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|In: Business Ethics|Last Updated:

Humans are tribal.

Whether it’s an evolved behavioral trait — a hypothesis Edward O. Wilson’s new book, The Social Conquest of Earth (2012), supports quite strongly — a learned, cultural one, or a combination of the two (most nature/nurture arguments are, after all, false dichotomies) will undoubtedly be the focus on much future research.

The nature/nurture question doesn’t matter to you at all. Where you live as a business leader, what matters is that both you and the humans you work with are tribal, not why they are tribal. The same holds true for you as a parent, part of a community, member of a political party if you are, and voter, which I hope you are: You’re tribal, everyone you know is tribal, everyone you read and read about is tribal too, with almost no exceptions.

It’s the old joke: There are two kinds of people, those who divide the world into two kinds of people and those who don’t.

Except the second kind is as rare as unicorns.

A person is tribal if his/her self-assigned membership in an identifiable group biases their acceptance of ideas, evidence, and the quality of the people they encounter. It’s why, in so many companies, the bean-counters in Accounting distrust any spending proposed by the propeller-heads in IT, who have no patience for the HR bureaucrats. It’s also why they all agree that the company’s pointy-haired bosses exemplify the Peter Principle.

My tribe is better than your tribe. Everything about us is better. And not just better: Everything about my tribe is admirable; everything about yours is despicable.

Tribalists aren’t “they.” The question isn’t whether you’re tribal. It’s what you do to minimize the damage you do to your ability to understand and solve problems by being tribal.

Self-awareness is a good start, of course. It will help you fight the tendency. It’s most useful when you need it the least, though … when you have time to think and reflect. When you’re in a heated argument, and your side is trying to win a political point over the other side, that’s when cooler heads are desperately needed. Exactly when you’re most likely to be a hothead instead.

Fighting a tendency this deep-seated (and very possibly innate) is more admirable than effective. An alternative that’s more likely to keep you on an even keel is to embrace the tendency but to send it in a harmless direction — possibly even a productive one.

Choose your own tribe, and choose it carefully. There’s no reason you have to belong to an already identified combatant tribe, either, and many reasons to avoid doing so.

In political discussions, for example, I find that identifying with the non-existent “Competence Party” invented in this space several years ago helps me avoid falling for the worst of the partisan nonsense fomented by the propagandists who have taken over most of our political dialog.

Join me. Once you’re a member of the Competence Party you’ll have no reason to become enraged at one party because of something horrible ascribed to it by the other. You’ll recognize that you’re just seeing symptoms of incompetence — something our tribe does our best to avoid by limiting our own information-gathering to sources whose first allegiance is to accuracy. And, you’ll immediately recognize attempts to make you angry, recognizing that whoever is trying to enrage you is playing you, no matter which side they’re on.

It works in business situations, too (which is fortunate, because otherwise this would be a pointless KJR). Imagine, for example, that you find yourself in the middle of a dispute between, say, IT and HR management, due to a conflict between IT’s need to recruit a position and HR/Recruiting’s policies and procedures.

Instead of choosing sides or trying to decide which side is right and which side is wrong, join an IT outsourcing firm who just took over responsibility for whatever the work is that IT needs the hoped-for new hire to handle. Ask yourself what that outsourcer would do to fill the position and compare it to the arguments being made by the parties you’re listening to.

Anger makes people stupid. Exploiting tribal tendencies is a great way to make people angry, so joining a non-combatant tribe … even if it’s one you’ve just invented … will help you keep the exploiters from messing with your head.

There’s another, more practical advantage to joining a non-combatant tribe: When an issue is undecided and the votes are close, both of the combatant tribes will need all the help they can get.

You might have to join one, but if you do, you get to choose.

Even better, you can negotiate favorable terms for doing so.

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|In: Business Ethics|Last Updated:

CitiGroup’s shareholders, in the non-binding vote made possible by Dodd-Frank, have sent a message to the Board of Directors: Don’t be ridiculous.

In case you somehow managed to miss this story, CitiGroup’s shareholders were given a chance to vote retrospectively (and can I just ask, WHAT???) on whether they approved of the $15M it paid to its CEO, Vikram Pandit.

They … and by “they” I’m referring, not to Irving Glotz of Goleta, California, who owns 143 shares, but to the fund managers who have enough votes to care about, and who presumably have some sophistication in such matters … they expressed dismay that Pandit’s compensation was excessive given CitiGroup’s performance, and that it wasn’t properly structured so as to provide the right incentives.

To be fair, averaged over the last three years the poor guy had to subsist on a mere $5M per year. To be even more fair, we aren’t going to touch on whether, in a company where the average employee gets less than 0.0004% of the revenue, it makes sense for the CEO to get about 0.02% of it or not.

Nope. The question this week is about 2009 and 2010, the years in which Pandit was paid $1 and $129,000 respectively, and whether the shareholders’ complaint about proper incentives is legitimate.

The answer is, no, and the reason it’s no means we need to re-think the whole idea of incentive pay, from the very top of the company right on down to you, your management team, and anyone else in your organization who receives a pay-for-performance bonus.

Why the answer is no is this question: Why would any Board of Directors hire a CEO it has to bribe to do a good job? And yet, in the ranks of a company’s top executives, the need to bribe the top execs is simply assumed.

This isn’t a new insight. Alfie Kohn made the point almost 20 years ago in his groundbreaking book, Punished by Rewards, and Daniel Pink reinforced it in his excellent Drive, providing solid evidence that most people, most of the time, perform their best when money isn’t at stake, and when they have opportunities to achieve great things (his formula is “Autonomy, mastery, and purpose”).

Which leads to my radical, certain-to-be-completely-ignored proposal: Boards of Directors should get rid of executive incentive pay entirely. They should pay a very nice amount of money (the best executives do work more hours and under more stress than most of us, and companies do have to compete for the best of them), although just how nice isn’t something we’ll explore here.

The point is that how much these execs receive should not be tied to any specific performance metric or combination of metrics, and the Board should refuse to hire any top executives who insist on a package like this.

Instead, the Board should hire pinball players … executives who enjoy the game, want to play it, and are motivated by the possibility of winning a free game so they can play again next year.

All that’s left is for the Board to explain, in English (but probably not in terms of specific numeric targets) what success looks like. This conversation should be only minimally about such minor matters as profits and share price, as profits are a rear-view mirror view, and share price reflects the consensus of outsiders as to how persuasive the company is in explaining how great things are going to be.

What the conversation should be about are such topics as marketshare, customer retention and walletshare, new customer acquisition, product innovation, operational efficiency and so on.

It should be about what the Board considers the company’s strategic drivers to be. Once those are established, it’s up to the CEO to run the company in a way that achieves them.

Now it’s your turn. Ask yourself, are you a pinball player? If you could have a conversation about what IT’s strategic drivers are, and then just run things the way you think they should be run, without once asking yourself how any of it might affect your bonus, do you think the outcome would be better or worse than how you do things now?

My guess: Not just better, but more satisfying. Which leads to this suggestion: Approach whoever you report to, and offer this deal — that whatever your current incentive pay is, the company should add half of it to your base salary.

The rest? Suggest it go into the R&D budget. I’ll bet it could use the help.

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