Dare to Be Fair – The Risk Companies Need to Take to Achieve Excellence

Marco Alverà is CEO of Snam, Europe’s largest natural gas utility. When he moved from a US investment bank to a large Italian state-owned oil company, he found his management toolset comprising bonuses, promotions, and threats completely useless. Yet, this organization still had pockets of excellence with its fixed salaries and secure lifetime employment. In one of 2021’s most popular TED Talks, Alverà explains how he discovered that fairness was “the surprising ingredient that makes businesses work better.”

A Culture of Fairness Enables Workers to Take Risks

Alverà observed how his new company outperformed competitors in some of the toughest sectors, such as project management and trading. This was especially true in exploration. Snam’s exploration team was finding more oil and gas than any other company globally. Initially, Alverà attributed it to luck, but as the trend continued, he looked for the unique tool, application, or individual that could explain it, only to find there were none of these things.

The answer came to him watching a colleague who had sunk billions of dollars of company money drilling seven wells to find oil in the eighth. Alverà felt nervous on his colleague’s behalf but noticed how relaxed he was, and finally, it hit him. His colleague knew he was working in a fair system that wouldn’t judge him on short-term results. He knew he was valued for what he was trying to do, rather than just the outcome, and that he was part of a community that cared for him as a human being and would stand by him. This security enabled the company’s employees to take the risks they needed to advance. And because they were good at what they did, these risks weren’t unnecessary. 

Why Does It Matter?

Unfairness at work makes employees angry and defensive and ultimately causes them to disengage. One study in the US showed that up to 70 percent of American workers are disengaged, costing companies $550 billion annually. That’s about half of what the United States spends on education and is comparable to the GDP of Austria.

Brain Science Supports the Theory of Fairness

Once he hit upon this concept of fairness, Alverà tested it in all quarters, speaking to colleagues, headhunters, neuroscientists, and coaches. He discovered that recent brain science supports that humans have an innate sense of fairness and will seek it out. For example, studies have shown that babies as young as six months old recognize and align themselves with fair behavior. Moreover, our brains release chemicals that make us feel pleasure when we observe fairness being practiced.

In contrast, when we perceive unfairness, we experience pain that can be more hurtful than physical harm. That’s because unfairness triggers our primitive “lizard” brain, the part that deals with threats and survival. Suddenly, the threat becomes all we can think of, and motivation, creativity, and teamwork all go out the window. As workers, we become disengaged. And it makes complete sense that unfairness represents a threat to us as social animals because we need to be part of a community to survive and thrive. If we see others being favored, we’re closer to being excluded from the community—and that hurts.

How to Weed Out Unfairness

Science also shows that in a community that exhibits fairness, we are all more likely to act fairly. Yet, it takes just a single drop of unfairness to contaminate the pool. Our job as leaders is to find the sources of unfairness in our organizations. 

Actively creating a culture of diversity of opinion and character is an excellent first step to canceling the individual biases that can lead to unfairness. Look at your organization’s rules, processes, and systems. Do they ensure you make decisions and allocate resources fairly? If not, get rid of anything that’s not clear, rational, and sensible or impedes the fair distribution of information. Finally, look at motivation and culture through the same lens and similarly weed out any unfair elements.

Go beyond What’s Rational to Do What’s Right

But the final stretch to creating a culture of fairness goes beyond process and systems. It deals with people’s emotions and needs, what’s going on in their private lives, and what society needs. Those things are difficult to put into algorithms or make part of rational decision-making. But if we ignore them, we miss essential elements, and the outcome will likely feel unfair. So we must take the risk and apply our hearts to what is right and fair because deep down, we know the right answer. We have known since we were babies.