Their distrust and its attendant lack of engagement is a huge, unrecognized problem in most organizations. This issue has always mattered, but it matters now more than ever, because knowledge-based organizations are totally dependent on the commitment and ideas of their employees. Unfortunately, neither integrity nor good judgment can be magically conferred on all the managers in an organization. In this article, W. A London policeman gave a woman a ticket for making an illegal turn. When the woman protested that there was no sign prohibiting the turn, the policeman pointed to one that was bent out of shape and difficult to see from the road.
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Their distrust and its attendant lack of engagement is a huge, unrecognized problem in most organizations. This issue has always mattered, but it matters now more than ever, because knowledge-based organizations are totally dependent on the commitment and ideas of their employees. Unfortunately, neither integrity nor good judgment can be magically conferred on all the managers in an organization.
In this article, W. A London policeman gave a woman a ticket for making an illegal turn. When the woman protested that there was no sign prohibiting the turn, the policeman pointed to one that was bent out of shape and difficult to see from the road. Furious, the woman decided to appeal by going to court. Finally, the day of her hearing arrived, and she could hardly wait to speak her piece.
But she had just begun to tell her side of the story when the magistrate stopped her and summarily ruled in her favor. How did the woman feel? No, she was frustrated and deeply unhappy. For the purposes of their theories, 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. People do care about outcomes, but—like the woman in London—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. Never has the idea of fair process been more important for managers than it is today. Fair process turns out to be a powerful management tool for companies struggling to make the transition from a production-based to a knowledge-based economy, in which value creation depends increasingly on ideas and innovation.
Fair process profoundly influences attitudes and behaviors critical to high performance. It builds trust and unlocks ideas. With it, managers can achieve even the most painful and difficult goals while gaining the voluntary cooperation of the employees affected. Good Outcome, Unfair Process In the late s, sales in the elevator industry headed south as overconstruction of office space left some large U.
Faced with diminished domestic demand for its product, Elco knew it had to improve its operations. The company made the decision to replace its batch-manufacturing system with a cellular approach that would allow self-directed teams to achieve superior performance. Lacking expertise in cellular manufacturing, Elco retained a consulting firm to design a master plan for the conversion. Elco asked the consultants to work quickly and with minimal disturbance to employees.
Subsequently, Elco would roll the process out to its High Park plant, where a strong union would probably resist that, or any other, change.
Under the leadership of a much beloved plant manager, Chester was in all respects a model operation. Who were these people wearing dark suits, white dress shirts, and ties?
They showed up daily and spoke in low tones to one another. During this period, the plant manager was increasingly absent. As people grew anxious, wondering why the captain of their ship seemed to be deserting them, the rumor mill moved into high gear.
Everyone became convinced that the consultants would downsize the plant. They were sure they were about to lose their jobs. Soon, people were bringing in newspaper clippings about other plants around the country that had been shut down with the help of consultants.
Employees saw themselves as imminent victims of yet another management fad and resented it. In fact, Elco managers had no intention of closing the plant. They wanted to cut out waste, freeing people to enhance quality and produce elevators for new international markets. But plant employees could not have known that.
The Master Plan. In March , management gathered the Chester employees in a large room. Three months after the consultants had first appeared, they were formally introduced.
At the same time, management unveiled to employees the master plan for change at the Chester plant. The employees sat in stunned silence, which the managers mistook for acceptance, forgetting how many months it had taken them as leaders to get comfortable with the idea of cellular manufacturing and the changes it entailed.
The managers felt good when the meeting was over, believing the employees were on board. With such a terrific staff, they thought, implementation of the new system was bound to go well. Master plan in hand, management quickly began rearranging the plant. But lacking an intellectual understanding of what was happening to them, some employees literally began feeling sick when they came to work.
Managers informed employees that they would no longer be judged on individual performance but rather on the performance of the cell. They said quicker or more experienced employees would have to pick up the slack for slower or less experienced colleagues. In fact, the new cell design offered tremendous benefits to employees, making vacations easier to schedule, for example, and giving them the opportunity to broaden their skills and engage in a greater variety of work.
But lacking trust in the change process, employees could see only its negative side. They began taking out their fears and anger on one another. You keep to your own workstation. The plant manager then announced that the new cell design would allow employees to act as self-directed teams and that the role of the supervisor would be abolished. He expected people to react with excitement to his vision of Chester as the epitome of the factory of the future, where employees are empowered as entrepreneurial agents.
