CHANGING MENTAL MODELS: HR’S MOST IMPORTANT TASK

Jeffrey Pfeffer

In the “managerial knowledge” marketplace, there is little evidence of much diffusion of ideas or innovative business models or practices. In organizations not implementing what they know they should be doing based on experience and insight, and in companies not acting on the basis of the best available evidence, one main factor explains the difficulties—the mental models or mind-sets of senior leaders. How they are formed, what they are about, and a multitude of examples that show how those mind-sets can be improved are presented here. © 2005 Wiley Periodicals, Inc.

Here is a paradox. In the financial markets, powerment and putting people first, the lan- investment information is rapidly and effi- guage of employee and customer loyalty, ciently diffused. New product and service and so forth—in many cases, not much ac- innovations, be they junk bonds, new forms tually changes in terms of what occurs on a of options, or debt securities that allocate day-to-day basis and in fundamental organi- and price risk in an innovative fashion, get zational business models. rapidly copied by competitors. But in the A few examples will help illustrate how “managerial knowledge” marketplace, there long it takes to successfully imitate effective is little evidence of much diffusion of ideas management models. Southwest Airlines or innovative business models and manage- was the most successful, productive, and ment practices. How can I say this in a profitable U.S. airline. Its success was world in which there are entire industries widely described in books, cases, and articles devoted to spreading concepts and best literally decades before JetBlue, ATA, and a practices, and where management is occa- few others in the United States, Europe, and sionally accused of being too fad-driven? Asia finally began to successfully imitate its Because although there is certainly rapid approach. Or, as described in an article in diffusion of language—the language of Fortune, Toyota has been world class and quality or Six Sigma, the language of em- ahead of its competitors in automobile qual-

Correspondence to: Jeffrey Pfeffer, Thomas D. Dee II Professor of Organizational Behavior, Graduate School of Business, , Stanford, CA 94305-5015, 650-723-2915, [email protected]

Human Resource Management, Summer 2005, Vol. 44, No. 2, Pp. 123–128 © 2005 Wiley Periodicals, Inc. Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/hrm. 124 • HUMAN RESOURCE MANAGEMENT, Summer 2005

ity and productivity for many years, and this why mental models affect organizational per- competitive advantage persists even though formance and why they are a high leverage the company gives plant tours to its competi- place for human resources to focus its orga- tors and its approach has been extensively nizational interventions. described and analyzed in books and re- To return to the examples, Toyota’s suc- Whole Foods’ search articles.1 Nevertheless, its rivals seem cess has much less to do with the specific big insight that to have trouble learning from and about Toy- techniques of its quality process—cords to others can’t ota and catching up. stop the production lines if there are defects, quite copy is that people In the gambling business, Harrah’s En- just-in-time inventory systems, and particu- actually will tertainment has used evidence, gathered lar statistical techniques—and much more to pay more for from its customer database and from run- do with a philosophy that supports quality high-quality ning numerous small experiments, to turn (and productivity and innovative product de- food they want conventional wisdom about how to make sign as well). The techniques and specific to eat. money in the casino business upside down.2 practices can be, and are, copied. The phi- Although Harrah’s has outperformed its ri- losophy is much harder to inculcate. South- vals and its approach has been widely docu- west Airlines’ success is not simply a result of mented and praised, once again there is little not serving meals or flying only 737s on evidence of successful imitation of its man- short hauls, something many other airlines agement techniques by others in the indus- have imitated. Instead, the key to South- try. And want still another example of success west’s performance is great service and out- not being imitated? Take Whole Foods, the standing productivity produced by a strong natural foods grocery store chain whose culture built on a value system that puts em- stock sells (as of summer 2004) at a ployees first, customers second, and share- price/earnings ratio of about 40—for a gro- holders third, along with a way of thinking cery store, no less—and has a five-year re- about and treating employees that has built turn to shareholders of over 330%. Whole loyalty and commitment even with a heavily Foods’ big insight that others can’t quite copy unionized workforce. is that people actually will pay more for high- Whole Foods has a different conception quality food they want to eat. This strategic of its business, captured in part in its “Dec- insight entails customizing both prepared laration of Interdependence,” that permits it food and even packaged goods selections for to operate differently and innovate to main- the local market in recognition that tastes in tain its position as the leading natural foods food vary, giving up on the idea of driving grocery store chain. And Harrah’s success is product costs down as much as possible but premised on a different way of thinking enhancing margins in the process. about the gambling business and what its In considering these and many similar strategy is. While other companies in the cases of organizations confronting either gaming industry build “attractions” and are knowing-doing problems—not implementing increasingly hotel, convention, and show what they know they should be doing based businesses with some gambling thrown in, on experience and insight—or doing-know- Harrah’s remains focused on gambling and ing problems—companies not acting on the on systematically understanding how to basis of the best available evidence—one fac- make money in that industry, in part by of- tor looms large as an explanation for the dif- fering a higher level of customer service. ficulties: the mental models or mind-sets of Also, Harrah’s focuses less on high rollers or senior leaders. As Mary Kathryn Clubb, for- families with small children (who have nei- merly a senior partner at Accenture, puts it, ther lots of free time nor a lot of discre- in order to get different results, you must do tionary money) and does not try to attract different things. Clubb’s insight was that in people by “comping” rooms. Instead, it has order to do different things, at least on a con- identified and focused on its best customers, sistent, systematic basis over a sustained older players who live nearby, see gambling time period, companies and their people ac- as entertainment, and are much more inter- tually must begin to think differently. That’s ested in free chips than free rooms. Changing Mental Models: HR’s Most Important Task • 125

