In organisations where people are held accountable, there is discipline and reward. Holding people appropriately accountable is not about being nice, it is about being fair. Being fair when rewarding people is about rewarding people for what they have control over (their contribution), not the results. Fair reward moreover is not about paying everyone the same because it is only fair that people’s reward should be commensurate with contribution made. Exceptional contributors, in other words, should be rewarded noticeably more than those who have made an acceptable contribution. It is only fair. At a deeper level, reward is about gratitude. It is about genuine appreciation for contribution made.
OUR SUMMARY OF THIS VIDEO: The latest thing that upset you probably had to do with unfairness. That’s because unfairness triggers us so strongly that we can’t think straight – we become afraid and suspicious. Our unfairness antennae stick up, we feel pain, and we walk away.
Unfairness is one of the defining issues of our society, it’s one of the root causes of polarization, and it’s bad news for business. At work, unfairness makes people defensive and disengaged.
A study shows that 70 percent of workers in the US are disengaged, and this is costing companies there $550 billion a year every year – half the total spent on education in the US.
So, removing unfairness and promoting fairness should be our priority. But what does it mean in practice? Is it about more rules? Is it about systems? Is it about equality? Well, partly, but fairness is more interesting than rules and equality. Fairness works in surprising ways.
15 years ago, I left a US investment bank to join a large Italian state-owned oil company. It was a different world. I thought the key to getting the best performance was a risk-reward system where you could give the high performers bonuses and promotions and give the underperformers something to worry about. But in this company, we had fixed salaries and lifelong jobs. Careers were set, so my toolkit wasn’t very effective, and I was frustrated.
But then I saw that this company was producing some pockets of excellence, areas in which they beat the competition in very tough, competitive sectors. This was true in trading and in project management – it was very true in exploration. Our exploration team was finding more oil and gas than any other company in the world. It was a phenomenon; everyone was trying to figure out how this was possible. I thought it was luck, but after each new discovery, that became less and less likely.
So did we have a special tool? No. Did we have a killer application that no one else had? No. Was it one genius who was finding oil for the whole team? No, we hadn’t hired a senior guy in years.
So what was our secret source? I started looking really carefully. I looked at my friend, who drilled seven dry wells, writing off more than a billion dollars for the company, and found oil on the eighth. I was nervous for him … but he was so relaxed. These guys knew what they were doing.
And then it hit me: it was about fairness. These guys were working in a company where they didn’t need to worry about short-term results. They weren’t going to be penalized for bad luck or for an honest mistake. They knew they were valued for what they were trying to do, not the outcome. They were valued as human beings. They were part of a community. Whatever happened, the company would stand by them.
For me, this is the definition of fairness. It’s when you can lower those unfairness antennae, put them at rest. Then great things follow. These guys could be true to their purpose, which was finding oil and gas. They didn’t have to worry about company politics or greed or fear. They could be good risk-takers, because they weren’t too defensive and they weren’t gambling to take huge rewards. And they were excellent team workers. They could trust their colleagues. They didn’t need to look behind their backs. And they were basically having fun. They were having so much fun, one guy even confessed that he was having more fun at the company Christmas dinner than at his own Christmas dinner.
But these guys, essentially, were working in a fair system where they could do what they felt was right instead of what’s selfish, what’s quick, what’s convenient.
To be able to do what we feel is right is a key ingredient for fairness, but it is also a great motivator.
And it wasn’t just explorers who were doing the right thing.
There was an HR director who proposed that I hire someone internally and give him a managerial job. This guy was very good, but he had not finished high school, so he had no formal qualifications. But he was so good, it made sense, and so we gave him the job. Or the other guy, who asked me for a budget to build a cheese factory next to our plant in Ecuador, in a village. It didn’t make any sense: no one ever built a cheese factory. But this is what the village wanted, because the milk they had would spoil before they could sell it. And so we built it.
So in these examples and many others, I learned that to be fair, my colleagues and I needed to take a risk and stick our head out. But in a fair system, you can do that – you can dare to be fair.
So I realized that these guys and other colleagues were achieving great results, doing great things, in a way that no bonus could buy. So I was fascinated. I wanted to learn how this thing really worked. So I started talking to colleagues, to coaches, to headhunters and neuroscientists.
