Fair Process: Managing in the Knowledge Economy

Unlike the traditional factors of production--land, labor, and capital--knowledge is a resource that can't be forced out of people. But creating and sharing knowledge is essential to fostering innovation, the key challenge of the knowledge-based economy. To create a climate in which employees volunteer their creativity and expertise, managers need to look beyond the traditional tools at their disposal. They need to build trust. The authors have studied the links between trust, idea sharing, and corporate performance for more than a decade. They have explored the question of why managers of local subsidiaries so often fail to share information with executives at headquarters. They have studied the dynamics of idea sharing in product development teams, joint ventures, supplier partnerships, and corporate transformations. They offer an explanation for why people resist change even when it would benefit them directly. In every case, the decisive factor was what the authors call fair process--fairness in the way a company makes and executes decisions. The elements of fair process are simple: Engage people's input in decisions that directly affect them. Explain why decisions are made the way they are. Make clear what will be expected of employees after the changes are made. Fair process may sound like a soft issue, but it is crucial to building trust and unlocking ideas. Without it, people are apt to withhold their full cooperation and their creativity. The results are costly: ideas that never see daylight and initiatives that are never seized.