As a firm expands, the founder’s best friend’s cousin’s sister with a background in fashion might not be the best-placed individual to head the human resources department despite her passion for the venture.
The company growth necessitates creating departments and bringing in qualified professionals to lead those areas.
After professionalisation and as the entity grows to multiple counties with many divisions, it becomes an institution.
While employees value the stability that comes with employment in a large institutionalised corporation, the staff lament the slow glacial embarrassing pace at which big companies adopt or react to change pressures.
Many Kenyans revel in the thrills of starting a business or joining a team in a startup venture. Often a combination of friends and family, everyone in the small firm pitches in, makes decisions quickly and pushes towards a common goal. While it often takes longer to reach profitability and the startup team must work extensive overtime, the sense of creativity, ownership, and autonomy energises the group.
As a firm expands, the founder’s best friend’s cousin’s sister with a background in fashion might not be the best-placed individual to head the human resources department despite her passion for the venture.
The company growth necessitates creating departments and bringing in qualified professionals to lead those areas. After professionalisation and as the entity grows to multiple counties with many divisions, it becomes an institution. While employees value the stability that comes with employment in a large institutionalised corporation, the staff lament the slow glacial embarrassing pace at which big companies adopt or react to change pressures.
Popular prestigious research conducted by Rodolphe Durand, Olga Hawn, and Ioannis Ioannou create a new framework on how organisations adopt or react to change forces. Only two main conditions weigh on organisations when they decide to respond to pressing social issues: issue salience and cost-benefit analysis of complications in resource mobilisation.
Issue salience involves the degree that a group effort of individuals and leaders within an entity define how and with what conditions members will work. Recent normative pressures can come from employee agreement with the Me Too Movement, Black Lives Matter, environmental responsibility, sustainability, transparency, anti-corruption, among many other normative movements and ideas. Salience increases with greater employee and stakeholder belief and pressure for the issue.
Cost-benefit analysis, whether formal analysis or psychological perception by executives, of resource mobilisation involves either human capital, technology, social capital, branding, financial, geographic, policies, processes, or skills requiring training or a combination therein.
Companies hold the choice of whether to just show a symbolic response or give a deep meaningful substantiative response. An example of a symbolic response from Black Lives Matter pressure at a firm where the majority of employees are white might include hiring several highly visible black staff. However, a substantive response could include addressing systemic racism at the entity, targeted recruitment, unconscious bias training, strategies and policies to change biased behaviours, promotions of black professionals into top executive ranks and the board, open staff conversations and sharing, spreading awareness in the respective industry, a whistleblower hotline with guaranteed protections, and championing diversity, among other appropriate responses.
Surprisingly, an organisation can still gain from just a symbolic gesture alone even though the correct moral choice should be substantiative action. Symbolic compliance coming from normative pressure, such as gender quotas from the Me Too movement, would provide some visible gender inclusion examples even though substantiative compliance would actually get to the root systemic gender bias at the firm. Corporations still receive a net benefit from employees, customers, and most stakeholders through either type of compliance, symbolic or substantiative, with expected norms.
But mere conformity to expected pressures without actual compliance initiatives, whether symbolic conformity or substantiative conformity, yields net negative costs to the company through negative stakeholder views. Use the two-thirds gender rule in Kenya as an example. Conformity puts the policy into organisations. But compliance would come from actual implementation. Stakeholders strongly prefer implementation to mere policies.
Sound complicated? Many firms may decide to then just do nothing and not respond to normative pressures. But, an organisation that does nothing through complete inaction yields more negative costs the greater and greater an issue’s salience becomes.
In summary, take time to listen to the normative beliefs and preferences of your stakeholders, including your staff. Implementing compliance measures in response to normative pressures yields net medium and long-term benefits to your organisation even if you must mobilise costly resources.
Dr Scott may be reached on [email protected] or on Twitter: @ScottProfessor
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