The Most Neglected Fact in Business

Henry Ford complained, "Why is it when I need a pair of hands, I have to get the whole man as well?" Sorry, Henry, that's how it works.

When my father was in the midst of strenuous management-labor negotiations he would say to me as a kid, "I love business, but the people side of business can be really frustrating." As much as I love my dad, I see the fallacy in his thinking now that I'm no longer a young whipper-snapper. There is no people "side" of business. The most neglected fact in business is that we're all human and virtually everything we do in the context of business can be distilled down to the emotions and whims of people just like you and me.

Douglas McGregor, who wrote The Human Side of Enterprise 50 years ago, suggested, "Behind every managerial decision or action are assumptions about human nature and human behavior." McGregor was the management guru who popularized Theory Y management, or the idea that people long for a workplace that allows them to actualize their greatest potential. Humans are trustworthy, motivated, and collaborative.

Unfortunately, most of us come from the Frederick Taylor scientific management school of thinking. Taylor famously suggested 100 years ago that, "In the past, man has been first; in the future, the system must be first. The first object of any good system must be that of developing first class men." I'm sure Henry Ford was a big Frederick Taylor fan. Theory X management is based upon the premise that men, by nature, are moldable and need to be trained because, left to their own devices, men are lazy losers. Have you ever worked at a company that had this kind of underlying assumptions about its people? What was the effect on the work climate over time?

The intersection of psychology and business is typically seen as being as congested, stressful, and emotionally barren as a peak commute traffic day on the LA freeways. But, thankfully, we live in an era in which neuroscientists are teaching us about the malleability of our brain and the emotionally contagious nature of our workplaces. We are not robots and, yet, when we're treated as such, we can lose our passion for our work and our compassion for our fellow employees and customers. Yet companies that create a healthy "psycho-hygiene" are able to tap into the full potential of their people. These companies evaluate their leaders not purely on financial results but on scales for both results and relationships, they create cultures of recognition knowing that positivity has a ripple effect just like negativity does, and they create a sense of purpose and meaning that helps employees feel that they're motivated by an internal calling or inspiration as opposed to being a trained seal who only performs when financial incentives or awards are offered.

In sum, we're finally starting to realize that organizations are purely the sum total of the relationships that make up that organization. The companies we admire are like the people we admire: resilient, authentic, personable, collaborative, ambitious, and humble. Daniel Goleman has proven that two-thirds of the success in business is based upon our Emotional Intelligence as opposed to our IQ or our level of experience. As we look for the next crop of future CEOs, maybe it's time for America's corporations to start interviewing grads from the psychology master's programs rather than the MBA programs.