Ethan S. Bernstein

In early 2020, the world began what is undoubtedly the largest work-from-home experiment in history. Now, as countries reopen but Covid-19 remains a major threat, organizations are wrestling with whether and how to have workers return to their offices. Business leaders need to be able to answer a number of questions to make these decisions. Primary among them is “What impact has working from home had on productivity and creativity?”

To help answer that question, we decided to explore how employees have fared since they began working virtually. To that end, we started surveying a diverse group of more than 600 U.S.-based white-collar employees during the second half of March and have continued to do so every two weeks since then. (This article is based on results collected through May.) Approximately half of our respondents are women, and half are men; they hail from 43 states; nearly half are married; and more than a third have children. About 40% hold management positions. We have been asking them about their job satisfaction, work engagement, perceptions of their own performance, conflicts with colleagues, stress, negative emotions, and current living situation, among other questions.

Using data from embedded participant-observers and a field experiment at the second largest mobile phone factory in the world, located in China, I theorize and test the implications of transparent organizational design on workers’ productivity and organizational performance. Drawing from theory and research on learning and control, I introduce the notion of a transparency paradox, whereby maintaining observability of workers may counterintuitively reduce their performance by inducing those being observed to conceal their activities through codes and other costly means; conversely, creating zones of privacy may, under certain conditions, increase performance. Empirical evidence from the field shows that even a modest increase in group-level privacy sustainably and significantly improves line performance, while qualitative evidence suggests that privacy is important in supporting productive deviance, localized experimentation, distraction avoidance, and continuous improvement. I discuss implications of these results for theory on learning and control and suggest directions for future research.

Workplace transparency provides a foundation for learning, control, and therefore productivity. Yet, in a world obsessed with transparency, Professor Bernstein’s research shows that limitations exist--that transparency-enhancing tools can backfire due to the unintended consequences of too much transparency at work.

Why does workplace transparency work when it does? Why does it disappoint when it does?  

Professor Bernstein’s research, which uses multiple methods to address those two questions, is centered on the finding that not only does transparency reveal what employees do, it can also change what they do, with both intended and unintended consequences. A bright light helps you study an Old Master painting, but it also affects the paint and changes or fades the colors. Just as museums need to balance the need to see and the need to protect, organizations need to balance the need to observe with the observed party’s need to be private. 

Those organizations which fail to balance observer and observed perspectives on workplace transparency may do so at their peril, resulting in what Professor Bernstein has termed a transparency paradox or transparency trap: overly-transparent work environments, because they leave employees feeling exposed, may produce less-transparent employees who seek to actively conceal what they are doing—even when making improvements—thus reducing productivity and, paradoxically, transparency. 

Professor Bernstein continues to conduct research to, in his words, make transparency transparent.

A common theme that integrates Professor Bernstein's research and course development is how the design of boundaries to observation in organizations can shape more productive employee behaviors in increasingly transparent workplaces. If the stream of research above challenges existing assumptions about transparency, empirically and theoretically exploring the unintended consequences of too much transparency at work, this second stream maps what is to be done, identifying the ways in which managers and employees (the observers and the observed) can strategically use boundaries to create zones of privacy, productive sweet spots that strike a balance between the dual needs for transparency and privacy.

The Managing Human Capital course has been specifically designed to teach practical skills for the future general manager (not just the human resource practitioner) who seeks to manage both other people and her or his own career with optimal effectiveness. We will explore, at a more advanced level than was possible in LEAD, those people-related issues and challenges that any good general manager should understand to be effective.

The term human capital implies that people have the capacity to drive organizational performance. The basic premise of this course is that how one manages others can be the source of sustainable competitive advantage for organizations and for individual leaders within them. Any and all students who believe they will need to effectively manage other people to produce superior business results (revenues, profits, growth) while also creating a unique place to work (such that superior business results are sustainable) should take this course.

Educational Objectives

The objective of Managing Human Capital can be captured in a simple question: How can I create places where talented people will gather, produce, develop, and thrive? 

