Friday, March 20, 2020

Are Pandemics Worse than We Think? Adding Loss of Inclusion to Loss of Lives

Now that the world is dealing with the Coronavirus turning from an epidemic to a pandemic, it may be time to talk about something we learnt from the Ebola virus. This is a lesson from research by April Wright, Alan Meyer, Trish Reay,and Jonathan Staggs published in Administrative Science Quarterly, and it concerns the social distancing that many places in the world now practice to mitigate the effects of this disease.

We understand that social distancing is inconvenient. In Singapore, which currently has a mild form of it because the Coronavirus is controlled well here, temperature checks when going into certain buildings are inconvenient, we eat at restaurants less often than we would like, and a shopping center (such as the one housing my gym) is a place to think twice about entering. Other places are much worse off, with people quarantined to their dwellings except for emergencies, and all community meeting places and arrangements canceled.

What this research points out is that places of social inclusion are essential to society. Places of inclusion are where people gather to have their needs provided by society, from private actors, government actors, or voluntary associations. They include the sports stadium of the local team, the unemployment office, the church, and the soup kitchen for the homeless. All these are places that provide practical goods and services, but they also serve a symbolic role of defining the community and affirming people’s inclusion in the community.

The importance of places of social inclusion was shown prominently when their research at a public Emergency Department (ED) in Australia suddenly involved the Ebola epidemic. ED doctors and nurses handle many kinds of risks to patients and themselves, but Ebola was unusual because it was an unknown situation, and one that could lead to exhaustion of ED resources and even temporary closure of the ED. This was a situation that invoked fear and a feeling of threat because the physicians understood that turning away any patients was more than failing to provide medical services; it meant an unmet human need. Although most people rarely interact with EDs, they are places of social inclusion that need to stay available.

To manage the Ebola situation in addition to the regular claims on their resources, the ED rationed resources carefully and enabled resource use whenever possible. Doctors and nurses also went to extraordinary lengths to avoid closing down and to keep the ED safe for both patients and employees. In the end, many ED personnel dealt with the situation by reasoning that the Ebola risk, although new, was not so much greater than the risk posed by violent patients or other infectious diseases, which they already dealt with routinely.

If we tie this research to the Coronavirus situation, we should be aware of some differences. The personnel at this ED were very conscious of its role as a place of social inclusion and did their best to stay open and admit patients. And when all was said and done, they had treated no Ebola patients, only some suspected cases. Is that what we will see in the current situation? I doubt it.

Not all places of social inclusion recognize that they have this role, and few are staffed by individuals who have taken an oath to protect the patient and the community, as many doctors do. The Coronavirus will see many places of social inclusion close, by their own volition or by public policy. Few places of social inclusion will be as safe from infections as the Australian ED studied in this research. Ebola was rare and not very contagious but was feared because it was so grimly deadly. The Coronavirus is now widespread and appears to be more contagious than the flu, and deadlier.

For a while, places of social inclusion will be lost, and this will be a great loss to communities and their inhabitants. A significant measure of community resilience will be how quickly the places of social inclusion can open again and serve their community. In the meantime, let’s hope that communities can improvise safe places of social inclusion, as Italians have done by singing from their balconies.

Wright, A. L., Meyer, A. D., Reay, T., & Staggs, J. 2020. Maintaining Places of Social Inclusion: Ebola and the Emergency Department. Administrative Science Quarterly, forthcoming. 

Wednesday, March 18, 2020

Emotions in Sync: How Teams Adjust for the Best Performance

Imagine a team of any size doing a task that calls for constant coordination and accurate execution. Sound difficult? It is very difficult, and that is why organizations typically prefer to distribute tasks across specialized roles and over time. The Charlie Chaplin movie Modern Times made fun of this approach in its production line scenes, but they are actually an accurate depiction of how assembly is often done these days, and for good reason – it is the most efficient approach.

But some teams need to coordinate quickly. A soccer team does so in response to the other team. An emergency unit team does so in response to the patient condition. Even teams that rehearse in advance to gain perfect execution may need coordination to avoid small mistakes accumulating and getting out of hand. A concert performance by a band, orchestra, or choir would be an example of this. A planned surgical operation or construction of a building is another. Thanks to research by John Paul Stephens published in Administrative Science Quarterly, we now know more about how such coordination is done. He studied a special kind of large team: a choir performing classical music.

The starting point is that each member of the team is heedful of the others, especially those nearby. They adjust to others’ pitch, volume, and tempo, and they influence others as well, helping them pick the right pitch, volume, and tempo. When a team comes together, these mutual influences and members’ knowledge of the ideal output mean that their efforts are in sync, and their emotions are too.

