Key Considerations in a Social Contract between Organisations and Employees

Gillian Armstrong
Jul 22, 2017 · 8 min read

For modern Organisations having employees who are engaged and passionate about being involved in something larger than themselves is the key to success.

Most Organisations are evolving beyond simply wanting to have a Business Contract with their employees (services in exchange for money), instead preferring to move to a Social Contract. In this contract everyone considers the greater good, and makes choices based on what is best for the company or person as a whole. This is a powerful concept, and is necessary for a truly high performing business.

In this type of relationship, a company would expect that, as well as doing your day-to-day tasks, an employee would also show an awareness of and concern for the company as a whole by demonstrating things like:

  • Creative or Innovation thought
  • Positive collaboration within their team
  • Willingness to contribute to company-wide events or initiatives
  • Willingness to go above and beyond when required
  • Continuous Learning
  • Information sharing and mentoring
  • Self- Management

As in any relationship, there are two sides, and an employee would expect in return things like:

  • Respect and Dignity
  • Demonstrations that the company values and appreciates them as people, not just for what they do
  • Honesty
  • Fair compensation
  • Information transparency, including in performance review
  • Meaningful work
  • Autonomy
  • Psychological safety — ability to take risks without fear
  • Opportunity to have voice heard, and make real changes

Companies should be aware that the consequences of breaking a social contract are far greater than breaking a business contract since this is now an emotional relationship.

Humans have a strong inbuilt sense of fairness, if employees feel they are being asked for more than their fair share, that the contract is unbalanced or unfulfilled, they may default back to a business contract — “you’ve asked me to do more, so you should pay me more”, or “that’s not my job”.

The key factors in a successful social contract are numerous and overlapping. The following covers just a few of the things that companies should be keeping in mind and highlights some of blockers that exist.


Valuing Humans and Building Trust

Organisations are made of humans, and therefore success is predicated on the organisations ability to fully realise the potential of their employees. The concept of ‘bringing your whole self to work’ is necessary to fully realise people’s potential and build genuine trust between the company and employees, but without considering each person as an individual this cannot happen.

Unfortunately, many companies use a corporate language that sits in resistance to moving towards a default mindset of considering each employee as an individual. How we talk about things shapes how we think about them.

The most obvious example of this within an organisation is using words like ‘resources’ or ‘headcount’ to refer to employees, as if they were simply interchangeable pieces. It does not suggest that employees are valued or respected. Although the company may not intent to suggest this, using language like this will create a mindset where employees are not considered as individuals, each with their own lives and hopes and dreams.

Many organisations have already realised this, and have moved to using the word ‘talent’ instead of ‘resource’ in an effort to more positively describe their employees. It is unfortunate that it is equally depersonalising. We move now from ‘people as an interchangeable resource’ to ‘people as a service’. Instead of considering a person as a complex set of both skills and needs, we reduce them to a function. Talents are abilities that belong to a person– not a definition of what they are. This phrase also carries the subtle psychological suggestion that it is the company, and not the person, who owns or controls the talent.

Breaking old mindsets and finding ways of connecting and empathising with each person as an individual will be extremely difficult, but when done correctly will pay dividends far exceeding the effort.


Make Success Possible for Everyone

In any game where part of the rewards of success are the means to achieve more success, it should be obvious that the gap between the ‘winners’ and the ‘losers’ will rapidly increase, with decreasingly lower chances for the ‘losers’ to catch up if there is no point at which the game resets. Many company performance review and reward systems work like this. Success leads to higher chance of additional success since it brings higher visibility and additional opportunities.

This is a particularly pernicious problem since research shows that as a person’s status increases their awareness of their own advantages and privilege reduces. In one experiment by social-psychologist Paul Piff, the researchers had people play a very biased game of monopoly in which one player was given significant and obvious advantages in money and moves. Which player was given this was determined by a simple coin toss before the game. When the advantaged player inevitably won and was asked why they had won, they spoke of what they had done, and not of the simple luck or advantages they had been granted. They believed their success was down to their decisions and the work they had done.

Consider how this can be applied within an organisation. Those who have achieved success can easily start to believe it is only because of their own talents and hard work. They can easily forget that perhaps simple luck put them on a high visibility project, or that they had excellent mentors who gave them support and opportunities others did not get. Their empathy for those who simply didn’t get the advantages they had can easily reduce, and they can equate lack of status with lack of effort or talent. This can lead to those who feel they are on the losing side of the game becoming totally disengaged since they feel that success is simply beyond their reach.

