A Labor Day dichotomy

Which is more important in human behavior — nature or nurture? It’s a classic question, with “nature” in this context meaning inborn tendencies and nurture meaning the consequences of life experience.

People, including academics who should know better, still argue the question today. Those who know more long-ago recognized that it’s a false dichotomy.

If you aren’t familiar with the term, a false dichotomy is an argument that presents as antithetical two possibilities that can, in reality, be simultaneously valid. The roles of nature and nurture in human behavior are, most assuredly, complementary.

Take Michael Jordan’s successful career as a basketball player. Nature or nurture? Anyone who doubts nature hasn’t looked at the average height of an NBA player. Also, anyone who doubts nature has to believe there are no genetic traits that confer above-average strength, stamina or agility. If you’re one of them, I commend to you “Finding the golden genes,” (Patrick Barry, Science News, 8/13/2008).

Those who think genes are the whole story should pay more attention to what Jordan and nearly every other top performer in the history of the world has had to say about the importance of their upbringing and life experiences.

The occasion of Labor Day makes another false dichotomy timely: The question of which matters more for a company’s success — the quality of its managers and leaders, or the quality of its employees.

It’s a false dichotomy because both are necessary conditions for achieving sustainable success, regardless of the nature of the organization you lead.

The importance of top-notch employees is old news in IT. Way back in 1975, Frederick Brooks’ The Mythical Man Month described research showing how much more productive great programmers are than average ones. Depending on the metric the answer turned out to be roughly a factor of ten.

Since compensation is based on market value and not delivered value, it’s unlikely any CIO pays top performers ten times more than average ones. Even three times more is a stretch, making top talent an excellent investment. Let’s see: Invest two more dollars a year to get ten back — sounds good to me.

More generally: All of the value-creating work in most companies is performed by its non-managerial employees. They are the ones who design, assemble, market, sell, distribute and support the company’s products and services. Every single step in the chain of events that convert raw materials to finished products is either performed by non-managerial employees, or is performed by automated systems they assemble and program.

It takes a serious act of denial to figure they don’t matter (an act of denial many executives have proven themselves all too capable of).

False dichotomy sorts conclude from logic like this that instead it must be leadership that doesn’t matter. They’re wrong.

The simplest demonstration of this wrongness is a basic fact: Non-managerial employees are hired by managers and executives. When a company has figured out how to attract, recruit, retain, train and promote great employees, the credit belongs to its management team, even as credit for the actual work belongs to its employees.

Leadership matters for more reasons than this. In particular, excellent leadership is the difference between employees expending their efforts at cross purposes, canceling each other out, and employees reinforcing each others’ efforts, extending the reach of the corporation.

It’s a vector thing.

One trend is turning the management/staff false dichotomy into a real one: The executive wage gap.

Thirty years ago, the average CEO made about 40 times the pay of an average employee. That’s now ballooned to 800 times as much. I’ve read that in typical corporations the top four officers draw ten percent of the total payroll.

Beyond the visceral reaction these statistics elicit (unless you’re one of the top four officers, an immediate need for Pepto-Bismol), is a practical business issue: Where the opportunity cost of a 1970s CEO’s compensation was 40 non-managerial positions the company could not afford to hire, the 2008 CEO paycheck costs 800 non-managerial employees — a net loss of 760.

Depending on the size of the company that can be a lot of value-adding labor that isn’t going to happen.

CEO compensation is a Pandora’s box that isn’t going to shut any time soon, so CEOs, and you too, had better concentrate on hiring the best talent available, even if it drives up the average wage (and drives down the CEO-to-employee wage ratio).

Doing anything else will turn a false dichotomy into a false economy.