Instead, they were simply confused. They had no idea how to succeed in this new environment. Without supervisors, what would they do if stock ran short or machines broke down? Did empowerment mean that the teams could self-authorize overtime, address quality problems such as rework, or purchase new machine tools?
Unclear about how to succeed, employees felt set up to fail. Time Out. By the summer of , both cost and quality performance were in a free fall. Employees were talking about bringing the union back. The theme of justice has preoccupied writers and philosophers throughout the ages, but the systematic study of fair process emerged only in the mids, when two social scientists, John W. Thibaut and Laurens Walker, combined their interest in the psychology of justice with the study of process.
Focusing their attention on legal settings, they sought to understand what makes people trust a legal system so that they will comply with laws without being coerced into doing so. Their research established that people care as much about the fairness of the process through which an outcome is produced as they do about the outcome itself. Subsequent researchers such as Tom R. Tyler and E. Allan Lind demonstrated the power of fair process across diverse cultures and social settings.
We discovered the managerial relevance of fair process more than a decade ago, during a study of strategic decision making in multinational corporations. Many top executives in those corporations were frustrated—and baffled—by the way the senior managers of their local subsidiaries behaved. Why did those managers so often fail to share information and ideas with the executives?
Why did they sabotage the execution of plans they had agreed to carry out? In the 19 companies we studied, we found a direct link between processes, attitudes, and behavior. Conversely, when managers felt fair process was absent, they hoarded ideas and dragged their feet. In subsequent field research, we explored the relevance of fair process in other business contexts—for example, in companies in the midst of transformations, in teams engaged in product innovation, and in company-supplier partnerships.
Making Sense of Irrational Behavior at VW and Siemens-Nixdorf Economic theories do a good job of explaining the rational side of human behavior, but they fall short in explaining why people can act negatively in the face of positive outcomes. Fair process offers managers a theory of behavior that explains—or might help predict—what would otherwise appear to be bewilderingly noneconomic, or irrational, behavior. Consider what happened to Volkswagen. In , the German carmaker was in the midst of expanding its manufacturing facility in Puebla, Mexico, its only production site in North America.
The appreciation of the deutsche mark against the U. In the summer of , a new labor agreement had to be hammered out. VW thought the workers would be pleased. Workers did not understand the basis for the decisions their leaders had taken. They felt betrayed. On August 21, about protesters were attacked by police dogs. The government was forced to step in to end the violence. In contrast, consider the turnaround of Siemens-Nixdorf Informationssysteme SNI , the largest European supplier of information technology.
Anxiety and fear were rampant at the company. In , Gerhard Schulmeyer, t he newly appointed CEO, went out to talk to as many employees as he could. In a series of meetings large and small with a total of more than 11, people, Schulmeyer shared his crusading mission to engage everyone in turning the company around. Deeper cuts were needed, and every business would have to demonstrate its viability or be eliminated.
Schulmeyer set clear but tough rules about how decisions would be made. He then asked for volunteers to come up with ideas. Within three months, the initial group of 30 volunteers grew to encompass an additional 75 SNI executives and employees. These change agents soon turned into 1,, then 3,, then 9,, as they progressively recruited others to help save the company.
Knowledge Management in Theory and Practice
Technological Integration Reviews and Testimonials McIntyre, Dalkir, Paul, and Kitimbo present project managers, academicians, researchers, and advanced students with a resource on organizational development focused on a combination of evidence-based lessons learned and current tools in the field. Susan McIntyre is a Canadian independent researcher in the field of defense development. Paul is an independent consultant. Previous to holding this position, she spent 10 years as Knowledge Manager for the Canadian Safety and Security Program, which is dedicated to finding science and technology solutions for domestic security challenges.
A Comprehensive Analysis of Knowledge Management Cycles
It provides much of the fundamental background for understanding KM and the food for thought to feed the discussions that need to occure in order for knowledge management initiatives to succeed and flourish. Both practitioners and educators should benefit from this informative source. Comprehensive in scope. Integrates nicely theory, practice, history, issues, terminology, and a future perspective. A should read for those interested in leveraging knowledge assets to improve organizational productivity and innovation. Dalkir has provided a rich foundation in the theory behind KM and draws in an engaging learner dialogue that demonstrates how theory can be practically engaged in the dynamic environments of KM-based institutions, businesses, and governments. Kim is an exemplary author who draws together numerous practical and theoretical frameworks.
Fair Process: Managing in the Knowledge Economy