The Assumption of Self-Interest: Are We Getting What We Deserve?

One egg

What came first? Do we have bureaucratic, hierarchical organisations because people are a “contemptible group of disorganised individuals who work only in order to receive money and who will avoid as much labor as possible” or do we find these types of people in bureaucratic, hierarchical organisations because this is what these type of organisations breeds? Chris Argyris was wondering about this in the 1960s and he found it was the latter.

  • Bureaucratic, pyramidal values lead to an organisation that breeds mistrust, intergroup conflict, rigidity, and so on, which in turn lead to a decrease in organisational success in problem solving.
  • Humanistic, democratic values, however, lead to trusting and authentic relationships among people which result in increased interpersonal competence, intergroup cooperation, and flexibility.

In short, we get the employees (and the performance) we deserve!

Fortunately, that was then…

Today, most business reasoning is build on a different assumption: The assumption of rational, individual self-interest

Virtually all theories and frameworks in (strategic) management, economics, sociology, psychology and political science assume that individuals are rational and this means they select the most efficient means to maximise their self-interest.

Perhaps you are thinking: “What is wrong with that?” The question we, perhaps, should ask is the following:

Do we have rational, individual self-interest at the centre of our organisations (and wider society) because people are focused on the most efficient means to maximise their self-interest” or do we find these types of people because this is what these type of organisations breeds? 

Andrew Van de Ven and others believe it is the latter (too). The self-fulfilling prophecy of self-interest makes people care more about their self-interest than they actually do. Bad Theories lead to Bad Practices. Instead of Rational Self-interest Behaviour they argue the older model of Reasonable Appropriate Behaviour needs to be put (back) in place. Why? Because this is actually much closer to how people in organisation and society actually (want to) behave.

The difference is in the questions we ask ourselves when we decide. Van de Ven lists these questions:

Rational Self-interested Action:

  • What are my alternatives?
  • What are my values?
  • What are the consequences of my alternatives for my values?
  • Choose the alternative that has the best consequences.

Reasonable Appropriate Action

  • What kind of situation is this?
  • What is my role or position?
  • What is appropriate for me in this role/situation?
  • Do it.

Assuming reasonable appropriate behaviour does not mean there is no self-interest going on in individuals, or in organisations, or in societies, it just means that in normal, day-to-day reality people lean towards reasonability.  Moreover, the reasonable appropriate behaviour also lines up with the superior performance of overarching normative goals in the  discussion on overarching gain goals versus overarching normative company goals. Bonus!

Are you building your company based on self-interested behaviour of people?

The lesson we might need to get is this: We typically get the people and the performance we deserve.

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