Emotions matter greatly for quick coordination because they adjust what happens when the team is falling apart. And any kind of quick coordination could lead to a team falling apart, with each member being anxious about their part of the task performance or upset about others appearing to do their part incorrectly. The feeling of being out of sync triggers adjustments, because each member will pay special attention to any and all cues that can improve the performance. They use their knowledge of the output, their knowledge of the skill set and current output of each other member, and their knowledge of their own skill set and current output. Once the team knows they are no longer in sync, there is mutual effort to recover.

This is where leadership counts the most. For a chorus, the conductor is always up front directing, but this person is actually not so important if they have rehearsed well and are in sync. If their performance is falling apart, however, increasing the attention to the conductor is a major cue that helps recovery. One sign of greatness in a conductor is exactly this ability to put a performance back in sync, to reunite the team. Much of a conductor’s leadership occurs when composing the performance through the variations rehearsed in practice sessions, but an essential part of such leadership emerges when recovery is needed during a concert.

The same process is found in more extreme versions in smaller teams with distributed leadership, such as those that combine different forms of specialists who engage in a single production. To continue with the musical performance comparison, a string ensemble has first and second violin (and sometimes more), viola, cello, and sometimes bass too. There is no conductor. Instead, a team like this has skilled members who each knows their specialty and the ideal final performance. The team usually comes together in sync during a performance, but when they fall apart, they turn their attention to their leader—the first violinist, who sits front and center and is easily visible by all ensemble members.

True leadership emerges when teams need to reunite.

Stephens, J. P. 2020. How the Show Goes On: Using the Aesthetic Experience of Collective Performance to Adapt while Coordinating. Administrative Science Quarterly, forthcoming.

Tuesday, March 17, 2020

Friends in Low Places: Independent Regulators Help Entrepreneurs

Here is something that is so well known in business, and so contrary to norms of fair competition, that we prefer not to teach it in business schools: For a large established firm, one of the best hammers for beating down competition from new ventures is influence over legislators. One of the best ways of wielding this hammer is to help them create cumbersome, expensive, and demanding legislation for new firms entering the business. Any kind of excuse will do. For example, societal concerns for safety and the environment can be twisted in ways that generate legislation with the main purpose of making it harder to establish new ventures.

How can that be good for the large firm? After all, they need to expand their business now and then, and they will face the same legislation. That’s true, but unlike entrepreneurs, they have friends in the legislature who can create exceptions when needed. So, is there any way for the entrepreneur to enter a heavily regulated industry? Research by Jake B. Grandy and Shon R. Hiatt published in Administrative Science Quarterly shows one way this can happen: by receiving help from regulators.

Why would regulators help entrepreneurs when legislators help established firms? This is a question that has two answers. The first answer is because they can: Legislation is usually written with some leeway, and regulators can interpret it to allow new entrants. Often, they will do so because strict interpretations can be challenged through appeals. The second answer is because they can: Legislators have many issues on their agendas, and they often grant regulators freedom to act on their own either by legislating some independence or by supervising regulators only loosely.

Grandy and Hiatt tested this effect by examining delays in granting permissions for hydroelectric power plants. For such permissions, the independence of the regulator has no consequence for established firms – but for entrepreneurs, an independent regulator makes all the difference. The timing matters because the application and approval process can take many years. If the regulator is fairly independent, that period can be reduced by a year or more. But if legislators have reason to curtail the regulator’s independence, the application period can instead increase by many months.

These accelerations and delays are important because they are where costs and benefits are found in this industry. The regulator can impose conditions that slow down a project and make it costly, but in the end, nearly all the applications are granted. Granting an application does not mean that the power plant will be built, however: The entrepreneur may have exhausted their financial resources by the time a project is approved, or required modifications may have made the project unprofitable. All of this means that help from regulators is necessary for entrepreneurs – and for a healthy level of competition in regulated industries. 

Grandy, J. B., & Hiatt, S. R. 2020. State Agency Discretion and Entrepreneurship in Regulated Markets. Administrative Science Quarterly, forthcoming.

Thursday, February 27, 2020

When is Flexible Work Time Inflexible?

Most readers of this blog have private offices with doors that can close when we want to work without noise or interruptions. Colleagues understand the difference between a closed door and one that is slightly or fully opened, and they adjust accordingly. The same doors also give privacy, which is highly valued. Some readers of this blog also work for an organization that has a policy of flexible work time, and I am willing to bet that they value this flexibility.

Many employees, in many organizations, work in cubicles, which is an entirely different situation. As a research paper by Leroy Gonsalves in Administrative Science Quarterly shows, flexible work time is often much less flexible than people think. As he discovered, the cubicles are one reason for the inflexibility.

