Darwin or Gresham?

Managing modern organization is indeed complex. Globalization has brought
about in its wake many challenges organizations are grappling with.

Peter Drucker observed in his bestselling book, Management Challenges for the
twenty-first century that organizations and institutions as they exist today
will not last for more than thirty years unless they reinvent themselves. Past
success no longer guarantees a future. Not even the present success. Everything
we knew about running a business has changed. Intel CEO, Andy Groves message
that only paranoids will survive is more real today than ever before.

Competitive advantage for organizations today emanates largely from the
quality of the human capital they can command. While there is an increasing
realization of the leverage the right talent offers to an organization, there
has not been a commensurate realization on preserving, engaging, and enhancing
the talent.

If you dig deeper into what caused this disconnectable to hire the best, but
unable to retain the bestyou will find the root cause in their deeply ingrained
philosophical orientation and belief system. The question to ask is who is at
work? Darwin or Gresham?

Good Vs Bad

Charles Darwin needs no introduction. Survival of the fittest comes to your
mind from his theory of natural selection. When Darwin is present in your
organization, your people practices will deliver a high performance culture, you
will have a gold standard for hiring, you will differentiate and affirm, you
will fast track top talent to key positions and so on.

In its original form, Greshams Law refers to bad currency unchecked will
drive good currency out of circulation. It also means price deviates from
value. Greshams Law when applied to people management refers to the survival
of unfit. When Gresham is present in organization, you will find non-performers
not being questioned (and sometimes they are even rewarded!).

And bad performers when unchecked will drive the good performers out of
circulation is the logical application of Greshams Law in organizations! Good
performers leave as they do not see differentiated rewards and recognition. They
also leave since if bad performers are not managed out, they become a drag on
the good performers and bring the average productivity substantially down.

Organizational Reality

Organizations are full of rhetoric in claiming that they have a high
performance culture; they set stretch goals; they practice meritocracy; they
differentiate the reward for star performers; they invest in training; and so
on. Closer look at the people practices and HR systems will reveal a total
disconnect between what is touted and practiced.

Policies and systems often drive the thriving of Greshams law. An example
would be apt here: When HR policies do not allow managers to backfill a vacant
position caused due to attrition, but insist on multiple levels of approvals,
managers tend to keep the bottom performers a lot longer and in the process end
up losing good ones. The same fear of losing people also makes managers
differentiate precious little when it comes to rewarding increases.

When organizations do not consciously exercise the choice of Darwin and
articulate their people practices around this, Gresham walks in. There is place
for just one.

C Mahalingam

The author is executive VP & chief people officer, Symphony Services
Corporation.

maildqindia@cybermedia.co.in