An emphasis on the importance of mind- models. The ability to identify and help oth- set and mental models as a way of under- ers discover their mind-sets and mental mod- standing the foundation of organizational els, and the capability to change those mind- success makes intuitive sense. Every organi- sets when necessary, are possibly among the It is, in fact, zational intervention or management prac- most critical capabilities an HR professional possible to uncover and tice—be it some form of incentive compen- can have or acquire. change mind- sation, performance management system, or Many people apparently believe that sets and mental set of measurement practices—necessarily mental models or mind-sets are not a very models and to relies on some implicit or explicit model of useful focus for organizational intervention, do so human behavior and beliefs about the deter- since this sort of approach is seldom em- reasonably minants of individual and organizational per- ployed. First, changing how people think is efficiently, reliably, and formance. It is therefore just logical that (a) going to be more difficult than just changing predictably. success or failure is determined, in part, by what they do, since assumptions and mind- these mental models or ways of viewing peo- sets are often deeply embedded below the ple and organizations, and (b) in order to surface of conscious thought. Second, to change practices and interventions, mind- some people, this type of intervention seems sets or mental models must inevitably be an “softer” than the more typical HR interven- important focus of attention. tions such as redesigning incentive plans, Where do these mental models or mind- implementing new performance manage- sets come from? First, most of our models of ment programs, and introducing human re- business and behavior are unconscious and source information systems such as auto- implicit. This suggests the first practical step mated applicant tracking and computerized is to get people thinking about the implicit hiring systems. But in spite of the apparent models of human behavior, organizational difficulty and its less tangible nature, chang- performance, and strategy that are implied ing the way people think about situations is, by their organization’s ongoing practices. in fact, the most powerful and useful way to Second, a lot of what we do is based on sim- ultimately change behavior and thereby af- ply repeating what we have done before, car- fect organizational results. rying the past into the future. Companies also copy what others do—it is called bench- An Example: The “Responsibility” Mind- marking—sometimes without carefully con- set sidering whether or not their circumstances are different and whether the experience of It is, in fact, possible to uncover and change others, therefore, actually will generalize to mind-sets and mental models and to do so them. And belief and ideology play a large reasonably efficiently, reliably, and pre- role in management decisions. Incentive pay dictably. Let me provide one specific example should work, people must take more respon- of how to diagnose and intervene to change sibility for their benefits decisions, the gro- one particular mind-set. The general frame- cery business is a low-margin business so we work and process can, of course, be applied have to drive down product and people to other mind-sets and mental models. costs—and we all too infrequently examine Some colleagues at a small boutique the evidence for and the assumptions under- strategy implementation consulting company lying these beliefs. called The Trium Group, headquartered in There are some straightforward implica- San Francisco, have been reasonably suc- tions of these ideas for the human resources cessful at helping companies make mind-set function and for human resource profession- transitions, thus enhancing the companies’ als. One implication is that the HR function effectiveness and helping in their strategy must intervene somewhat less with programs implementation.3 Although their work fo- and particular techniques and practices, and cuses on several mental models, one impor- instead focus much more on helping both it- tant focus is on what they call the “responsi- self and senior organizational leaders see bility” mind-set, which they contrast with the and, when necessary, change their mental “victim” perspective. 126 • HUMAN RESOURCE MANAGEMENT, Summer 2005

