Why companies are so bad at treating employees like people

Few disagree that the time is ripe for reimagining complex organizations so that they are more human and more agile. But existing models for how to make the shift seem to offer a choice between a rock and a hard place.

Take the thorny problem of developing people. Anachronistic annual performance appraisal systems, everyone agrees, must give way to more fluid and continuous feedback. Or, consider the issue of working flexibly while maintaining an esprit de corps. Standardized arrangements and facetime-ism, we concur, must cede to more bespoke arrangements and an outcomes-orientation.

But, while the ideals are noble, the jury is still out on just how to re-invent the workplace. Managers today seem to face a Goldilocksian choice, between approaches that are either too tight or too loose to change a corporate culture that still pays insufficient attention to the human factor.

At one end of the spectrum is humanizing by fiat. A large company I worked with recently recognized that it was failing to develop its people. Senior management decided that had to change, and that only forcing tactics would do the trick. So they bought and rolled out a ‘leadership’ system that required all managers to log five weekly development goals for themselves and their direct reports, and to track conversations about the multiplying objectives. A 200+ page manual outlined the new terms and processes. Cynicism followed.

On the other end, often by unintended consequence rather than by design, is humanizing by fear. When Netflix abolished annual performance appraisals and fixed vacation time in favor of ‘adult conversations’ and personal discretion, one critic told me “who’s going to take much time off in a company that systematically culls the B players?”.

Amazon’s ‘feedback-rich’ culture is another example of too much of a good thing, yielding offensive practices like the use of its hyperlinked employee roster to give anonymous upward feedback. As reported in a scathing New York Times article, cynicism follows.

As I listen to the current debate about humanizing the corporation, I’m reminded of an award-winning 1993 ethnography by Professor James Barker of Marquette University that shows how even the best intended of management initiatives can evolve in paradoxical ways. Studying one organization’s transformation from a traditional hierarchy to self-managing teams, Barker was surprised to find that the change produced even tighter control than what existed under the old-fashioned hierarchy.

Ronald, one of the technical employees Barker interviewed for the study, told him that he felt more closely watched under the new egalitarian system. While his former boss might have overlooked him coming in a little late occasionally, for example, his team had a ‘no tolerance’ policy on tardiness. They monitored members’ behaviors closely and imposed sanctions for non-compliance.

Instead of loosening the ‘iron cage’, as sociologist Max Weber famously called the sort of rule-based, bureaucratic control that we know associate with lumbering corporations, Baker argued that flatter, more egalitarian systems sometimes tighten the cage more powerfully, thanks to peer pressure and what psychologists call ‘internalized control’, our zealous adherence to norms of our own creation.

As we tout the obvious benefits of the Silicon Valley model, we would also do well to remember Ronald and Barker. Without the benefit of an impartial bureaucratic allotment of paid time off, for example, it can be hard to tell what’s fair, what won’t let the team down, or what won’t hurt one’s career. So we work more instead of less. And, when busy bosses are lacking in interpersonal skills and performance pressures pervert the best of intentions, employees may prefer an imperfect annual performance appraisal to no feedback at all or, worse, a constant cold shower of unsolicited opinion.

There is little doubt that discretionary effort by people who are empowered to give their best produces not just better morale but also better products and services. The historical record shows a mix of better and worse attempts to achieve neither too tight nor too loose but ‘just right’ control, a word that is as out of fashion as it is accurate. Corporate leaders will just have to keep trying.