When Will We Ever Learn? A Postscript

Last Updated Mar 29, 2009 8:01 PM EDT

Last November Jeffery Pfeffer was in Sydney at the invitation of Australian Institute of Management presenting on his current topic, Evidence Based Management for Business based on his latest book Hard Facts, Dangerous Half-Truths and Total Nonsense: Profiting from Evidence-Based Management jointly written with Robert Sutton. I attended the seminar and finally finished reading the book last week. The book was better than the seminar although it was great to see Professor Pfeffer in action and get him to sign my copy of his Managing with Power, which is an excellent book and is recommended reading for every manager in a large organisation.

Anyway, I then discovered the Professor Pfeffer writes a monthly blog for BNET and in a recent post asked this question: When will we ever learn? Besides making me green with envy by getting 40 comments I did start thinking about the issue he raised. Why, with so much evidence of misdirected financial incentives driving behaviour that leads to major problems, do organisations still persist in using them? Pfeffer proposes three explanations:

  1. Lack of focus on understanding failure. Leading business schools do not teach history or cases on failure. Everyone reads about Google --- few spent time learning from the mistakes of others.
  2. Over-reliance on compensation as a management tool. Most people believe that others are motivated by money even if we know we are not. In a recent survey of people taking Law School Admission Test, only 12 percent said they were interested in law school for the money, while these same people thought that 60 percent of their fellow test-takers were. Coupled with the large compensation consulting industry most organisations overemphasise pay as an element in their management system.
  3. Omnipresent managerial hubris. Although most executives know that in many instances poorly designed reward systems have produced problem behaviour in other companies, they cling to the belief that such things won't happen in their organisations. The reason is simple --- they are smarter!
Most of the 40 comments considered the second reason as the main reason for failure. I disagree, I think hubris is the major reason. The reason is simple. The core emotion every manager needs is the desire to win. If this desire is strong, you will have a manager who is a self-confident, forceful leader, who can defend his or her ideas vigorously. Unfortunately along with these traits you will also have someone who is arrogant, insensitive, domineering, prejudiced and dogmatic. Learning to moderate these negative traits is stage II of Emotional Intelligence; unfortunately few people receive the training that is necessary and end up being perceived as corporate bullies.

Know anyone or have you worked with someone who fits this description?