"In Praise of the Handshake"

by Didier Marlier on Sunday March 20th, 2011

When asked by a new client to describe the Enablers Network, I usually explain that we are no conventional, pyramidal organization but far more an organic and connected community. In our team, seniority is not superiority; we have no contractual agreement between us although we are highly engaged and dead-serious about our values (which we prefer to call “a permanently evolving set of beliefs[1]”). Our Purpose (the “Why” of Simon Sinek in our February post[2]), as we recently wrote for a much respected client of ours in Latin America, is to “help our clients to remain masters of their own destiny in an environment which becomes increasingly complex and sometimes chaotic. We believe that our clients’ capacities to permanently “scan the periphery” and recognize emerging patterns faster than competitors will be critical under such circumstances. Our clients’ success will be a function of the quality of their interactions, thinking patterns, behaviours and dialogues. We are firmly convinced that such a leading edge can not be outsourced to consultants or other specialists. Our clients need to learn to practice them…”

As a matter of fact, we rarely write contracts with our own clients (sadly, this is still a requirement from our US clients). We normally agree on our fees after the work is done and always have struck the right balance between the perception of value our clients receive from us and the rewarding feeling of being fairly compensated for our hard work, courage and knowledge.

Recently, Michael Newman showed me a very inspiring article: “In praise of the handshake”.

The author (Dan Ariely, Professor of Behavioural Economics at Duke) opposes two ways of engaging: one through formally contracting, the other through the informal handshake. Ariely’s key point is that a contract is an illusion: in today’s increasingly complex and unpredictable world, hoping to plan for and predict all the possible situations that may affect our mutual engagement is a dangerous delusion. He then follows by explaining that a classical and written contract is far less powerful than an informal engagement. A contract refers and is linked to a legal agreement. An engagement relies on social norms and is therefore much more compelling.

Ariely provides a series of examples, one of which I found quite illustrative: A large internet company tried to replace the informal way of rewarding its employees (based on trust, passion, generosity) by a far more “serious” and structured, complicated matrix… very quickly, the climate and performance deteriorated as “employees became obsessively focused on meeting the specific terms of their contracts, even when it came at the expense of colleagues and the company. Morale sank as did overall performance”.

Another example is the clip here below (a shortened version of Clay Shirky’s intervention on a recent TED conference[3]). Clay is an “American writer, consultant and teacher on the social and economic effects of  internet technologies”[4]. The story he quotes shows that, when a nursery had the idea of fining parents who were coming late to pick up their kids, the result went rapidly worse… Instead of obeying to social norms (ie. We as parents should be conscious that it has been a long day for our children’s care takers. They also have a family and are entitled to their private life. We should behave in an ethical and respectful manner), parents suddenly felt entitled to cheat and abuse as the fine they would be submitted to, appeared like a contract: You may choose to come your child on team or pay the fine. The result was a disaster.

Anyone who studies Roman law at university (as I did, coming from a family of lawyers who believed that the world could be ruled by contracts and people engaged by respecting them) will remember one of the basic of the old Latin law: “In every decision they take, judges should favour the spirit of the law instead of its literal application”… This is what Ariely and Shirky are saying in a more powerful way: The contractual binding will always loose to the goodwill, social norms engagement.

This is by the way, why so many “matrixed organizations” find it challenging to function: when the organization is explained through rational arguments and sets of rules only, people are lost. When the purpose and the social norms are explicit and lived by the “significant leaders”, the matrix becomes reality.

I hope you will have had as much fun in reading this as I had in writing. Short day of work in Lyon then a few days off (so to speak as e.mails and phone will stay on) with the family. Have a great week all,

Didier


[1] With my profound respect to French philosopher, scientist, economist and “Membre de l’Académie Française” Erik Orsenna, who explained us, this week in a wide Convention for DCNS Group leaders that he “loves to be proven wrong as this is what makes me progress in life”

[2] http://blog.enablersnetwork.com/2011/02/20/%E2%80%9Cpeople-don%E2%80%99t-buy-what-you-do-they-buy-why-you-do-it%E2%80%9D/

[3] http://www.ted.com/talks/lang/eng/clay_shirky_how_cognitive_surplus_will_change_the_world.html

[4] http://en.wikipedia.org/wiki/Clay_Shirky

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2 Responses to “"In Praise of the Handshake"”

  1. In Brazil we like to say “For friends everything, for the enemies the contract”

    Reply
  2. Dear Didier,
    Last week, I agreed a ‘contract’ with a consultant on a pay-by-value-at-the-end approach. This is a second test of this formally, the first having worked very well for the consultant and my company a few months ago. I would tend to agree that the human connection, and the responsibility to live up to one’s promises – and the responsibility to pay appropriately (and within your means) for the value – is much stronger than if you tie everything down in T’s and C’s. I don’t think this would work with all parties, but those who are interested in a relationship, instead of a transaction, are certainly candidates. Thanks for sharing the thinking!
    Regards,
    Chris

    Reply

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