates management’s respect for individuals and their ideas. Encouraging refutation sharpens everyone’s thinking and builds collective wisdom. Engagement results in better decisions by management and greater commitment from all involved in executing those decisions.
Explanation means that everyone involved and affected should understand why final decisions are made as they are. An explanation of the thinking that underlies decisions makes people confident that managers have considered their opinions and have made those decisions impartially in the overall interests of the company. An explanation allows employees to trust managers’ intentions even if their own ideas have been rejected. It also serves as a powerful feedback loop that enhances learning.
Expectation clarity requires that once a decision is made, managers state clearly the new rules of the game. Although the expectations may be demanding, employees should know up front by what standards they will be judged and the penalties for failure. What are the new targets and milestones? Who is responsible for what? To achieve fair process, it matters less what the new rules and policies are and more that they are clearly understood. When people clearly understand what is expected of them, political jockeying and favoritism are minimized, and they can focus on the job at hand.
This makes a lot of sense and I see validity in these three principles as there are clear parallels to many other leadership mental models. “Engagement” is at the core of Lean (the concept of “Gemba”), Agile (empowered teams) and Design Thinking, “explanation” has a lot to do about Intent-Based Leadership and the art of influencing and story-telling, and “expectation clarity” is congruent with evidence based management, outcome orientation and beyond-KPI goal setting and measurement practices such as OKR.
At the end of the day, I think Fair Process is a very simple practice. It starts from a place of care and respect for your people, and a conscious effort to not cut corners on dialogue. It can be a tedious process as the temptation to just convey the conclusion is strong. But it is a rewarding practice for leaders as it will lead to more motivated, engaged and enabled people. And isn’t that the holy grail of team building for any leader?
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