While the question is simple in concept, it is remarkably difficult to execute. Future graduates of HBS, like the population at large, will have more and more choices about how to work and how to manage work, especially given advances in “big data,” AI, and other workplace technologies. They, and their companies--from the great global enterprises of the 21st century to the smallest entrepreneurial venture--will struggle with common questions and concerns about the people who work in their organizations, such as:

• Module 1 (Hiring): What kind of people do I need, and how do I hire them?
• Module 2 (Socialization): How do I effectively on-board them, setting them up for success?
• Module 3 (Performance Management): How do I keep them fully engaged and productive?
• Module 4 (Compensation and Rewards): How do I make sure they are properly incented to do what the organization needs them to do?
• Module 5 (Coaching Effective Managers and Talent Development): How do I develop them over time, so they are prepared to take on bigger roles down the road? How do I let go of those who are not contributing?
• Module 6 (Structure): How do I architect my group, team, division, or organization to make the management of human capital easier, not harder?
• Module 7 (Reimagining the Management of Human Capital): How do I use “Future of Work” trends to my benefit and to my organization's advantage? How can I be ready for the way human capital will be managed when I come back for my 10th or 20th MBA reunion--and what experiments should I conduct in my teams and organizations in the interim to stay on the leading edge (without accidentally reinventing the wheel and rediscovering things we already knew)?

In each module, we will intentionally discuss cases that frame both traditional and bleeding-edge “Future of Work” approaches to each human capital challenge. The ‘answer’ will often lie somewhere in-between the extremes, but will-with regularity-come back to a set of guiding criteria that connect how human capital is managed with the goal of organizational performance.

In each module, and indeed within almost every session, we will explore these topics through three lenses: managing others, being managed by others, and managing our own human capital.

Professor Bernstein taught Leadership and Organizational Behavior (LEAD) from 2013-2016 (7 sections).  This course focuses on how managers become effective leaders by addressing the human side of enterprise.

The course is divided into five modules:
Leading Teams: In a world where most problems faced by organizations are too complex for a single individual to tackle alone, leadership frequently involves forming, mandating, and managing teams. And yet teams are fickle. Even as teams become more and more common at all levels of organizations, a shocking number of them fail to live up to their potential or even deliver at all. Small differences in the leadership of teams can have large consequences for the success of their efforts. In six class sessions, we build an understanding of how leadership of team identity/design and team processes can significantly improve team effectiveness and the chances of becoming a high-performing team.

Enhancing Interpersonal Effectiveness: Those in charge have always depended on others to get work done. This means building a network of effective work relationships. The segment begins by identifying the critical ingredients for building effective relationships with superiors, colleagues, and subordinates. We will look at various interpersonal relationships from different perspectives, including hierarchical, demographic, and cultural aspects, exploring the nuances of working with those from varied demographic backgrounds and the advantages and disadvantages of different communication and influence strategies. The aim of this segment is to enable managers to successfully build effective work relationships as they apply to managing in all directions.

Leading, Designing, and Aligning Organizations: This module explores in depth what it takes to be an effective leader. This segment will also examine what it takes to achieve “congruence” among an organization's elements:  its strategy, critical tasks, formal organization, people, and culture. We will study a number of leaders “in action” to gain insight into the critical functions and personal qualities that contribute to effective leadership. To be effective, the critical elements of an organization need to be in alignment.

Leading Change: Leaders’ attempts to renew or change their organizations often fail. In this segment of the course we will compare and contrast efforts to transform organizations in order to identify critical stages and activities in the change process. We will identify different approaches for developing and communicating a vision for an organization and for motivating people to fulfill that vision. We address the following questions: What are the primary sources of resistance to change? What are the most appropriate ways for overcoming them? What change strategies “work” and under what conditions?

Developing Your Path: In this final module, we will focus on several strategic issues involved in building a dynamic career, paying particular attention to early- and mid-career choices and dilemmas. We will consider the following topics:  How do individuals learn to lead? What critical experiences and relationships are needed?

The LEAD course has the following six goals:

• The course offers a realistic preview of what it means to manage
• The course helps students begin to transform professional identity from individual contributor to manager
• The course helps students confront both the task learning and personal learning involved in becoming a manager
• The course addresses the process of developing effective relationships with a diverse collection of individuals and groups
• The course helps students develop an understanding of what it takes to be an effective leader
• The course helps students learn how to be proactive and entrepreneurial in developing your leadership talents over the course of your career

Professor Bernstein took particular joy in teaching LEAD as he was a student in the LEAD course in the fall of 2000 (Section D).