An important introductory comment: make the world, including the organizational Responsibility is not the same as accounta- world, in which one lives a better place. bility. Responsibility is probably a good thing Building a responsibility mind-set or, for that for companies and their cultures, but ac- matter, changing mind-sets in general, is a countability is actually somewhat more prob- process that requires two things: (1) getting Responsibility lematic. Accountability is, of course, an idea people to acknowledge and accept that how entails feeling very much in vogue these days. People in they think about situations is under their vo- efficacious and companies and even schoolchildren are sup- litional control—choice is possible; and (2) believing one has some posed to be held accountable for their deci- having them both emotionally experience obligation to sions and actions—what they do has conse- and think about the pros and cons of alter- make the quences, and they must feel those native ways of thinking about situations. world, consequences, be they positive or negative. What Trium does is have people pair up including the There is a lot of evidence, however, that the with someone attending the same workshop organizational growing emphasis on individual accountabil- or meeting. One person in the pair is then world, in which one lives a ity—something, by the way, that is com- told to tell the other a story that has the fol- better place. pletely inconsistent with the lessons of the lowing characteristics: (1) the incident is quality movement—hinders learning and real, (2) it is work-related, and (3) the person even discovering mistakes. telling the story felt like a victim—not in The downside of the emphasis on indi- control, things were happening to the per- vidual accountability is nicely illustrated by son, there was little or nothing they could do Jody Hoffer Gittell’s research on Southwest about what was occurring, and they were un- and American Airlines during the mid- happy with what occurred. They are told to 1990s.4 American Airlines’ then-CEO tell the story in as convincing a way as possi- Robert Crandall insisted that delays come ble, so their partner actually believes the to his attention and get assigned to individ- story and feels their emotions. Then the roles uals and departments, so they would be ac- are reversed, and the partner tells his or her countable for their results and, moreover, “victim” story to the other person. would compete with each other to avoid The questions posed are: What does it creating problems. One field manager told feel like to be a victim? and What are the ad- Gittell that when a plane making a connec- vantages and disadvantages of the victim tion was late, “Crandall wants to see the role? One advantage of being in a victim role corpse.” The result of this approach was to is that one gets sympathy, and, in fact, we create a culture of fear and infighting as often see people in subunits who bemoan people and units tried to pin the blame for their shared and unfortunate fate with each problems on others. Little learning oc- other, thereby building social solidarity. Cer- curred and on-time performance continued tainly, this feeling must be familiar to human to lag. At Southwest Airlines, the view was resource professionals, who often tell stories that delays were everyone’s problem, and to each other about how their chief financial when they occurred, people needed to work officer or other senior executive refused to together to learn as much as possible so let them do the right thing or prevented them that, to the extent possible, delays and other from implementing some culture-building operational problems could be prevented in program or practice that might have en- the future. Gittell’s research showed that hanced the organization’s performance. the Southwest system actually produced The next step in the mind-set change more learning and more teamwork, result- process is to have each partner tell the same ing in better system performance, than the stories they just told each other, but now try- American Airlines approach with its empha- ing to imagine what it would be like to be sis on assigning individual or departmental more in control or more responsible for what accountability and blame. transpired. Being in control does not mean Responsibility implies something differ- things would have necessarily turned out ent. Responsibility entails feeling efficacious perfectly—organizations are interdependent and believing one has some obligation to systems, and almost no one gets to have their Changing Mental Models: HR’s Most Important Task • 127

