I was delighted as I walked into a large government organization and spotted a banner proclaiming: Employees are our most important asset.
Traditionally, people and culture get short shrift in this organization, so I was eager to ask several frontline managers what was new. Are there new directives, new management, a new leadership philosophy or new incentives?
The answer was no. Nothing had changed except for the hanging of the banner.
In fairness, nearly every organization’s leaders emphasize the importance of people and culture. These values are highlighted in mission statements, speeches and strategic meetings. However, when you look under the surface, the actual situation often reveals a different story.
This oversight is costly because people and culture are the driving forces behind organizational performance. Let’s take a look at:
- The cognitive biases that cause managerial distraction
- A few examples of how we fool ourselves
- Some tips for managers to better focus on people
The Extrinsic Incentives Bias
One cognitive bias explains this gap: the Extrinsic Incentives Bias. This bias describes the tendency to believe others are mainly driven by external rewards, like money. Meanwhile, we see ourselves as motivated by internal factors, such as opportunities for growth or engaging in meaningful work. A study by George Mason University found that, although managers often consider money the top motivator for employees, the employees themselves consistently see recognition as their main motivator.
This disconnect often causes executives to focus too much on “hard” metrics and processes, like compensation structures and budgets, while ignoring the “soft” aspects of leadership—such as open communication, trust, morale and culture.
It’s not that money isn’t important; it’s just that intrinsic rewards, like a sense of purpose, achievement and personal growth, have a more lasting and powerful influence on motivation and performance.
The Cognitive Divide: Numbers vs. Relationships
Another factor here is how our brains process information. Research suggests we have two separate cognitive systems that work in different areas:
A system for analytical thinking geared toward numbers, metrics, and logic
A system for relational thinking that emphasizes emotions, empathy and human connections
A 2008 study by Joshua Greene and his team at Harvard University highlighted the interaction and interference between these systems. Using functional magnetic resonance imaging (fMRI), they found that activity in regions associated with relational thinking decreases when the brain is heavily engaged in analytical tasks. Conversely, focusing on relational tasks suppresses the analytical regions.
This “cognitive switch” suggests that the two systems don’t operate at the same time but compete for dominance depending on the task.
Practically, this means that when we focus on budgets, spreadsheets and key performance indicators, we unconsciously hinder our ability to think about people, relationships and culture. This explains why discussions about trust, morale or communication often seem out of place in meetings dominated by hard metrics—they engage entirely different neural systems.
This finding highlights why leaders must deliberately balance their focus between leadership’s “hard” and “soft” aspects. Without intentional effort, the pull of analytics can overshadow the relational dynamics that fuel innovation, trust and long-term success.
A Larger Cognitive Bias?
Could there be a broader bias at play here? Perhaps it’s a form of confirmation bias, where leaders, often trained in analytical disciplines like finance, engineering or law, gravitate toward what they know best. Numbers seem safe, measurable and actionable. It’s what we managers are taught and rewarded to do. In contrast, concepts such as trust or morale can feel nebulous, subjective and more difficult to address.
There might be a hard-over-soft bias that affects the whole organization. As mentioned earlier, psychologists have shown that intrinsic motivators like purpose, autonomy and personal growth are much more effective at engaging people than structured HR awards.
Fooling Ourselves: Looking Under the Hood
The banner was like a shiny paint job. When we take a closer look at how this and other organizations operate, we see a disconnect. Here are a few examples:
1. The Selection of Front-Line Managers
I studied how a large government organization selected new front-line managers. The leadership claimed they prioritized both technical and people skills. However, when I examined the actual selection process, candidates were chosen almost entirely for their technical expertise, with little to no regard for their ability to manage people. The result? Leaders who excelled at solving technical problems but struggled to build trust, inspire teams or foster open communication.
2. Managers’ To-Do Lists
Take a look at the typical manager’s to-do list. It’s dominated by urgent administrative tasks: attend budget review, submit report and update calendar. What’s missing? Leadership responsibilities. Rarely do you see tasks like “provide Jennifer with positive feedback,” “hold one-on-one check-ins with the team” or “recognize outstanding work during the staff meeting.” Leadership—the art of inspiring and motivating people—is rarely treated as a tangible priority.
3. The Absence of Leadership Reviews
Organizations dedicate significant time to budget reviews, analyzing financial performance meticulously. However, there is no parallel process for leadership. I introduced leadership reviews to a large group at the State Department, and the results were impressive: notable positive outcomes and a surge of creative ideas. Think of a “leadership review”—a regular, structured meeting where best practices for leadership, strategies for culture enhancement, and trust-building techniques are discussed. These monthly or quarterly sessions could revolutionize organizations by shifting the focus from numbers to behaviors that foster long-term success. Additionally, since there are no “gotchas” during the sessions, they would enhance morale among all participants.
4. The Default to Systems Over People
When executives try to change culture, they often turn to technology solutions. For example, they might introduce a new IT system or launch a workflow app or tool, hoping these changes will encourage more collaboration or innovation.
But culture isn’t built by software; it’s shaped by people. Hiring managers with strong interpersonal skills and a commitment to fostering trust would be a far more effective way to shift culture. So would implementing people-oriented processes like check-ins in which managers check in with employees weekly to offer help or just a quick positive chat.
Changing the Focus
To bridge this gap, organizations need to make deliberate changes:
- Prioritize People Skills in Leadership Selection: Assess candidates on their ability to build trust, promote communication and motivate teams alongside technical skills.
- Integrate Leadership into To-Do Lists: Encourage managers to include relationship-focused tasks in their daily agendas.
- Conduct Leadership Reviews: Develop a structured process for discussing leadership practices, sharing successes and brainstorming ways to improve the culture. Maintain a positive tone.
- Shift the Mindset: Guide executives and managers to balance their focus on the “hard” and “soft” sides of leadership, understanding that both are vital for long-term success.
Tips For Executives: The Hard vs. The Soft Divide
Recognize the Bias: Acknowledge the tendency to prioritize hard issues (like metrics and structure) over soft ones (like relationships and trust).
Understand Attributional Bias: Be mindful that we often see things differently for ourselves versus others. For example, you might value your relationship with your boss as critical, but when thinking about employees, you don’t. You might prioritize organizational structure instead.
Audit Your Calendar: Review your schedule to identify the balance between hard and soft activities. Adjust as needed to give adequate attention to leadership tasks like fostering morale, giving feedback and building trust.
Pause Before Reorganizing: Think carefully before initiating a reorganization. Is it addressing the real issue, or is it a default solution masking deeper cultural or leadership challenges?
Final Thoughts
If leaders genuinely believe that people and culture are critical, they need to back those beliefs with actions—not just words. As the examples show, it’s easy to default to the comfort of numbers, processes and policies. But the real work of leadership lies in inspiring and supporting people. After all, innovation, collaboration and trust don’t come from budgets or org charts—they come from how we lead.
The question is: Are you ready to start working on what lies under the hood? The first tiny step for all of us is to shift our to-do lists toward people.