What is the connection between cubicles and inflexible flexible work time? Visibility. Flexible work time means that people can arrive and depart from work at times they select, provided they spend enough time working. But workers in cubicles are seen by others, so the early riser can’t come too early because it means leaving before the others, and the late riser can’t come too late because that means arriving after the others. When people gather, there can be informal norms. Norms can become toxic if they are connected to ideas of effort and productivity, and norms guide people’s visible behavior.

Many small behaviors demonstrate visibility and make the work time inflexible. The morning greeting is an acknowledgment of arrival, less formal than stamping a time card but nearly as controlling. Walking past an empty desk in a cubicle raises the question of where the occupant is, and also serves as a reminder of the question others will consider when walking past one’s own empty cubicle. The effect is to remind everyone of the need to arrive exactly at the normative time.

How did Gonsalves discover this source of inflexible flexible work time? He studied an organization that reorganized its office to save space, eliminating cubicles assigned to specific people and replacing them with dynamic workspaces. In the new office, work stations were classified by activity, and employees would move around during the day depending on the type of work they did. These were professional workers who carried a laptop around that contained everything they needed for their work.

The big surprise was that the new, smaller, and flexible-use office also triggered much greater use of flexible time. The workers quickly realized that the visibility was gone. An empty desk said nothing because it was not assigned to a person. Greeting someone in the morning, or not greeting them, also said nothing because it was unclear what part of the office someone would be in and what time of the day that person would have started work.

With the visibility gone, workers immediately started using the flexible work time policy the way it was intended. Flexible work time lets workers adapt to their circadian rhythm, improve their commute, and adapt to temporary work requirements. Arrive late if you are a late riser, avoid the worst morning rush hour, and work longer hours when needed and shorter hours to even out the worktime. All of these are possible as long as the visibility does not impose a norm that creates an inflexible flexible work time.

Organizational theory is often about unintended consequences. An employer saves office rental fees through using cubicles and unintendedly ruins its flexible work time policy that is supposed to improve the workers’ lives and the work. An employer saves even more office rental fees by replacing cubicles with flexible work spaces and inadvertently converting its workers from surface ships to submarines, who take full advantage of their stealth. I am sure the submarine workers are happier with their flexible work time, and maybe they are also more productive, so this was a good unintended consequence.

Gonsalves, L. 2020. From Face Time to Flex Time: The Role of Physical Space in Worker Temporal Flexibility. Administrative Science Quarterly, forthcoming.

Tuesday, February 25, 2020

How to Get Paid More at Work? Extend your Turf!

The title is not clickbait – research on organizations can be very practical. One thing that organizations often do is to create specialized jobs. The reason is obvious – specialization means repetition and regularity, which builds skills and routines and reduces irregularities. When done well, specialization creates efficiency. The “when done well” part is important to keep in mind, because specialized jobs naturally do a smaller proportion of the organizational tasks, which means that more specialization could mean more kinds of jobs, or some jobs that are general and cover the gaps between the specialized jobs, or a combination of the two. All of this is well known to those who design and operate organizations.

But what does specialization do to worker pay? That’s the topic of research by Nathan Wilmers, a professor at MIT Sloan School of Management, published in Administrative Science Quarterly. The question is very interesting because it is commonly assumed that wages are determined in some labor market that rewards workers first by observable skills, such as training and education, and later through performance on the job. The problem with this conception is that it assumes that observable skills map cleanly onto organizational tasks. This assumption is never quite correct, and it gets worse in organizations with highly designed jobs.

Instead, consider jobs organized by the degree of task specialization, and consider wages not as set in a market but as an implicit negotiation between worker and employer. A highly specialized job usually means that there are many potential occupants and that the post-hire training to do the task is easy. Probably the specialist isn’t pre-trained before hiring, but that does not matter because the training is inexpensive. That means lower wages, because a worker occupying a specialized job is expendable. In organizations, narrow job turf means low pay.

A general job that covers the gap between specialized jobs is exactly the opposite. First, efficient job design requires having many specialists and few generalists covering the gaps, so the generalist is necessarily rare. Second, the generalist work is complex and specific to the job design of the employer. Again, the generalist isn’t pre-trained, and it takes a while for a newly hired generalist to be efficient. In the implicit wage negotiation, the generalist has a strong position. In organizations, broad turf means high pay.

Wilmers found sizable effects when analyzing the data. Workers who equally split time between tasks would lose 11 percent of their pay if they were split into groups that specialized in one task. A worker who moved from having the average level of generalization to the 95th percentile of generalization would gain more than 8 percent pay. These differences in pay levels mean that increases in job turf are well worth fighting for.

