TED@BCG Milan
Marco Alverà: The surprising ingredient that makes businesses work better
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What is it about unfairness? Whether it's not being invited to a friend's wedding or getting penalized for bad luck or an honest mistake, unfairness often makes us so upset that we can't think straight. And it's not just a personal issue -- it's also bad for business, says Marco Alverà. He explains how his company works to create a culture of fairness -- and how tapping into our innate sense of what's right and wrong makes for happier employees and better results.
Marco Alverà - Businessman, fairness crusader
Marco Alverà is an Italian/American businessman and CEO of Snam, Europe’s largest natural gas utility. Full bio
Marco Alverà is an Italian/American businessman and CEO of Snam, Europe’s largest natural gas utility. Full bio
Double-click the English transcript below to play the video.
00:13
For me, it was not being invited
to a friend's wedding.
to a friend's wedding.
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At first, I didn't really mind.
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I thought he was having a small reception.
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But then I kept meeting people
who were going to the same wedding,
who were going to the same wedding,
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and they weren't as close
to the groom as I was ...
to the groom as I was ...
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and I felt left out.
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That really sucked.
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It felt really unfair.
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For my daughters, Lipsi
and Greta, it was last week.
and Greta, it was last week.
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They were taking turns
massaging their mom's back
massaging their mom's back
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with a toy for back rubs,
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and then one of the girls felt
that the other girl had a longer go.
that the other girl had a longer go.
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That's when I walk into the room
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to find Greta in a rage,
shouting, "That's not fair!"
shouting, "That's not fair!"
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and Lipsi in tears,
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and my wife holding a stopwatch
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to make sure that each girl
had precisely one minute on the toy.
had precisely one minute on the toy.
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So if you're anything like me or my girls,
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the last thing that upset you
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probably also had to do with unfairness.
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That's because unfairness
triggers us so strongly
triggers us so strongly
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that we can't think straight.
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We become afraid and suspicious.
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Our unfairness antennae stick up.
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We feel pain, and we walk away.
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Unfairness is one of the defining
issues of our society,
issues of our society,
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it's one of the root causes
of polarization,
of polarization,
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and it's bad news for business.
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At work, unfairness makes people
defensive and disengaged.
defensive and disengaged.
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A study shows that 70 percent
of workers in the US are disengaged,
of workers in the US are disengaged,
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and this is costing the companies
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550 billion dollars a year every year.
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This is, like, half the total
spent on education in the US.
spent on education in the US.
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This is the size of the GDP
of a country like Austria.
of a country like Austria.
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So removing unfairness
and promoting fairness
and promoting fairness
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should be our priority.
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But what does it mean in practice?
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Is it about more rules?
Is it about systems?
Is it about systems?
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Is it about equality?
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Well, partly, but fairness is more
interesting than rules and equality.
interesting than rules and equality.
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Fairness works in surprising ways.
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15 years ago, I left a US investment bank
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to join a large Italian
state-owned oil company.
state-owned oil company.
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It was a different world.
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I thought the key to getting
the best performance
the best performance
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was a risk-reward system
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where you could give the high performers
bonuses and promotions
bonuses and promotions
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and give the underperformers
something to worry about.
something to worry about.
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But in this company, we had fixed salaries
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and lifelong jobs.
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Careers were set,
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so my toolkit wasn't very effective,
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and I was frustrated.
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But then I saw that this company
was producing some pockets of excellence,
was producing some pockets of excellence,
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areas in which they beat the competition
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in very tough, competitive sectors.
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This was true in trading,
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in project management --
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it was very true in exploration.
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Our exploration team
was finding more oil and gas
was finding more oil and gas
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than any other company in the world.
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It was a phenomenon.
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Everyone was trying
to figure out how this was possible.
to figure out how this was possible.
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I thought it was luck,
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but after each new discovery,
that became less and less likely.
that became less and less likely.
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So did we have a special tool? No.
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Did we have a killer application
that no one else had? No.
that no one else had? No.
