The issue had become sufficiently serious to become visible to the chief executive. His take on the matter was very simple; the credit controllers and accountants needed to work harder, make more calls, be more aggressive.. Apply bigger sticks and carrots and the results would come.
Examining the situation more closely, it became clear that things were not as clear as they had been presented. Almost all the problem amounts had one of three stories attached to them:
Once we realised that we had an organisational problem, not a skills and motivation problem, the solution was simple. We got the right people involved, and the cash flooded in. Within three months the problem was solved, and stayed solved.
There's a very important general point here. How often have you heard someone (yourself?) decrying someone else's behaviour using terms like "they're greedy", "stupid", "selfish", "just downright bloody-minded...."
Stop. What you are hearing, or saying, is an example of the Fundamental Attribution Error. What's that? It is the perfect example of social scientists' ability to come up with a really powerful, useful idea and then disguise it in impenetrable jargon. The basic idea is that we have an inbuilt tendency, when we see somebody else doing something we don't like, to explain it in terms of "that's how they are" rather than "that is what you would expect given the circumstances they are in."
In the case of the credit controllers, for instance, the company had fallen into exactly this error. It saw the problem as coming from poor motivation in the finance department, whereas in fact it was organisational.
Learning to spot when we are falling into the Fundamental Attribution Error and how to get ourselves out of it is hugely valuable, in fact liberating. Here is how. When you see someone doing something you don't like, ask yourself;
● Under what system of incentives would this be rational behaviour?
● What would I do in their position?
● Do I see most people doing the same thing in this situation?
Being able spot when you are falling into the Fundamental Attribution Error turns an intractable problem, human nature, into a much more tractable one - designing organisations, systems and incentives which produce sensible behaviour.
This is an extract from Alastair Dryburgh's new book Everything You Know About Business is Wrong - How to Unstick Your Thinking and Upgrade Your Rules of Thumb. More details at www.alastairdryburgh.com