Two additional notes are worth considering. The estimates I cited above are among the more conservative estimates of how big the differences were in those organizations. Moreover, the data analyzed come from a single type of organization, which means that the effects could be bigger or smaller depending on the employer analyzed. In fact, chances are that in most firms, the advantages to having a job with broader turf are greater than in this analysis. You see, Wilmers analyzed labor union employees, and unions are known to favor pay equality.

So organizations that pursue efficiency seek specialization, and workers who want high pay seek a broad turf. Clearly this is an area of work design that involves negotiation, because smart workers will not willingly accept a more specialized job. They will fight for their turf.

Monday, February 17, 2020

My Failure, Our Failure: When Do Firms Fire Suppliers?

Interorganizational networks can be many things, but one of the most consequential is made up of the exchange ties that follow components downstream to a firm that assembles the final product. These ties are consequential for many, because the component makers and final product assembler all rely on the cost and quality of the components, and so do the final users. Having a familiar component supplier is wonderful because “tried and true” testifies to quality, so any signs of failure in existing components is a small crisis for the assembler. This situation is also interesting to researchers because it shows how organizations make important choices.

What better place to study it than in Formula 1 racing car assembly, as David R. Clough and Henning Piezunka did in a paper published in Administrative Science Quarterly? Their study gives an interesting and surprising answer to how firms decide when to fire component makers. Firms look to the performance of their own product, which is expected, but also to the performance of competitors’ products using the same component. And here is where the research findings get surprising. If competitors using the same component are also doing poorly, the firm will stop using the “tried and true” component and switch to another supplier. Shared fate with the competitors does not make firms complacent but rather makes them more eager to improve.

Why does this happen, and especially in a race where the whole point is to do better than the competitor? If many cars slow down, your car is not slowing down more than many others. The key is that firms learn vicariously from each other, and they can be very objective in assessing their options when the stakes are high. A competitor’s car doing poorly when holding a shared component is already a warning sign that could lead a firm to drop the component from its own car, and if the firm’s own car is also doing poorly the warning gets louder. Firms learn from their own experience, learn vicariously from the experience of others, and put the two forms of learning together to make difficult choices such as replacing a key component made by a familiar supplier.

In business, interorganizational ties such as supplier–buyer relations are important because they help build trust and reputations for responsiveness when problems occur. In the end, however, what matters more is the actual quality, and then a different kind of tie may be just as effective: buyers compare themselves with each other and use the information to assess the supplier. Performance matters more than trust.

Wednesday, February 12, 2020

The Usual Choice: One More Reason Males Are Favored

We know several reasons that men get ahead of women as employees and entrepreneurs. There are cultural beliefs that men are better for work and more committed to it than to family life. Men in powerful positions tend to promote men because they are similar to them. And many occupations and forms of entrepreneurship are seen as archetypically male, suggesting that parents might consider advising their daughters against training to become a plumber or a computer programmer. Given all these biases, would it be possible for one more to exist?

Research by Mabel Abraham in Administrative Science Quarterly has uncovered one more form of discrimination in a sample of entrepreneurs. It is a subtle one, but the effect is strong. Suppose an entrepreneur wants to initiate a network connection with someone else in order to start resource exchange -- as a customer, supplier, or collaborator. Would it matter for a woman whether she initiates that contact directly or whether she does so by asking another entrepreneur to make a referral? The answer is yes. If the woman is engaged in a typically male activity, her contacts are much less likely to refer her to their contacts. Why? Because women would not be the usual choice for a transaction partner in that activity, and people worry about how their referrals are judged by others.

Importantly, this effect is specific to women. Men engaged in typically female activities are just as likely to be referred to contacts as women. Women and men in neutral activities are just as likely to be referred to contacts. It is only when referring women to their contacts in typically male activities that people stop and think: is she the usual choice, or is there something wrong about a woman doing this occupation or building this kind of venture? Abraham’s analysis showed that the difference in results was sizable. If an occupation was between 50 and 60 percent male, a man could expect to get about 5 more referrals than a woman would get each year, and this gap grew wider in occupations with higher percentages of men (see the graph)

This difference is important because selectivity in referrals occurs before any of the other biases. Once a woman has been referred to a contact, that contact might still hold beliefs against the suitability of women as entrepreneurs or might be a male who prefers to interact with other males. Biased referrals mean that the potential connection can’t even decide whether to discriminate (or not). The absence of a referral is already a form of discrimination.

Given these effects, no wonder women entrepreneurs have to build their own business networks: they are not getting help from others if their occupation has a majority of men – as most highly paid occupations do. Abraham’s research showed that when making direct contacts, rather than referrals, there was no difference between women and men. So contrary to one popular belief, women aren’t too shy to build networks. Instead, it is sometimes their male network contacts who are reluctant to refer them to others.