The Moral Molecule

Neuroscience and economic behavior

This Is Your Organization on OXYTOCIN, Part I

Ofactor theory

For a decade, I had the honor of serving on the same university faculty as Peter Drucker. Although my research took a different tack than his, I have come to reach quite similar conclusions about organizational behavior.

Specifically, much like Drucker, my research has shown that organizations that are people-centered and managed by clear objectives are the best places to work and, over time, enjoy the most success.

The big difference is that Drucker worked mostly through observation—a discipline that he called “social ecology.” My work stems from a theory that I have developed based on neuroscience experiments performed in my laboratory, and then augmented by field studies at corporations and nonprofit organizations.

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The theory is called Ofactor, where the “O” indicates a focus on oxytocin, the chemical foundation for trusting others that my lab was the first to discover.

From this understanding of how the “trust molecule” works in the brain, my team and I have identified policies that managers can use to empower employees to excel and, at the same time, hold them accountable for their decisions. The policies fall into eight categories that, conveniently, have an easy-to-remember acronym: OXYTOCIN. This stands for Ovation, eXpectation, Yield, Transfer, Openness, Caring, Invest and Natural. (Previous posts have given examples of how to implement policies in each of these categories.)

In scientific shorthand, Ofactor theory says: OXYTOCIN → Trust → Engagement → Performance.

That is, when managers implement policies that raise trust, colleagues at work have the incentives and resources to perform better, boosting organizational performance. The neuroscience provides precise predictions for how to best practice Ovation (give praise), build eXpectations (set clear goals) and promote the other OXYTOCIN factors. My case studies have highlighted how various businesses have implemented these approaches.

The neuroscience makes an additional prediction: When work colleagues are trusted and when they understand how their organization improves the lives of customers—its core purpose—then work becomes enjoyable. This leads to another equation: Trust x Purpose = Joy 

In next month’s posting, I’ll present data from thousands of employees who we have tested that confirm the predictions of Ofactor. Meanwhile, I encourage you to “reverse-engineer” your organization. Assess the joy among your colleagues. If it is low, check your OXYTOCIN factors to raise trust, and work harder to communicate your organization’s core purpose.

Your employees are sure to respond well. Their brains, after all, are wired to do so.

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This originally appeared in The Drucker Exchange Oct. 3, 2013 and is used by permission. 

Paul J. Zak is a neuroeconomist at Claremont Graduate University in Claremont, CA.  His book The Moral Molecule will be published in 2012.

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