The reason agreement in principle does not translate to agreement in practice is that the former has no consequences. A contract is not a contract until performance and compensation are agreed. No one is actually going to do anything until their perceived balance of consequences reach a critical mass in favor of doing the thing.

Volkswagon’s values include “social responsibility” and “sustainability.” How then could the company systematically lie about emission test results? Because people agreed with those values in principle and not in practice. In practice, revenue and profits mattered more than social responsibility and sustainability. There were positive and negative consequences to hitting or missing profit targets and none for social responsibility efforts.

Show me how people are paid and I’ll tell you what they do. If you want people to focus on short-term results, pay them based on those short-term results with things like spot bonuses. If you want them to focus on creating long-term asset value, give them a share of that long-term value creation. If you really want them to worry about customer satisfaction, link a portion of their compensation to their customer satisfaction results. If you them to work like a team, pay them for their results as a team.

No one at GE believed Jack Welch’s commitment to cultural fit until he started firing strong performers who did not fit. Consequences are positive or negative.

Balance Of Consequences

This is more complicated than it initially looks given the unintended consequences of some of your actions. For some people, the absence of a positive is a negative. It’s important to make sure you are providing positive consequences to desirable behaviors and negative consequences to undesirable behaviors.

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This is closely linked to the ABC’s of management (thank you, Michael Brown):

• Antecedents – prompt behavior

• Behavior

• Consequences – reinforce or discourage behavior

Run this little experiment.

1. Invite someone to shake your hand

2. Shake their hand

3. Say thank you

Then do it again.

They will likely shake your hand again. They did it the first time because you asked. They did it the second time because your “Thank you” was a positive consequence.

If instead of saying “Thank you” after they shook your hand the first time, you had punched them in the face, they will be less eager to shake your hand the second time. (Assuming they perceived the punch in the face as a negative consequence.)

Further, if instead of saying “Thank you” (positive consequence) or punching them in the face (negative consequence) you had merely refused to look them in the eye and walked away, they probably would have been less eager to shake your hand the second time because of the absence of a positive consequence the first time.

Implication

Stop punching people in the face for doing what you want them to do.

Don’t laugh. We’ve all done it and we’ve all had it done to us.

One of my colleagues took the initiative to propose a new way of doing things. I was there when his boss came by his desk and probed whether or not anyone had asked him to write that proposal. They had not. His boss then threw the proposal into my colleague’s trash bin in front of him.

One boss told the first three people to speak up in a brainstorming session why he thought their ideas wouldn’t work.

One of my bosses cancelled a stress management seminar I was supposed to go to two times in a row because we had too much to get done. When she cancelled it the third time I asked her to call the seminar leader and explain that she was putting me under too much stress to allow me to go to a stress management seminar.

I’m not creative enough to make these things up. Each of you has similar stores of balance of consequences turned upside down. Get these right and good things will follow.

 

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