The favor ledger is more honest than the org chart

Series「People Don't Follow the Org Chart」 · Part 3 of 13 · Part 1 · How people group
Prologue：The people who aren't on the org chart

One department needs to borrow a person from another. On the chart, that goes through approval. What actually happens is one manager phones the other and gets the person the same day, because last quarter he covered an urgent job for her.

This happens in every company every day. It's nowhere on the chart, and it decides how much gets done.

Give, receive, repay

Marcel Mauss's The Gift (1925) studied exchange in Pacific islands and North American tribes, but the conclusion applies to any organization: a gift is never free. Giving carries three obligations: to give, to receive, and to repay. Refusing to receive refuses the relationship. Receiving without repaying creates a debt within it. What is exchanged is not the object but the relationship itself.

Japanese workplaces run this mechanism more precisely than most societies. Kari and kashi, debt and credit in favors, are everyday words. Covering a shift, taking the blame, backing someone in a meeting, the year-end gift: all are ways of keeping the ledger. Nobody writes it down, and everyone knows their balance.

Some call this a backward relationship culture that systems will replace. I don't think so. Mauss's observation is that reciprocity is one of the base mechanisms by which humans form groups, and systems are built on top of it. A system can make some exchanges explicit. It cannot remove them.

The chart draws authority; the ledger records credit

The org chart answers "who can instruct whom." The favor ledger answers "who will do a little extra for whom." The two books often disagree.

Someone low on the chart who has helped everyone for ten years can be the company's largest creditor on the ledger. A word from him carries more than a director's instruction. That is the influence line from the prologue to this series. Conversely, a parachuted-in executive has large authority on the chart and a zero balance on the ledger: his instructions are executed, but nobody does a little extra.

The most typical case in a Japan entity is the person sent from HQ. He arrives with HQ's authority and not a yen of credit in Tokyo. His first two years are better understood as making deposits than as managing. Those who understand this do a few favors before making demands. Those who don't make demands first, and then find that nobody goes beyond the instruction.

The design decision: protect it, don't settle it

When HQ notices the favor ledger at work, the common reaction is "that's informal" and a process to replace it. The process runs, and things slow down, because what one phone call used to settle now waits three days for approval.

My recommendation is the opposite: accept the ledger as part of the organization and design systems to protect it rather than clear it. Three things.

One: don't let the ledger become unfairness. Favors are fine, but promotion and pay go through grades, not favors. The ledger governs "a little extra," not "how much you earn." Two: give newcomers a chance to deposit. In a parachuted executive's first three months, arrange work where he can help others, not just make requests. Three: don't transfer the biggest creditor away. When he leaves, he takes the company's credit balance with him, and it appears on no handover list.

Back to the diagnosis

In my organizational diagnosis I walk three decision chains to find who actually sways decisions. At each step I ask one question: this got done because who owed whom? The answer is usually far more honest than the chart.

Your company's largest creditor on the favor ledger: where are they on the org chart?

In this series
Previous：5, 15, 50, 150: when to redraw the org chart
Next：Fifty meters apart, conversations stop

The ledger doesn't close when you leave a company. I wrote about how your exit keeps being read for years in the favors you leave behind.