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The mythical rational employee

If people come to work for money, do we need all this HR and leadership nonsense?

Organization Development is an elusive term — in a recent blogpost, David D’Souza suggests that googling it probably means you may be gone some time. But that is not the same as suggesting it doesn’t exist, or has no significance or value, of course. Au contraire, in fact: the CIPD organized a whole conference on the subject, which was (at least indirectly) the origin of David’s post.

One of the discussions took place under the somewhat antagonistic title ‘Organisational Development vs. Learning and Development’. They’re really on a continuum, wrote David: “There is an interdependency between OD and learning that means you are fighting yourself if you aren’t able to find common purpose.”

I couldn’t agree more, and that is why I found one of my eyebrows moving up when the next sentence revealed that one delegate apparently suggested “people come to work for money, so this ‘shared purpose’ is basically HR and leadership nonsense.”

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Wasn’t this supposed to be ironic?

The ‘people who come to work (only) for money’ sound very much like the homo economicus who is central to many 20th century economic theories — the utility-maximizing economic agent consistently and rationally pursuing his narrow economic self-interest. It has taken behavioural economists many decades of hard work to successfully challenge the idea that real people behave rather differently. Unfortunately, that enlightened view has not quite penetrated in organizational management.

Real people make complex trade-offs involving much more than just money, in the economy and at work. When we spend money, whether it’s on breakfast cereal, a sofa or a holiday, we don’t always go for the cheapest option. And when we choose to join an employer (and stay with them), we don’t just look at who offers the biggest paycheck. The idea that employees are entirely or primarily motivated by money is as deluded as the idea that shoppers are only interested in the price.

People come to work for many reasons, and money is only one of them. Identifying and addressing the others requires intelligence — the kind of intelligence that good application of L&D and OD can bring. That is a lot more difficult than just throwing money, but it’s also more likely to create a positive-sum result.

And perhaps the rational employee is not so mythical after all: it is entirely rational to trade off all the aspects of a job. The lack of rationality is rather with those who believe employees are only in it for the money.

Written by

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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