way all the time. But the responsibility mind- changes that get pushed into the future— set is simply seeing oneself as an actor af- human resources in many organizations is fecting, or trying to affect, what goes on mostly involved in systems, operations, and rather than being in a more passive role of the pressing issues of setting pay, recruiting, Actually having things happen to oneself. and developing people. Even when HR intervening to affect mental The debriefing then continues by having adopts a more strategic role, it is mostly fo- models may be people think about the emotions they experi- cused on designing specific systems to pro- one of the more enced with this responsibility mind-set and, duce higher levels of performance in the im- efficient ways of again, discussing the advantages and disad- mediate future. making the vantages of adopting a responsibility mental There is certainly nothing wrong with changes that model. Not everything is great about being these activities or focusing on critical HR so often advocates to responsible; it is, for instance, hard work and processes that are key to organizational suc- build a high- can feel burdensome. Feeling responsible cess and dimensions that are used to evalu- performing also has many positive emotions and advan- ate the performance of the HR function. All culture. tages associated with it, including feeling these things must get done, and when they more powerful and more connected. are done well, they can contribute to the or- The point of the exercise is not to have ganization’s performance and success. Hir- people necessarily come to believe one way ing, retaining, and developing people are of thinking is better than another. The objec- critical activities in a world in which intel- tive is to have people recognize that each of lectual capital and organizational capabilities us has a choice—or actually a series of are the key source of competitive advantage, choices—we make each day about how we so working on incentive-pay plans and im- approach the world and the problems and proving recruiting and hiring systems are im- opportunities it presents to us. We can be portant activities. victims or responsible. In a similar fashion, But I suggest there may be a potentially we can choose how we view opponents and even more important activity that human re- rivals and we can choose what assumptions sources might do—the diagnosing and we make and hold about people and organi- changing of mind-sets and mental models as zations and their capabilities and potential. described in this article. Actually intervening We can choose to see the grocery industry as to affect mental models may be one of the a low-margin business where minimizing more efficient ways of making the changes costs is the only way to compete or consider that HR so often advocates to build a high- a different approach. We can see casinos as performing culture. In an environment in hotels with gambling or, as Harrah’s does, see which there are many tasks, this may be the hotel rooms as places for gamblers to sleep, most important. restaurants as places for gamblers to eat, park- Moreover, it is possible to measure and ing lots as places for gamblers to park, and so monitor the results of this process. Surveys forth. Each choice has consequences—for and interviews can reveal whether or not how we feel and, more important, for what there is consensus in how people under- we do, the decisions we make, and how we stand the causes of organizational perform- act in the situations we confront in seeking ance and the company’s strategy. And sur- to make our organizations more effective and veys and interviews also can reveal the successful. mental models people use in thinking about their role and work as well as other dimen- How HR Might Intervene in sions of their work environment and the Organizations company’s business model. Assessed over time, it is possible to chart the results of var- For many good and understandable rea- ious interventions on the mental models sons—for instance, that the urgent pres- people use and, for that matter, the actions sures of day-to-day operations drive out the and decisions they take. long-term planning and strategic thinking Human resources has, at times, been de- and the important but more fundamental scribed as one of the important keepers and 128 • HUMAN RESOURCE MANAGEMENT, Summer 2005

analysts of an organization’s culture. Culture resources must be concerned with the mental is a crucial determinant of many dimensions models and mind-sets of the people in the of organizational performance, and HR’s cul- company, particularly its leaders. Because tural role is significant. What I have argued what we do comes from what and how we here is that there is another, possibly even think, intervening to uncover and affect men- more crucial role for HR. In addition to being tal models may be the most important and concerned with the company culture, human high-leverage activity HR can perform.

Jeffrey Pfeffer received his BS and MS degrees from Carnegie Mellon University and his PhD from Stanford. He has held positions at the University of Illinois and the University of California, Berkeley, and has taught at Stanford since 1979. Pfeffer is the author of ten books and more than 100 articles and book chapters and has taught seminars in more than 27 countries.

NOTES years and meet with them occasionally to dis- cuss ideas. They came up with this particular in- 1. Taylor, A., III. (1997, December). How Toyota tervention and first introduced me to their views defies gravity. Fortune, pp. 100–108. on the importance of mental models and mind- 2. Loveman, G. (2003, May). Diamonds in the data sets and how to think about changing them. mine. Harvard Business Review, pp. 109–113. 4. Gittell, J. H. (2003). The Southwest Airlines 3. I have recommended Trium over the past few way. New York: McGraw-Hill.