I was reading an article from the McKinsey Quarterly from about a year ago, entitled Why good companies create bad regulatory strategies, where the authors were talking about the difficulty that many companies have in making an impact with stakeholders and regulators with some of the decisions they make. Authors Andre Dua, Robin Nuttall, and Jon Wilkins, attributed this difficulty to what they called “cognitive bias of excessive optimism.” I think the advice they give to help companies break out of this difficulty also provides a good lesson in strategic HR.
The authors say “…a surprising number of corporate leaders and companies continue to take positions that may seem credible internally but are totally incredible to outside observers and regulators. Simply put, there’s a disconnect between external perceptions and internal beliefs that often undermines efforts to engage productively with regulators.” It is my contention that corporate leaders make the same type of mistakes with another group of stakeholders, the ones known as employees. How many times have you heard employees say “What were they thinking?” or “We don’t understand why they did that” when some management decision is announced.
So what is the advice the authors suggest? First they recognize that several biases may be in play and addressing those biases is difficult for executives because that is the way their brains work. One way to get around this is to “…put in place processes for challenging entrenched beliefs and approaches.” One way to do this is to have a group that is specifically set up to question the decisions made by the executives. I think this would take a lot of backbone to have this job, but the right HR executive could fill this role.
Another way is to ask the question, “Why would anyone listen to us?” They suggest that “Leadership teams should subject themselves to this question on a regular basis—perhaps by conducting war games in which they explicitly put themselves in the shoes of other stakeholders or “voice of the stakeholder” exercises in which they interview (and figure out what is most important to) regulators, political actors, and the public at large.” In the HR arena the stakeholder group would be the employees. The question might be not so much why would anyone listen to us, but rather “Why would our employees embrace this position, policy, action or whatever.” If the answer is because “we said so” then maybe the action needs to be revisited.
The authors concluded with “The disciplined embrace of processes like these can help executives avoid embarrassing themselves by taking positions that seem implausible to outsiders” or in our case, employees. HR can help drive this process by playing devil’s advocate on the policies and decisions the executive team makes BEFORE they are implemented.
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