CHAPTER 7

Are You Allowed to Make a Decision?

Or, About Decision Analysis and Organizational Culture

Our ability to make and implement project decisions depends on our professional environment—in particular, the corporate culture in which we work. In many organizations, project teams are unable to contribute to major decisions and are not properly rewarded for making good choices. This significantly undermines the productivity and quality of an organization’s projects. We call this effect the Frustrated Employee Syndrome, or FES, a dangerous disease affecting corporate culture. It is hard to treat FES, mostly because senior management tends to recognize the problem only when it is very advanced.

What Is FES?

After reading this book, you may become an expert in project decision-making, but will you be allowed to apply your newfound expertise? Will your organization permit you to make a decision, or at least will it heed your advice? In other words, will your manager continue to make decisions for you and your team, leaving you with only one choice: implement the project plan even if you disagree with it?

Projects always have constraints. Often, for technical reasons, you will be unable to perform certain tasks. Sometimes constraints are related to market conditions, safety, or environmental concerns. But all too often these constraints are artificial constructs imposed by upper management, and they make no practical sense. As a result, potentially superior alternatives are excluded from the decision-making process.

Such constraints are not an isolated problem but rather one of many symptoms of a disease that can infect an entire organization. FES affects the “central nervous system” of a company, which in essence is its corporate culture. FES manifests itself when managers and members of project teams are unable to contribute to major project decisions and are not properly rewarded for showing extra initiative and making good decisions. As a result, organizations lose the ability to produce high-quality, innovative projects at a reasonable cost.

By contrast, organizations that are free of FES display certain attributes:

• Project decisions are made at the lowest level possible; a consensus of project contributors is the optimal way of decision-making

• The environment is results-driven; the organization provides effective incentives (not necessarily financial) for valuable project contributions

• Members of a project team have a sense of autonomy

• Members are committed to their projects and share their visions and goals with others

• There is effective communication within the team, within the organization, and with clients; and there is mutual trust and mixed roles within a project team

• Team members have high levels of enjoyment

Is FES really that prevalent? One glib answer is that if FES were not prevalent, Scott Adam’s Dilbert comic strip would not be so funny and popular. Unfortunately, many organizations are infected with FES. Most executives are familiar with FES, but have different terms for it. Disconcertingly, many do not think that FES is an important issue or a reason for concern.

Why Is FES a Problem?

When people are involved in simple physical activities—such as digging a trench, carrying logs, or roofing a house—you can motivate them to do good work with minimal incentives. However, motivation becomes more difficult when the activities involve creative thinking and decision-making. In these situations, different types of incentives are required to motivate a project team. Every job has incentives in place to motivate individuals to perform at higher levels. But in many organizations these incentives are structured incorrectly and provide little motivation. This leads to frustration and eventually to FES. Table 7-1 presents motivators and incentives, as expressed by project managers and team members, in the order of their priorities (based on an example of a software project manager).

As you can see from the table, purely financial rewards do not rank in the top five incentives for either project managers or team members. Others—“achievement,” “recognition,” “the work itself”—are more important. And if organizations fail to understand these underlying motivations of their employees, they are ripe to come down with FES. FES is subtle, though, and does not instantly lead to the failure of the company—a fact that often leads executives to believe that inadequate emphasis on incentives is not a problem. Let’s examine how FES could affect an organization, using a simple model.

Table 7-1. Motivations and Incentives. Source: McConnell 1996

How Does FES Spread?

Most start-ups do not have FES; if they do, they quickly fail. As an organization gets over its growing pains and starts to expand, more people join the organization, more processes are established, and relationships among people and between project teams become more formal and complex. In many cases, FES infection occurs as a company evolves from a start-up to a steady-state company. If executives are not familiar with the creeping effects of FES, or if they don’t pay attention to it, an organization can quietly become infected. In many cases, FES infection occurs during an acquisition. If a company with FES acquires an FES-free organization and tries to impose its own corporate culture on the smaller organization, FES very quickly infects the newly acquired entity.

The story is told about a young engineer, fresh out of university, who had just been hired by a design company.

• On his first day, the manager asked her, “What do you want to do?” “I want to design a beautiful city with nice buildings, wide boulevards, parks, and canals,” the engineer replied. “That’s great,” the manager answered, “but for now you need to design a staircase.”

• Three years later the manager repeated his question. “I want to design a beautiful building with large apartments and a big lobby with a fountain,” the engineer answered. “That’s great,” the manager answered, “but for now you need to design a staircase.”

• Three years later the manager again repeated his question. “I want to design a beautiful apartment with big windows and a nice bathroom,” the engineer answered. “That’s great,” the manager answered, “but for now you need to design a staircase.”

• Three years later the manager again asked the engineer, “What do you want to do?” “I want to design a staircase,” the engineer replied.

Often, when an organization becomes infected with FES, people who like a creative environment move out. Or, as in the case of our young engineer, they become complacent and their career may stall.

