“That’s Not Fair!”

“Life isn’t fair”

What parent hasn’t heard the wail “That’s not fair!” Although it’s true that fairness is a human concept with which the Universe rarely aligns, I doubt that any outraged child was ever placated by my frustrated parent response, “life isn’t fair.”

Fairness, I’m told by others, is my personal value. “You know, Alan, the servings don’t have to be completely equal. No one will complain if they get an eighth of an ounce more or less dessert.” If I was a believer in sun-sign astrology, I could respond it is my Libra personality balancing the scales.

I was raised to be fair. My mother told me a story of two young Chinese “boys.” She called them that. She was sixty-something; they were probably my age at the time, early twenties.

“They were giggling and I asked what was so funny. ‘The cafeteria lady made a big mistake, gave me a twenty in change for a five. Ha, Ha.” I told them that wasn’t fair. That cashier would have to make up that money at the end of the day. ‘No, no’ they said. ‘good luck for me, bad luck for her.’ I told them that wasn’t how we did things in America and sent them back to the cafeteria.”

I remember this for what my mother instilled in me and for the perhaps Chinese-American cultural differences,  but certainly diverging ideas of fairness:

• accept that luck smiles or frowns upon each of us or
• go out of your way not to injure someone by your actions.

Leaders wrestle with fairness all the time, but what does fairness really mean?

Does it mean everything is shared equally?

Do we believe that workers should share in profits at the same rate as financiers or shareholders? Not in most of the companies where I have worked.

We say we believe that two people who do the same work should be paid equally. Of course, we often fail at that standard. In the United States, women are often paid less than men. People of color are often paid less than white people.

Ability isn’t shared equally, some would say, so why should remuneration be equally distributed. Fairness is about relative contribution.

This is the argument for sports and entertainment star salaries, for sales vs. production worker salaries, and for 300/1 ratios CEO vs. lowest paid worker. We seem to forget that no one on a team, in a movie, or in a business does work entirely on their own. Other people make it possible for a company to grow, a sales quota to be exceeded,  a team to win or a movie to do well at the box office.

In some places seniority is rewarded. If I have worked here longer than you, I am presumed to be better at my job and am worth more. Also, perhaps we are rewarding loyalty. Is loyalty a component of fairness?

“He has a family to support!” This is need-based fairness. It justified paying men more than women for the same work. With so many women working, does anyone try this excuse now?

Fairness, at least pay equity, should be understood as an often subjective evaluation. What someone’s contribution is, the work that they do, their need, or the value of loyalty, is often colored by how much we like or identify with the person. We rationalize unfairness away.

What’s a fair price?

I remember at the London Business School, a professor said, “For some of you, especially those from this country and the United States, it may shock you to learn that the price is never just the price. In most of the world, everything is negotiable.”

Businesses price the same product or service differently all the time. There are volume discounts, preferred customer discounts, loss leader pricing, clearing last year’s inventory pricing and competitive-market-share-grabbing pricing. To keep this fair some government regulators of some products penalize “predatory pricing,” e.g., consistently selling below cost to drive competitors out of a market. “That’s not fair!’ They say “You must have a ‘level playing field,” perhaps a reference to early football matches played where the home pitch had a pitch.

More fairness phrases:

“First come, first served” is something we’ve come to expect at a Deli, but accept that restaurant walk-ins may be second to those with advance reservations.

“To the victor belong the spoils.” This is a concept we seem to accept in politics, war. and increasingly in economics. But is it fair? It seems a “might makes right” extension. There are vast inequities in basics like food and housing around the world because some countries won the economic game. There are vast inequities in opportunity because some people have “a leg up” from their parents and ancestors.

“They’re the job creators,” say those making the contribution fairness argument for billionaires.  The United States is arguably the richest country in the world and some have more money than they could spend in ten lifetimes while others struggle with sustenance and shelter. How I feel about three or five hundred to one income ratios depends upon the one; if the one is “enough,” then I am more sanguine about the excess than if the one is hungry and homeless.