Organisations should consider how they can level the playing field to offer opportunities to a wider range of employees, not just those previously successful, or with ‘appropriate’ status. A company can do this simply with the understanding that is the right and fair thing to do — or as Donella Meadows puts it a practical understanding that losers, if they are unable to get out of the game of success to the successful, and if they have no hope of winning, could get frustrated enough to destroy the playing field’.


Giving Employees Freedom

Providing opportunity for employees to have autonomy allows them to have concrete opportunities to make positive changes within their own scope of work and the company as a whole. It shows that the company respects and trusts its employees — vital to a successful social contract. A rigid hierarchy is anathema to autonomy. Each of us operates within a bounded rationality, rarely seeing the full range of possibilities, and making decisions, not based on their impact to the organisation as a whole, but instead based on our own pressures, interests and incentives. A rigid hierarchy increases the gap between different groups and increases the discrepancy in understanding the motives and pressures on other parts of the organisation, or even your own team.

In a self-organising autonomous team, the team as whole is accountable for delivery. Every person on the team shares equal responsibility for and ownership of the product. Ensuring the team works smoothly and to its highest potential is now rewarded, and putting self-interest over team is discouraged. Each person is working towards the ‘greater good’ of the team and the company. No one gets to unilaterally issue commands, although for the team’s own success they would be remiss not to take things like experience and skill levels into account when making decisions. Any explicit or implicit suggestion from the company that there is a rigid hierarchy will set a mindset that will prevent the team from feeling empowered to self- organise. It will also prevent a team from feeling that they truly own both their successes and failures. In a failure scenario, it becomes easy to ‘pass the blame’ up or down the hierarchy, when there is success the team may feel others higher in the hierarchy ‘take the credit’.

If a company finds itself unable to break completely free from having a ‘team leader’, then structures should be put in place to prevent this from falling back into a command and control model where the drivers or goals for the ‘leader’ and the team do not align. Consider the model at FAVI where the power of those designated as team leaders is kept in check by the fact that people can choose to leave the team at any moment to join another team. A company concerned that this means certain teams may be emptied out, should take into consideration that this should be considered a positive. It would immediately highlight a serious dysfunction within the team, or a lack of value or meaningfulness in the work the team was being given. It could also highlight a wider company issue in an imbalance in the respect or support of different types of work.


Being Aware of the Conform vs Transform Tension

Every organisation has a list of values and competencies that employees are encouraged to meet through a series of incentives and disincentives. These may be both explicit (performance scores, bonuses) or implicit (approval). These serve as a mechanism for keeping employee behaviour within a bell curve, and allowing for an employee to be more easily compared against their peers. They also serve as a mechanism for pulling everyone towards an “average” as they discourage operating outside of those boundaries, even in positive ways that would benefit the company or push it forward. Using words like ‘cultural fit’ can further reinforce the idea of an idealised employee persona existing as a standard for employees to aspire to. This can cause a tension since creativity and conformity rarely sit well together (an organisation should note that listing creativity as a value or competency that everyone should aspire to will not correct this). Attempting to remove or dilute employees within an organisation whose creative ideas are considered radical or disruptive may seem more comfortable, but ultimately would be a loss to diversity and innovation.

Another key consideration for a company that is seeking to be continuously moving forward, is that some level of transformation will always be needed. Any employee modelling new ways, or pushing outside the boundaries will necessarily not conform. A company needs to ensure they are not asking employees to transform, while at the same time explicitly or implicitly expecting them to conform. This tension will wear down the employees who are trying to transform the company and themselves, and may ultimately stunt the evolution and growth of your company.


Conclusion

A Social Contract is more costly in terms of time and effort than a Business Contract, but ultimately is the only way an organisation can gain the agility and wholeness to be able to embrace change in this fast-moving world. This means it is a necessity that an organisations considers what changes it needs to make in order to ensure a successful social contract is put in place, rather than just focussing on what changes its employees need to make.

With a strong and balanced contribution from both sides, you can build an organisation that really can change the world.

Gillian Armstrong

Written by

Technologist and ponderer of the technology, psychology and philosophy of AI and CogTech. | http://virtualgill.io

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