“Strategic direction is more important today. It's about providing a framework for managers to navigate through the fog of complex chokes. No company can avoid this."

– C.K. Prahalad –

PoS Sep 2014 | Are Selfish Organisations Altruistic?

Recently a relative fell ill and needed immediate platelet transfusion from a live blood donor. I posted a request for a B+ donor on the mail group of our residential community. In just a couple of hours I was swamped by calls, messages, and mails from prospective donors. Some of them were neighbours and friends but the vast majority were unknown people.

Are humans naturally altruistic?

Why were so many coming forward to help a stranger at a significant cost of time, not to speak of the perceived barriers of giving blood? Are humans naturally altruistic? Do they unhesitatingly give to anybody?

Empirical observation and research evidence firmly indicate that people are more generous towards their kind. We form in-groups and out-groups based on religion, ethnicity, preferences, and shared backgrounds such as from education, careers, or pastimes.

We give more to people like us than to those who are different. Hindus support Hindu charities more than those sponsored by practitioners of other religions. We send money for calamities that affect our nations citizens but overlook humanitarian crisis in Darfur.

The tribal connection

Preference for ones own kind may have evolved from early days of human civilisation when looking after members of own tribe helped small groups survive. Over thousands of years it has evolved into in-group preferences that are intuitive and emotional. And yet, so many offered to donate blood to a perfect stranger! Surely there were a few who were completely impartial but perhaps the majority saw some connection with him that was not apparent.

Research shows people can and do sometimes unfairly punish those that do not belong. This widely prevalent natural inclination can and does lead to serious malpractices in organisations. Do men prefer men for jobs, or promotions? Does it affect performance appraisal of a Muslim, or Christian in the eyes of a Sikh boss? Are we prone to treating people who agree with us kindly compared to others? Worse, do we penalise a person from an out-group more severely compared to one who belongs and commits a similar transgression?

The need for rational policies

It is easy to see that these prejudices can be harmful, even immoral in certain situations. Leaders remain unaware because biased actions are not always deliberate and it is difficult to quantify the harm.

Clearly rational policies must be practised to weed out the effects of these pernicious biases. Policies bind managers to behave in prescribed ways. A diversity policy, for example, can effectively rectify biased hiring. Some orchestras ask musicians to play from behind a screen so that they base judgement only on what matters. Would telephone interviews work better for certain positions?

Overcoming bias

Overcoming bias in performance appraisal is harder because it is subliminal and relies on a degree of subjectivity. It will help to train and confront managers to recognise their bias. More stringent supervision and review of appraisals is necessary. But it is even more important, indeed morally correct, that employees are assessed on factors that are within their control, and measures that reflect performance accurately and objectively.

Policies and processes to counter in-group prejudices improve governance and firm performance. For purely selfish reasons, therefore, leaders need to build a culture of objectivity, impartiality, and empathy, the hallmarks of altruistic organisations.

Related reading: TED Talk by Paul Bloom: Can Prejudice Ever Be A Good Thing?