Another effect of FES is that people start concentrating on small technical issues, which are the only things over which they can exert some influence. The larger picture is often hidden from them by the management, which typically does not communicate sufficient information about the project with the team. As a result, management’s and team members’ goals begin to diverge and over time can become completely different. For example, the goal of managers of software companies is to develop an application that is simple and fast. By contrast, an individual programmer in such a company may have a different goal, of wanting to introduce a new programming tool that will improve the product. Unfortunately, the tool is more difficult to use and makes the code so complex that it adversely affects the application’s performance. But the programmer persists. Why? He argues that this new, innovative tool is “architecturally sound” or is “scalable,” but in fact he simply needs to express himself, and choosing this software tool is the only significant decision he can make.

When top managers do not realize the corporate culture has a problem, they start behaving irrationally. When sales go down, they think they will solve the problem by shaking up the sales team. When this fails, they look at the development process and start to implement additional and often unnecessary steps. For example, if managers believe there is a communication problem within the organization, they often try increasing the number of meetings and duration of meetings. What this really does, though, is distract people from their jobs as they get increasingly bored and irritated if the meetings start to creep into their lunch time or quitting time. When this approach does not work, management starts to look at external factors: market conditions, competition, and other aspects that the organization cannot control directly, so nobody within the company is held responsible.

Failing all else, management starts to reorganize. After one or two reorganizations, nothing improves, and in fact the situation appears to have deteriorated. This is because the reorganization itself is a project, which is just as infected with FES as all the rest of the projects. Then upper management makes decisions regarding the reorganization without consulting the project team members, and very often it becomes just another bureaucratic initiative. Finally, after FES significantly reduces organizational performance, the company is converted to another form in one way or another. Large companies can sell assets or spin off an FES-infected division. Or a company can exist for quite a while as a low-producing entity by surviving on old clients and projects. The tragedy is that the executives who unwittingly worked so hard to spread the infection often get other assignments and never realize that the dying organization is a product of their dysfunctional decision-making process.

Three Common Myths about FES

Myths about FES abound. These are three of the most common ones.

Myth 1: “Our organization is not suitable for an FES-free environment” Some executives say that they are not a “dotcom” or a start-up, they have run their company for many years, and the existing corporate culture works. In reality, all organizations can be infected by FES because corporate culture is a function of interpersonal relationships, not the organization’s type, size, or industry. Still, an environment that devalues motivators and incentives is much more common in big companies than in small ones. Fortune magazine maintains a list of the best companies to work for (Fortune 2018). The magazine has used a number of criteria to create this list, but it pays most attention to corporate culture.

Myth 2: When companies implement organizational processes, the result is often FES Organizational processes such as those used by project management, including decision-making processes, actually have nothing directly to do with the development of FES. In some cases, however, executives use the processes as an excuse to diminish the system of motivators and incentives, which leads to FES.

For example, a company can establish a hierarchical reporting system. There is nothing wrong with such a system in and of itself; all well-organized companies should have one. But if the administrative hierarchy is used as a substitute for team decision-making, and if small decisions require the approval of upper management (which normally has only a remote idea of the individual needs of each team), FES can result.

Myth 3: An FES-free corporate culture leads to anarchy Some managers believe that they will lose control if they allow decision-making to occur at the project team level, or encourage independent work, or build a sense of autonomy for each team member, or even allow mixed roles. They also think, for the same reason, that it is wiser to provide team members with as little information as possible. The experience of most successful organizations illustrates that an FES-free environment does not lead to anarchy. Such a company can be well organized, and decisions can be well informed and balanced because everybody takes part in the decision-making process.

In reality, FES can be a primary cause of anarchy because management and project team members do not share the same goals. Management tries to do one thing, development does another thing, and sales has a completely different agenda. Often, upper management does not know about the state of the business because its subordinates are engaged in “creative” reporting. This is a classic case of anarchy.

The Roots of FES

FES is not a natural phenomenon, like the flu. Rather, it is the result of management actions. The questions that always arise are: “What were they thinking? And why did management think that damaging corporate culture would improve the business?”

Can you imagine a world without FES? Companies would be so productive that humanity would already have settled on Mars, eradicated cancer, reversed climate change, and perfected the sky hook. The only drawback would be that Scott Adams wouldn’t have any more material for his Dilbert cartoons.

The first thing to realize is that management does not deliberately set out to ruin the corporate culture. Rather, the roots of FES lie in the human psychology of judgment and decision-making: management overconfidence, selective perception (“I see what I want to see”), inability to recognize personal limitations and mistakes, and many of the other biases we have discussed in earlier chapters. Appendix B contains an extensive list of these biases. So, while good management practices and training may reduce the negative effect of these biases, unfortunately we cannot completely eradicate FES any more than we can get rid of plagues or unwanted hair, because they are all an integral part of our existence.

Treating FES

Even when top managers realize that their organization is infected with FES, treatment is extremely difficult, and the contagion cannot be removed without major organizational disruptions. Making radical changes to the corporate culture is especially difficult for the simple reason that FES-infected organizations usually do not support any type of initiatives, let alone ones that would attempt to completely transform the manner in which the organization conducts its internal processes. In most cases, successful organizational changes occur when new management instigates changes to improve company business. But remember: treatments work only if they fully involve everybody in the organization, not merely the management team.

If management wants to repair the corporate culture, major organizational changes may be required, and very often extensive retraining is also necessary.

