The issue of Fairness for your business and sales force
Let’s talk about the issue of fairness in business. People like the
word “fair” and the idea of fairness. Whereas most of us realize that
the world is inherently unfair, we expect to be treated with fairness in
most of our interactions. The idea of fairness is so powerful in fact,
you can treat people pretty badly in actuality and, as long as you are
perceived as being fair about it, most people will understand.
The fact that people like being treated fairly is not a new idea for most of
us. It jives with our upbringing and our social conditioning.
Let’s look at a real world application of fairness in the workplace.
In business we expect decisions to be rational and fair. The law
actually mandates fairness. In this article I want to look at the very
specific issue of fairness in allocating resources to your sales force.
People in the know realize that our economy has been in recession since
about December 2007. For a variety of reasons I won’t go into for the
sake of brevity, many businesses are having a tough time meeting their sales
goals. Sales are the engines of commerce and when sales drop profits
drop with them. What is the usual response? Cut costs.
Every company I have worked for cuts costs when sales slow down. There
is usually a period of warning, but in the end we find sales budgets cut,
salespeople laid off or let go and travel/entertainment budgets restricted.
Is this the right response?
To most people, cutting the budget of your sales force makes no common
sense. The problem is a loss of sales so it makes sense that
everything should be done to support the sales force so they can get out
there and increase top line sales. Why isn’t this done?
Aside from obvious waste and mismanagement of the sales force, which are
issues that should have been dealt with separately and immediately, the big
obstacle to maintaining the sales budget is the issue of fairness, and the
perceived fairness of company decisions within the organization. It is
important to organizational cohesiveness that any and all cost cutting
measures be seen as fair.
People are hard wired for fairness and will actually seek it out.
Instituting policies that are perceived as unfair is detrimental to the
long-term health and stability of the business and any organization.
Illustrating this was a recent study conducted at UCLA, where researchers
used a psychological test known as the “Ultimatum Game” to test the ideas of
fairness and self-interest in human relations. (Association for
Psychological Science (2008, April 18). Are Humans Hardwired For Fairness?.
ScienceDaily. Retrieved April 20, 2008, from http://www.sciencedaily.com
/releases/2008/04/080416140918.htm)
In the experiment researchers would take a set amount of money and have two
participants divide it up. The first participant had all the money and
had to divide it with a second participant. There were no guidelines as to
how the money could be divided. The subjects could split it 50-50,
90-10 or in any manner of their choosing. If the second player did not
agree to the division then neither participant kept the money.
How did it work out? When subjects felt the division was fair they
were happier than when the offers were perceived as unfair. And it wasn’t
just a subjective opinion. The researchers also scanned parts of the
participant’s brains while they were judging the offers and found that
perceptions and issues of fairness were hard wired into the brains of the
subjects.
The impact of this on organizational decision-making is profound. If
you were to make the decision to rationally cut the budgets in all divisions
except for sales there is a great chance that the decision would be
perceived as unfair by the other departments and their employees.
Company morale could suffer and, with declining sales the possibility exists
that the more talented and valuable people would seek employment elsewhere.
After all, nobody wants to work in an unfair environment or to be associated
with a declining company.
The research clearly shows that business leaders and managers need to weigh
their decisions carefully and to look at the whole picture. Fairness
might not make rational sense, but it often makes emotional sense. We
are wired for emotions and we react from the emotional perspective much
faster and much more often than we do rationally. An effective leader
and manager must to always employ this fact in their decision-making.