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Was it one genius who was finding oil
for the whole team?
for the whole team?
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No, we hadn't hired a senior guy in years.
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So what was our secret sauce?
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I started looking at them
really carefully.
really carefully.
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I looked at my friend,
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who drilled seven dry wells,
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writing off more than a billion
dollars for the company,
dollars for the company,
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and found oil on the eighth.
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I was nervous for him ...
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but he was so relaxed.
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I mean, these guys
knew what they were doing.
knew what they were doing.
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And then it hit me: it was about fairness.
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These guys were working in a company
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where they didn't need to worry
about short-term results.
about short-term results.
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They weren't going to be penalized
for bad luck or for an honest mistake.
for bad luck or for an honest mistake.
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They knew they were valued
for what they were trying to do,
for what they were trying to do,
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not the outcome.
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They were valued as human beings.
They were part of a community.
They were part of a community.
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Whatever happened,
the company would stand by them.
the company would stand by them.
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And for me, this is
the definition of fairness.
the definition of fairness.
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It's when you can lower those
unfairness antennae, put them at rest.
unfairness antennae, put them at rest.
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Then great things follow.
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These guys could be true to their purpose,
which was finding oil and gas.
which was finding oil and gas.
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They didn't have to worry
about company politics or greed or fear.
about company politics or greed or fear.
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They could be good risk-takers,
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because they weren't too defensive
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and they weren't gambling
to take huge rewards.
to take huge rewards.
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And they were excellent team workers.
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They could trust their colleagues.
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They didn't need to look
behind their backs.
behind their backs.
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And they were basically having fun.
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They were having so much fun,
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one guy even confessed
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that he was having more fun
at the company Christmas dinner
at the company Christmas dinner
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than at his own Christmas dinner.
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(Laughter)
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But these guys, essentially,
were working in a fair system
were working in a fair system
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where they could do
what they felt was right
what they felt was right
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instead of what's selfish,
what's quick, what's convenient,
what's quick, what's convenient,
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and to be able to do what we feel is right
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is a key ingredient for fairness,
but it is also a great motivator.
but it is also a great motivator.
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And it wasn't just explorers
who were doing the right thing.
who were doing the right thing.
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There was an HR director who proposed
that I hire someone internally
that I hire someone internally
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and give him a managerial job.
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This guy was very good,
but he didn't finish high school,
but he didn't finish high school,
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so formally, he had no qualifications.
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But he was so good, it made sense,
and so we gave him the job.
and so we gave him the job.
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Or the other guy, who asked me
for a budget to build a cheese factory
for a budget to build a cheese factory
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next to our plant in Ecuador,
in the village.
in the village.
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It didn't make any sense:
no one ever built a cheese factory.
no one ever built a cheese factory.
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But this is what the village wanted,
because the milk they had would spoil
because the milk they had would spoil
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before they could sell it,
so that's what they needed.
so that's what they needed.
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And so we built it.
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So in these examples and many others,
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I learned that to be fair,
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my colleagues and I, we needed
to take a risk and stick our head out,
to take a risk and stick our head out,
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but in a fair system, you can do that.
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You can dare to be fair.
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So I realized that these guys
and other colleagues
and other colleagues
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were achieving great results,
doing great things,
doing great things,
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in a way that no bonus could buy.
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So I was fascinated.
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I wanted to learn
how this thing really worked,
how this thing really worked,
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and I wanted to learn it also for myself,
to become a better leader.
to become a better leader.
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So I started talking
to colleagues, to coaches,
to colleagues, to coaches,
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to headhunters and neuroscientists,
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and what I discovered
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is that what these guys were up to
and the way they worked
and the way they worked
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is really supported
by recent brain science.
by recent brain science.
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And I've also discovered
that this can work at all levels
that this can work at all levels
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in any type of company.
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You don't need the fixed salaries
or the stable careers.
or the stable careers.
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This is because science shows
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that humans have
an innate sense of fairness.
an innate sense of fairness.