What’s a fair deal?

Transactions are often seen as fair or not. “He takes and takes, but never gives anything back.” Often our idea of fairness involves reciprocity. Even in relationships if we give, we expect to receive. I saw a TV program recently where a woman explained to a man, “When someone opens up to you and tells a story about their past, becomes vulnerable, the only acceptable response is to tell a story about your past and exchange a similar openness and vulnerability. It’s only fair. And to not do that is insincere and insulting.”

I once chided a boss of mine in a similar way for his reluctance to self-disclose. Later my daughter sent me an email distribution with funny stories about first jobs.  I passed it along to the office including my boss. He responded that his first job “was drowning bagged kittens in the creek. I was paid  25 ¢ a kitten.” Unfortunately, he selected “reply all.”

My daughter stopped sending me email distributions from her friends and I stopped encouraging my boss to reciprocate in self-disclosure.

“One good turn deserves another” is a phrase that expresses the expectation of reciprocity. Or some say “You scratch my back, I’ll scratch yours,” although that one often describes a reciprocal arrangement that implies kickbacks and corruption.

Fairness in change

Leaders often puzzle through fairness when things change. Who gets the ax in lay-offs? Who receives the opportunity of a new product division? Who opens a new geographic territory? How do you staff or choose IT systems between one company and another in a merger? What do you tell people and when as you plan through change?

Perceived fairness involves trust. People must trust that leaders will make the right decision and that the process will be fair, that is take in all appropriate input, and be communicated as needed.

Chan Kim and Renée Mauborgne, professors at INSEAD, and co-authors of Blue Ocean Strategy, wrote an article in the Harvard Business Review, called “Fair Process: Managing in the Knowledge Economy.”

In the article they show that people, especially knowledge workers, expect to be involved in the process of decisions that affect them. They demonstrate that even if people approve of the outcome of a decision, they may resist if they believe that the process was not fair and visible.

Kim and Mauborgne suggest three actions:

• Engagement, gathering input from people for decisions that affect them.
• Explanation, explaining the factors considered in making a decision.
• Expectation clarity, explicitly conveying actions that the decision requires of people.

Transparency is now a buzzword in business and politics. People now want to know what is going on. The simple truth is that not every decision can be completely transparent at every stage. Companies want to protect sensitive strategic information. Governments want to protect national security information. But if the business or government keeps secrets that affect people’s lives, but don’t involve such risks, trust erodes.

Mergers make people nervous. They know that layoffs or material job changes may result. One of the best post-merger integration leaders I ever saw understood this. He took several actions:

• He publicly committed to communicate “What we know when we know it.”
• He created a rumor hot line where people could anonymously record a rumor they’d heard and there would be a public response within twenty-four hours.
• He committed to gather input and explain any hiring or job change decisions with those affected.
• He committed to severance and outsourcing for displaced persons who could not be redeployed.

This leader stuck to these commitments and while some people lost their jobs and others’ jobs changed radically, there were no lawsuits, no work stoppages nor strikes from the unions, and the integration of the two companies happened on schedule. One laid-off manager later told me,

“I didn’t like it, but the company treated me fairly. They helped me find another job, and I didn’t suffer too much in the process.”

As a young consultant I worked behind a grizzled old management consultant twenty years my senior. In a meeting with a CEO his age, this Old Hand advocated that the CEO communicate more, explain his reasons for his decisions. The CEO took umbrage.

“This isn’t a Democracy!” he fumed.

The Old Hand smiled and spoke softly. “It is true that a business is not a democracy, but it still requires the ‘consent of the governed.’”

The CEO’s gray eyes widened at first, then he looked at his desk and breathed in through flared nostrils and out through puffed lips.

“That’s fair,” he said. Then the two discussed a communication plan as I took notes.

So life isn’t fair, but people can be, and leaders should strive for a visible fair process.