On March 27, 1977, two Boeing 747s, Pan Am flight 1736 and KLM flight 4805, were preparing to take off on the only runway of Los Rodeos Airport in Tenerife, one of the Canary Islands in Spain (Aviation Safety Network 2019). KLM Captain Jacob Veldhuyzen van Zanten was known as a first-class pilot and was even the preferred pilot for the airline’s publicity shots, such as KLM’s magazine ads. As the KLM aircraft lined up for take-off, the Pan Am flight was still taxiing on the same runway. Due to fog, the KLM crew was unable to see the Pan Am 747 taxiing on the runway ahead. As they lined up for take-off, the KLM crew received clearance from the control tower to fly a certain route after take-off. Captain van Zanten apparently mistook this clearance as permission for take-off. The KLM flight engineer quickly expressed his concern about the Pan Am flight’s not being clear of the runway. The engineer repeated his concern a few seconds later, but he was overruled by Captain van Zanten and made no further challenges to this decision. Shortly after taking off, KLM 4805 crashed into the Pan Am aircraft, killing 583 people and injuring 61. The Tenerife disaster resulted in the highest number of fatalities of any single accident in aviation history.

According to the subsequent investigation, communication problems and weather conditions were the primary causes of the accident, though another cause for the disaster was identified. Some experts suggested that the KLM captain, van Zanten, may have developed a kind of governance attitude that impaired the decision-making process in the cockpit. The flight engineer apparently hesitated to further challenge him, possibly because van Zanten was not only senior in rank but also one of the most experienced pilots working for the airline.

As a consequence of the Tenerife accident, the airline industry adopted changes in cockpit procedures. The hierarchical relationship among crew members was deemphasized, and more emphasis was placed on decision-making by mutual agreement. This is known as crew resource management (CRM) and is now standard training in all major airlines (McAllister 1997). CRM training originated from a NASA workshop conducted in 1979 that focused on improving air safety. The NASA research found that the primary cause of the majority of aviation accidents was human error, and that the main source of human error is the failure of decision-making in the cockpit. CRM training today encompasses a wide range of knowledge, skills, and attitudes, including communications, situational awareness, problem-solving, decision-making, and teamwork.

Unfortunately, the project management industry still trails aviation, fire safety, and other industries in understanding the importance of decision-making by all team members. Moreover, many consider the project manager, who is in most cases considered to be an administrative manager, the ultimate decision-maker. This is a direct path to FES.

As you remember, training can help to improve our decision-making skills. So, training the project team to work together, to make decisions as a group, and to share rewards together can help to battle FES. If you have a health problem, you consult your doctor. If your organization contracts FES, you need to contact a project management consultant, rework your organization’s training, and try to relieve the FES symptoms.

But if you are not an executive and you work in an FES-infected organization, you are in a very unfortunate circumstance. You can do little to treat the condition. Your best option is to raise awareness of the situation with your managers; but if you pursue this route, you might also want to freshen up your resume. At the other extreme, you can keep your head down and hope that management recognizes the situation and starts to do something about it.

Perhaps the most sensible course of action is to concentrate on improving the particular circumstances of your projects and, within your circle of power, focus on making this the best possible environment for you and your team. This strategy can actually help improve your local project environment, even if the rest of the organization remains infected with FES.

The Second Russian Revolution

Sometime around 1988, a few hundred, mostly young, Russian engineers and computer programmers met with industry experts to discuss what could be done to improve software development for personal computers in Russia:

• The first panelist argued that the primary problem was lack of hardware and that the government should undertake the production or importation of more computers.

• The second expert thought that the government should establish R&D organizations specifically for the development of PC software.

• The last expert said that while he agreed with all other panelists, he did not believe that major government investments, establishment of state-run companies, or any other government programs were going to help the industry. The answer, he said, was to create conditions in which private individuals (engineers and programmers) would be able to sit in their basements (actually, apartments in Russia), develop software, and sell it.

For anybody involved in software development, the third suggestion made perfect sense, but what the expert said was absolutely revolutionary—and almost seditious. Remember that it was 1988. Private enterprises in the then–Soviet Union were illegal. Operating one was a criminal offence. If you developed software and sold it over the phone, you went to jail; if you painted a picture and then sold it on the street, you went to jail. (You get the picture?) One might say that the whole country was suffering from FES.

The underlying message was that a solution to the problem was to allow individual initiative and private enterprise, which could not be done without a regime change. When the revolution occurred a few years later, in the forefront of this so-called second Russian Revolution stood engineers, programmers, and anybody else who wanted to make their own decisions and earn something as a direct result of their own risk-taking and initiative.

Please don’t get us wrong. We are not advocating revolution, rebellion, guerilla warfare, or other types of insurgency in your organization. We don’t want this book to be labeled heretical and burned at a corporate bonfire. But what we do want to point out is that any attempt to set up an advanced decision analysis methodology will most likely fail if your organizational culture is infected with FES. Before undertaking any new major processes, the culture of your organization must be fundamentally sound. In many cases, however, project teams can still benefit from improved decision analysis even if FES is present. A good first step is establishing a proper decision-making process within your project team.