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We know what is right and what is wrong
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before we can talk or think about it.
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My favorite experiment
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has six-month old babies
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watching a ball
trying to struggle up a hill.
trying to struggle up a hill.
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And there's a helpful, friendly square
that pushes the ball up the hill,
that pushes the ball up the hill,
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and then a mean triangle
pushes the ball back down.
pushes the ball back down.
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After watching this several times,
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they ask the babies to pick,
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to choose what to play with.
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They can pick a ball,
a square or a triangle.
a square or a triangle.
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They never pick up the triangle.
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All the babies want to be the square.
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And science also shows
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that when we see or perceive fairness,
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our brain releases a substance
that gives us pleasure,
that gives us pleasure,
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proper joy.
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But when we perceive
unfairness, we feel pain ...
unfairness, we feel pain ...
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even greater pain
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than the same type of pain
as if I really hurt myself.
as if I really hurt myself.
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That's because unfairness triggers
the primitive, reptile part of our brain,
the primitive, reptile part of our brain,
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the part that deals
with threats and survival,
with threats and survival,
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and when unfairness triggers a threat,
that's all we can think about.
that's all we can think about.
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Motivation, creativity, teamwork,
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they all go way back.
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And it makes sense
that we're wired this way,
that we're wired this way,
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because we're social animals.
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We need to be part
of a community to survive.
of a community to survive.
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We're born so helpless
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that someone needs to look after us
until we're maybe 10 years old,
until we're maybe 10 years old,
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so our brain evolves towards food.
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We need to be in that community.
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So whether I like it or not,
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not being invited to the friend's wedding,
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my lizard brain is generating
the same response
the same response
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as if I'm about to be pushed out
from my community.
from my community.
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So science explains quite nicely
why fairness is good
why fairness is good
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and why unfairness
makes us really defensive,
makes us really defensive,
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but science also shows
that in a fair environment,
that in a fair environment,
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not only do we all want to be the square,
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but we tend to be the square,
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and this allows other people
to be fair in turn.
to be fair in turn.
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This creates a beautiful fairness circle.
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But while we start off fair ...
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one drop of unfairness
contaminates the whole pool,
contaminates the whole pool,
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and unfortunately,
there's plenty of drops in that pool.
there's plenty of drops in that pool.
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So our effort should be to filter out
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as much unfairness
as we can from everywhere,
as we can from everywhere,
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starting from our communities,
starting from our companies.
starting from our companies.
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I worry about this a lot because I lead
a team of 3,000 excellent people,
a team of 3,000 excellent people,
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and the difference between
3,000 happy, motivated team workers
3,000 happy, motivated team workers
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and 3,000 clock-watchers is everything.
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So the first thing I try to do
in my fairness crusade
in my fairness crusade
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is to try to take myself
out of the equation.
out of the equation.
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That means being aware of my own biases.
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For example, I really like
people who say yes
people who say yes
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to whatever I suggest.
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(Laughter)
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But that's not very good for the company
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and not very good
for anyone who has different ideas.
for anyone who has different ideas.
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So we try to actively promote
a culture of diversity of opinions
a culture of diversity of opinions
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and diversity of character.
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The second thing we do
is a little more procedural.
is a little more procedural.
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We look at all the rules, the processes,
the systems in the company,
the systems in the company,
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the ones we use to take decisions
and allocate resources,
and allocate resources,
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and we try to get rid
of anything that's not very clear,
of anything that's not very clear,
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not very rational, doesn't make sense,
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and we also try to fix
anything that's limiting
anything that's limiting
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the transfer of information
within the company.
within the company.
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We then look at the culture
and the motivation for the same reasons.
and the motivation for the same reasons.
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But my point is that however hard
you look at the rules,
you look at the rules,
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the processes, the systems --
and we have to do that --
and we have to do that --
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but however hard we look,
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we're never going to do enough
to get to the real essence of fairness.
to get to the real essence of fairness.
