How “Certainty” helps achieve cooperation at IT companies..

Recap …

Achieving cooperation and delivering is a priority for IT companies.

As part of this blog series, we look at “systematic” concepts that help achieve cooperation. We’ve looked at …

Today we talk about …

Certainty

Employees should have confidence that good behavior will be rewarded. And that bad will be punished. Higher such confidence, higher the cooperation.

Lucky draw :

I worked with Infosys for many years. Many times, my performance was pretty good (staying modest) . However, I wasn’t always rewarded.

Reasons ?

●Allotted appraisal slots were filled.

●A new rule got created adding to the requirements.

●My manager had other favorites.

After 100% of hard work, my chances of getting rewarded stood around 20 – 30 %. This was a de-motivating factor. Not just for me but for all others too.

After a few iterations … Did we work hard anymore ? Ofcourse not !

The same thing happened with punishments. When I was lethargic or wrote poor quality code:

●My stature could get me off.

●I could butter my way out.

●After months, the incident could just be forgotten. (appraisals were a 6 monthly affair)

Once again – After 100% of laziness, my chances of getting punished stood around 20 – 30 %.

Did the system encourage lethargy ? Ofcourse !

Certainty triggers co-operation. And uncertainty triggers collusion.

Countries behavior

International agreements like Trade fall under the purview of WTO ( World Trade Organization ).

When one country complains that another has cheated on a trade agreement. Example …

●Donald Trump complains that China manipulates its currency to help their exports. But nothing happens.

●India ( land of Basmati and Turmeric ) had to fight a legal battle for the copyright of the same products.

Then, the WTO initiates an administrative process that drags on for months or years. Facts of the case have little bearing on the judgment. It usually depends more on international politics and diplomacy.

Due to the uncertainty and delay – such enforcement procedures are NOT effective. The same goes for techies at IT companies.

Penny wise Pound foolish :

I worked with a software company. They promised me a ‘reward’ for delivering a difficult project. End of the project, they suddenly came up with an excuse – financial troubles.

PS: My reward would’ve been in the range of ~5000 $.

I moved on to greener pastures. But the company did not realize that – most employees had become sluggish.

Employees weren’t certain whether their work would be rewarded anymore. This reduced overall productivity. The loss could be quantified in the range of ~1,000,000 $.

The org saved some thousands, only to lose a million ! Pennywise, pound foolish !

Wrap up

Certainty is important. My probability of being punished drives my risk appetite.

The same rewards/ penalties with a high degree of certainty drive higher co-operation.

●20 % chance of reward – Hard work doesn’t seem enticing enough.

●20 % chance of punishment – Laziness doesn’t seem problematic enough.

Excerpts from: The Art of Strategy

Next, we look at the Size of a reward/ penalty.