This is your brain on management theories

Management theories abound, and jaded telecom veterans have gone through many fads over the years that didn’t have much evidence to support them. But a new management book uses ‘brain science’ to explode some myths. The science? Hard data culled from experiments using functional magnetic resonance imaging (fMRI) scans and the new science of behavioural economics. One key misconception is that giving people feedback will improve performance, says Charles Jacobs, author of Management Rewired and managing partner of Boston-based strategy consultancy 180 Partners. “Studies conducted at General Electric show that it either has no effect or can even drive down productivity. Feedback only works when it’s solicited by the person being evaluated and it’s about something specific,” says Jacobs, giving a nod to Rypple’s approach. The source of the feedback makes a big difference. Boss-initiated feedback can set off a counter-productive chain of reactions in our brains, he says. “When we get feedback that’s dissonant from our view, we take the path of least resistance, which is to discount the feedback instead of changing our self-image. No matter how constructive it is, it summons aggression. It becomes our interest to continue the same behaviour to prove the boss wrong.” Instead, managers should reverse the typical feedback relationship with their staff, he says. “If they stop telling people things – from setting objectives to giving feedback – and start asking them what managers could be doing better, the psychological dynamic will work in their favour.” Another myth is that companies should focus on numerical objectives to grow their businesses. Many do this because numbers are something all stakeholders can agree on compared with subjective goals, he says. “The problem is that the experiences that teach us what to do in the future are encoded in our brains with emotion. If we don’t access our emotions, we don’t learn from past experiences. So the more you get people thinking logically, the more you force them to think about the business in the short-term. Ideally, you need to put those short-term numerical objectives in the context of a vision about the purpose of the enterprise, and not just financial results.” In the current economic climate, one emotion that’s running high is fear. “Everyone I know is running scared,” says Jacobs. Fearful brains generate powerful hormones designed to prime body and mind for fight or flight. “Fear slows the mind’s process and stops it from making the connections it would ordinarily make, and narrows the peripheral vision both physically and mentally. In short, it makes people stupid.” The most reassuring thing management can do to cut costs but maintain morale is to bring people together, lay out the company’s financial situation in detail and ask staff for suggestions about areas to cut. “We did that at a steel company, and the staff generated hundreds of ways to cut expenses. And because the ideas came from the people who’ll suffer the consequences, they had more reason to make it work.” Due to its regulated past, the telecom sector has a history of poor management, and now there’s a layer of fear on top, says Jacobs, who’s worked with five of the regional Bells in the US. “Many telecom managers are die-hard techies, but if you show them the data about what happens to their people when they do things, show them the brain scans, make a logical case about how attention to these psychological factors can help them make more money, it convinces them to deal with the human issues they’ve been avoiding.” The perils of absenteeism on productivity Companies are cutting many areas, but health and well-being programs have a proven track record of reducing absenteeism and boosting productivity and morale. “We’re actually surpassing our targets this year,” says Sue Brown, director of HealthyReturns at Sun Life Financial. “The message is out and leaders are listening. During hard times, they need to help employees due to increased stresses at work and home, and they need more resilient management.” There are two key components to the program, Brown explains. “One helps employees stay healthy by decreasing risk factors in their lifestyles and behaviour. The other helps the organization stay well by creating a culture of support for healthy behaviour with incentives, programs and facilities.” Employees with three or more health risk factors drive absenteeism, she says. “People who smoke, drink and don’t exercise are 50% more absent and are three times more costly.” The top two categories of illness that result in short- and long-term disability (LTD) are psychological disorders such as depression and anxiety, which are often precipitated by stress, and musculoskeletal disorders such as carpal tunnel syndrome, which often come from sitting in sedentary positions all day working at computers and using the same muscles. ‘Presenteeism’, which is the opposite of absenteeism, is actually an even bigger issue, she says. “Their bums may be in their seats, but employees are not completely there – they’re disengaged or distracted by personal issues, illness and so on. Research shows this issue is four times bigger than absenteeism in terms of hours lost.” While health and well-being programs don’t directly reduce insurance rates for the employee group, they do that indirectly in terms of reduced costs for LTD claims, she adds. The organizational component of well-being programs is particularly important when layoffs are underway and companies are left dealing with survivor workers, she says. “If people feel they’re not being treated with fairness and respect, they become resentful, and this contributes to absenteeism and presenteeism.” In the late nineties, Telus Corp designed and implemented a holistic in-house health and well-being program that offers more benefits than most companies. “The program is flexible and responsive to our people’s needs,” says Janet Crowe, director of health services at Telus. For example, many employees said they preferred daycare services nearer to home instead of the on-site facility because they didn’t want to commute long distances to work with small children in the car. For these employees, the company offers subsidies at alternative sites in their communities. The company also offers annual health screening programs in the workplace that include flu shots and testing for blood pressure, cholesterol and breast cancer. In 2007, Telus crunched the data and found an average reduction of six out of 10 risk factors, and the projected ROI was 4:1 for its investment in the program. “This is like an actuarial table in reverse,” says Crowe. “People who reduce their risk factors today will boost the company’s productivity in the future.” Rosie Lombardi is a Toronto-based freelance writer. You can contact her at rosie@rosie-lombardi.com

This is your brain on management theories

News | April 28, 2009

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