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That's because the last mile of fairness
requires something else.
requires something else.
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It's about what people's emotions are,
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what their needs are,
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what's going on in their private lives,
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what society needs.
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These are all questions and elements
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that are very hard to put
into a spreadsheet, into an algorithm.
into a spreadsheet, into an algorithm.
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It's very hard to make them
part of our rational decision.
part of our rational decision.
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But if we miss these,
we're missing key important points,
we're missing key important points,
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and the outcome is likely to feel unfair.
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So we should cross-check our decisions
with our fairness center switched on.
with our fairness center switched on.
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Is it right that this guy should get
the job he's really hoping to get?
the job he's really hoping to get?
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Is it right that this guy should be fired?
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Is it right that we should be charging
so much for this product?
so much for this product?
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These are tough questions.
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But if we take the time to ask ourselves
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whether the rational answer
is the right one ...
is the right one ...
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we all know deep inside
what the answer is.
what the answer is.
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We've known since we were babies.
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And to know what the right answer is
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is pretty cool for decision-making.
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And if we turn on our hearts,
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that's the key to getting
the real best out of people,
the real best out of people,
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because they can smell it if you care,
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and only when you really care
will they leave their fears behind
will they leave their fears behind
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and bring their true selves to work.
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So if fairness is a keystone of life,
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why isn't every leader
making it their priority?
making it their priority?
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Wouldn't it be cool to work
in a company that was more fair?
in a company that was more fair?
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Wouldn't it be great to have
colleagues and bosses
colleagues and bosses
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that were selected and trained
for fairness and for character
for fairness and for character
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and not based on 60-year-old GMATs?
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Wouldn't it be nice to be able
to knock on the door
to knock on the door
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of a Chief Fairness Officer?
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We'll get there,
but why is it not happening now?
but why is it not happening now?
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Well, partly, it's because of inertia,
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partly, it's because fairness
isn't always easy.
isn't always easy.
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It requires judgment and risk.
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Drilling that eighth well was a risk.
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Promoting the guy who didn't finish
high school was a risk.
high school was a risk.
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Building a cheese factory
in Ecuador was a risk.
in Ecuador was a risk.
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But fairness is a risk worth taking,
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so we should be asking ourselves,
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where can we take this risk?
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Where can we push ourselves
a little bit further,
a little bit further,
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to go beyond what's rational
and do what's right?
and do what's right?
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Thank you.
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(Applause)
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ABOUT THE SPEAKER
Marco Alverà - Businessman, fairness crusaderMarco Alverà is an Italian/American businessman and CEO of Snam, Europe’s largest natural gas utility.
Why you should listen
Marco Alverà has 20 years of experience in Italy's most important energy companies. He holds a degree in Philosophy and Economics from the London School of Economics and started his career working at Goldman Sachs in London.
In 2002, Alverà joined Enel as Director of Group Corporate Strategy and a member of the management committee, contributing significantly to the development of the company's gas strategy. In 2004, he became Chief Financial Officer of Wind Telecom and oversaw the sale of Wind to Orascom.
In 2005, Alverà moved to Eni where he worked for 10 years holding various positions. He joined the company as Director of Supply & Portfolio Development at the Gas & Power Division, successfully navigating the group through the gas Russia-Ukraine gas crisis in the Winter of 2006. In 2008 he moved to Eni's Exploration & Production Division as Executive Vice President for Russia, Northern Europe, and North and South America. In 2010 he was appointed Chief Executive Officer of Eni Trading and Shipping. In 2013, he took on responsibility for the Midstream business unit, which consolidates the results of Eni's Gas & Power Division and brings together all of the supply, logistics and trading activities linked to energy commodities. He was later appointed Chief Retail Market Gas & Power Officer at Eni.
Alverà is a Visiting Fellow of the University of Oxford. He currently serves as President of GasNaturally, non-executive director of S&P Global and member of the General Council of the Giorgio Cini Foundation in Venice.
Marco Alverà | Speaker | TED.com