Treating People Fairly

An organization that recognizes the need to do the right thing as it conducts its business will be perceived by its people as treating them fairly. Fairness is a sweeping sort of word. People will say “I very much enjoy my work – it is tough and challenging, but they treat me fairly.” People often say that “fairness” is the reason why they exert enormous effort to serve the goals of the organization. Leading a high-performance work system is largely about inluencing people to do extraordinary things, to change things for the better. Individuals will engage with high energy in a high-performance work system when they perceive they are being treated fairly.

Fairness is a broad term that encompasses the extrinsic and the intrinsic, that has both material components and social and emotional ones. Fairness, like leadership, cannot be deined precisely, but it doesn't really have to be – all of us recognize when we are being treated fairly. Below I describe some important processes based on beliefs and principles that are part of my vision of a high-performance work system's ethic. They all relate to this principle:

The high-performance developmental organization treats its people fairly.

In an article in the June 2010 issue of the Harvard Business Review, author Tony Schwartz cites a 2007 Towers–Perrin study.1 That study, which was based on a survey of 90,000 employees of organizations worldwide, found that only 21 per cent felt fully engaged at work and that nearly 40 per cent were disenchanted or disengaged. Furthermore, those companies that had high levels of engagement reported a 19 per cent increase in operating income; those with low levels of engagement reported a 33 per cent decrease in operating income. There are many causes of disengagement, so perhaps that study can only help convince us of the importance of treating employees in a manner they perceive as fair.

In the following pages I describe a number of critically important factors related to treating an organization's people fairly. It is vital to a highperformance work system that all of these be addressed. There are others, but the ive factors below relect the essence of my beliefs and experience.

Fair Compensation

Treating people fairly is often viewed merely in terms of providing them with competitive remuneration – the industry, the region where they live, the going market rate for their skills, and so on. Pay is much like price. It is a given that the price of the product you are marketing must be perceived by customers as fair. When a customer complains about price, the role model leader in the selling organization almost always inds that the real

1 Tony Schwartz, “The Productivity Paradox: How Sony Pictures Gets More Out of People by Demanding Less,” Harvard Business Review 88, no. 6 (June 2010): 64. complaint (albeit unstated) is poor quality or poor customer service – in other words, a lack of something else, not always an unfair price. It is easy to price fairly; it is harder to determine and address those other unstated issues. That is the challenge that must be addressed by the role model leaders of a virtuous, vital, and viable high-performance work system.

The same logic can be extended to paying people fairly. Paying fairly is not something to be debated – it is obviously an important component of the high-performance work system. So it will be taken as a given in this book.

The Right Organizational Values

An organization's values are those things it holds to be true. They are the beliefs, philosophy, and principles that guide its actions. They are determined in a variety of ways for the purpose of serving the organization's needs.

There are huge differences in the values that different business organizations hold as their guides to setting goals. Most companies, though, have statements that in some way reference the value they place on people: “Care and concern for people,” “Treat people fairly,” “Pay people well,” and so on. And most companies in their statements also refer to serving society: “Do no harm to the environment,” “Serve societal needs,” “Donate X percent of revenue to local communities,” “Support local charity Y,” and so on. And, of course, these statements often refer to inancial beliefs and principles: “Excellence,” “Innovation,” “Grow the business at rates greater than GDP,” and so on.

We as individuals and as employees will have our own sets of beliefs and principles that determine our goals. These will tend to be very speciic to who we are, to how we think about things, and to our history, among other factors. Goals such as “I want to retire at ifty-ive,” “I want to be perceived as socially responsible,” “I want to be happy,” and “My family is most important.” So regrettably, there are often – I should say, there are almost always – differences in goals between the employee and the business organization, as well as among employees. The organization's people can choose to ignore those differences, or they can live with them, or they can question the enterprise's values and goals.

Reconciling differences in values in positive ways by engaging employees in thoughtful conversation and discussion to reach agreement on a set of core values is one way to strengthen the virtue of the business organization. Showing respect for employees' values can be another powerful way of highlighting that the organization's beliefs are important to it and that its people should try to ind common ground between their beliefs and those of the organization. It would be even more powerful to say that the business is open to changing what it stands for based on its employees' beliefs. The nature of values is such that there is no better way than that to align the behaviour of the entire business organization with that of its individual employees. This approach holds the potential for a business to relate to its employees at an ethical level. When that potential is there, the “human beingness” of the organization is converging with that of the individual employees and the business organization is becoming more virtuous and – it follows – more of a high-performance work system.