What I discovered is that what these guys were up to and the way they worked is really supported by recent brain science. And I also discovered that this can work at all levels in any type of company – you don’t need the fixed salaries or the stable careers.
This is because science shows that humans have an innate sense of fairness. We know what is right and what is wrong before we can talk or think about it.
My favorite experiment is six-month old babies watching a ball trying to struggle up a hill. And there’s a helpful, friendly square that pushes the ball up the hill; and then a mean triangle pushes the ball back down. After watching this several times, they ask the babies to choose what to play with. They can pick a ball, a square or a triangle. They never pick the triangle. All the babies want to be the square.
Science also shows that when we see or perceive fairness, our brain releases a substance that gives us pleasure, proper joy. But when we perceive unfairness, we feel pain – even greater pain than if I really hurt myself.
That’s because unfairness triggers the primitive, reptile part of our brain, the part that deals with threats and survival, and when unfairness triggers a threat, that’s all we can think about. Motivation, creativity, teamwork, they all go way back.
And it makes sense that we’re wired this way, because we’re social animals. We need to be part of a community to survive. We’re born so helpless that someone needs to look after us until we’re maybe 10 years old, so our brain evolves towards food. We need to be in that community. So whether I like it or not, when there is unfairness, my lizard brain is generating the same response as if I’m about to be pushed out from my community.
So science explains quite nicely why fairness is good and why unfairness makes us really defensive. But science also shows that in a fair environment, not only do we all want to be the square, but we tend to be the square, and this allows other people to be fair in turn. This creates a beautiful fairness circle.
But while we start off fair, one drop of unfairness contaminates the whole pool, and unfortunately there are plenty of drops in that pool.
So our effort should be to filter out as much unfairness as we can from everywhere, starting from our communities and companies.
I worry about this a lot because I lead a team of 3,000 excellent people, and the difference between 3,000 happy, motivated team workers and 3,000 clock-watchers is everything.
So the first thing I try to do in my fairness crusade is to try to take myself out of the equation. That means being aware of my own biases. For example, I really like people who say yes to whatever I suggest. But that’s not very good for the company and not very good for anyone who has different ideas. So we try to actively promote a culture of diversity of opinions and diversity of character.
The second thing we do is a little more procedural. We look at all the rules, the processes, the systems in the company – the ones we use to take decisions and allocate resources. We try to get rid of anything that’s not very clear, not very rational, doesn’t make sense, and we also try to fix anything that’s limiting the transfer of information within the company. We then look at the culture and the motivation for the same reasons. But however hard you look at the rules, the processes, the systems (and we have to do that), we’re never going to do enough to get to the real essence of fairness.
That’s because the last mile of fairness requires something else. It’s about what people’s emotions are, what their needs are, what’s going on in their private lives, what society needs. These are all questions and elements that are very hard to put into a spreadsheet, into an algorithm. It’s very hard to make them part of our rational decision. But if we miss these, we’re missing important points, and the outcome is likely to feel unfair.
So we should cross-check our decisions with our fairness center switched on. Is it right that this guy should get the job he’s really hoping to get? Is it right that this guy should be fired? Is it right that we should be charging so much for this product?
These are tough questions. But if we take the time to ask ourselves whether the rational answer is the right one … we all know deep inside what the answer is. We’ve known since we were babies. And to know what the right answer is, is cool for decision-making.
And if we turn on our hearts, that’s the key to getting the best out of people, because they can smell it if you care, and only when you really care will they leave their fears behind and bring their true selves to work.
So if fairness is a keystone of life, why isn’t every leader making it their priority? Wouldn’t it be cool to work in a company that was more fair? Wouldn’t it be great to have colleagues and bosses that were selected and trained for fairness and for character and not based on 60-year-old GMATs (Graduate Management Admission Tests)? Wouldn’t it be nice to be able to knock on the door of a Chief Fairness Officer?
We’ll get there, but why is it not happening now? Partly, it’s because of inertia; partly, it’s because fairness isn’t always easy. It requires judgment and risk. Drilling that eighth well was a risk. Promoting the guy who didn’t finish high school was a risk. Building a cheese factory in Ecuador was a risk.
But fairness is a risk worth taking, so we should be asking ourselves: Where can we take this risk? Where can we push ourselves a little bit further, to go beyond what’s rational and do what’s right?