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leadership lab

This column is part of Globe Careers' Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab.

Corporations and people that populate them will cheat, deceit and harm you, or anybody who happens to be in the way of their relentless pursuit of self-interest. Right?

We are all familiar with this rhetoric. We are exposed to it every day – it lights up our social media feeds and jumps at us from newspaper pages. And, considering the wave of high-profile corporate scandals that have recently swept the business world, it is easy to believe. The Volkswagen emission crisis may very well have put the last nail in the coffin of public trust for corporations and those who keep them running. But is it true? Should we assume that employees and managers will try to take advantage of the system whenever they can? And will this assumption help us safeguard against broken promises?

Our research shows otherwise. Most people we choose to surround ourselves with are people from whom we expect honesty, not opportunism, as the default behaviour. Our in-depth historical study of America's two flagship corporations, Du Pont and General Motors, reveals that 90 per cent of commitment breakdowns occur not because people act in their own self-interest – on the contrary, most of the time people try to act in the best interests of their stakeholders, but unanticipated forces interfere with the outcomes. Trying to prevent people from acting opportunistically would not neutralize these forces.

Why, then, do we keep focusing on curbing self-interest as a way to ensure fulfilled commitment? The philosophy that corporations and their employees are self-interested in nature is deeply flawed – but, unfortunately, deeply ingrained in business organizations and business schools. Traditional approaches to avoid cheating and shirking are just as ingrained, and include incentive systems to align interests such as excessive focus on financial bonuses, or monitoring systems to detect and punish undesirable behaviour, such as heavy reporting requirements and close supervision. Needless to say, these approaches are useless when no ill intent is present.

It is also easy to swing to the other extreme and assume that if we create trust in organizations, we would overcome all managerial challenges, because in a trusting environment people will systematically do the right thing. This opposite philosophy has given rise to catchy buzzwords (a Google search for a trusting organization yielded more than 21 million hits), tremendous investment into team building, and a multimillion dollar consulting industry. But then, don't we all know from experience the dark side of unwarranted trust? Will trust remove structural barriers to making good on open-ended promises?

We propose a third way, built around the concept of bounded reliability. We assume that most people, teams and organizations are inherently reliable, but there are bounds on their reliability, stemming from two broad reasons:

1.) the systemic problems of re-prioritization and overcommitment, whereby individuals make commitments in good faith, but experience conflicts when faced with a new, more proximate commitment, or with a realization that the original commitment was too great; and

2.) the problem that individuals systematically revert back to behaviour linked to their identity, which they cannot shake off.

If we accept this reasoning, we can introduce simple but effective managerial practices to remove these bounds on reliability. Here are some examples of specific ways for companies to avoid recurrent, seemingly never-ending unreliability that puzzles most business leaders:

Engage in multi-level goal setting

Involving different layers of the organization in planning will ensure that goals are realistic, accepted and understood. This involvement has to be meaningful and substantive – token quarterly updates do not count.

Keep commitments top of mind

Breaking long-range goals into manageable pieces and performing frequent goal achievement reviews will keep commitments cognitively proximate, and facilitate adjustment of unrealistic expectations if necessary.

Keep impulsive behaviour in check

Systematically triangulating objectives with available resources, and imposing reasonable limits on new initiatives will help keep commitments realistic. Asking for a second opinion, either by circulating objectives through different parts of the organization or by bringing in specialized expertise, may also be useful.

Show leadership

People may need help to adopt certain behaviours, especially if it involves unlearning old practices. Here, leaders must clearly explain the relevance and strategic potential of objectives and commitments in relation to each individual, team and department.

Provide the toolkit

So simple, yet so frequently overlooked. Give people the tools to fulfill their commitment. Offer training to teach them how to adopt and execute the routines they have committed to.

Act as one

It is difficult to fulfill organizational goals if different parts of the company are out of harmony. Inter-unit communication and co-ordination is critical. While difficult in a large organization, it is certainly achievable, especially with the help of modern ICT technologies. Inter-divisional discussion platforms, structured company-wide communication tools, as well as cross-organizational committees, can help units act as a cohesive whole. These tools imply active involvement of top management.

Get personal

Personal interactions across the organization promote common identity, reinforce culture and enable work-related knowledge sharing. Top management must lead the way by remaining visible, approachable and available.

Naturally, these managerial tools are not free: they cost time and money. Yet, the cost of patching up holes created by failed commitments could be far greater. Notably, the above practices may also safeguard against opportunism, by creating disincentives to cheat and shirk. By refocusing managerial practices to remove bounds on people's reliability, we could ultimately design much better organizations, without invoking such value-laden and emotional, yet elusive concepts as opportunism and trust.

Alain Verbeke is a Professor at the University of Calgary's Haskayne School of Business (@haskayneschool). He is a leading scholar in the field of international business strategy.

Liena Kano is an Assistant Professor at the University of Calgary's Haskayne School of Business (@haskayneschool). She is an expert in strategic management and international business.