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Strategic Mentalizing Can Save Jobs

A success story set in India.

Photo by Sonika Agarwal on Unsplash

This article provides a real-life example of how you can use social perspective taking, gaining, shifting and shaping strategically, to deal with business challenges

About 12 years ago, as I was just starting to unpack my suitcase upon my return from a long-term placement in Kenya, one of my former employers in the Netherlands approached me to see if I was interested in an assignment with their software development subsidiary in Chennai, a City in India. I told them that I was definitely interested in the position.

Initially, I was designated as a project manager. After ten months in that role, the CEO of the Indian subsidiary abruptly left the organization, and I was asked to take her place. Although I saw the promotion as an excellent opportunity, I was already in the process of shifting my professional focus from business administration to organizational psychology. Therefore, I committed to serving as interim General Manager for one year after which a new CEO would be hired.

I knew that the year ahead was going to be challenging, as the Dutch parent company was on precarious financial footing. Moreover, the Indian subsidiary was left in a state of disarray following the sudden departure of the former CEO, who had struggled with the challenges that she faced trying to keep the development operation afloat.

During my time as a project manager, I had gained a comprehensive understanding of the difficulties that the subsidiary was facing. Turning the ship around would require rebuilding a solid organizational structure, reigniting the motivation of the workforce, and refocusing everybody on their primary responsibilities.

It took three months of concerted effort with the management team before we began to observe that the chaos within the subsidiary was being replaced by a sense of control, an increase in worker motivation, and a renewed focus on core responsibilities.

Just as things were starting to head in the right direction, however, the CEO of the Dutch parent company contacted me to give me a heads up that both he and the company’s largest investor were planning to visit the Indian subsidiary in two weeks. 

He added ominously, “Prepare yourself, as the investor is adamant about decreasing the headcount as a cost-cutting measure.” 

As you can imagine, I wasn’t thrilled about this news. We had just restored the workforce to an even keel and gotten the operations moving in the right direction. Moreover, we had parted ways with personnel who didn’t align well with the organization’s new course, and these vacancies needed to be filled.

I immediately arranged a meeting of the local management team to discuss the upcoming visit. The mandate that came out of that meeting could be summarized in one sentence: 

We needed a compelling story to share with our upcoming visitors; one that would provide us with a fighting chance of retaining our already overstretched human resources.

I was not simply suggesting that we sit down and craft a convincing business case for avoiding layoffs. The story that we needed to convey had to be “experienced” by our visitors throughout their entire week-long visit. We needed to deliver a convincing narrative centered on trust, competence, hard work, and dedication through both our verbal and nonverbal communication.

How did we go about it?

In crafting and delivering this narrative, we leveraged our powerful human capacity for strategic mentalizing. What is strategic mentalizing?

Strategic mentalizing is the highest and most cognitive level of mentalization. It enables us to look beyond observable signals and cues to form increasingly rational models of what is going on in the minds of others. It is on this strategic level that we are able to make theory of mind inferences. We refer to this level as “strategic mentalizing” because it involves two distinct strategic orientations and objectives: first, to enhance affiliation and cooperation; and second, to distance from others and/or gain a competitive advantage. 

Often, however, our motives for interacting with others are not exclusively directed to either enhancing cooperation or gaining competitive advantage. Many social interactions, such as negotiations, involve overlapping goals, so that both enhancing cooperation and gaining competitive advantage play a role. These “mixed-motive” situations require increasingly complex higher-order mentalization. (1)

Even though we were in competition with the investors’ intention to cut costs by culling the Indian workforce, we were intent on cooperating when it came to saving the overall business from going under.

How did we use strategic mentalizing to design our story?

Mentalization centers around understanding perspectives. There are four levels involved in understanding the perspectives of people:

1. “Perspective taking” involves noting physical changes in another person relative to their surroundings, taking their vantage point, while looking for affect and intent signals and cues in their nonverbal behavior. [Perspective taking is a basic mentalizing competency.]
2. “Perspective gaining” involves sharing the conceptual viewpoint of another person. We gain the perspectives of others through verbal or written information exchanges. 
3. Mentalization is critical to the ability to shift between different perspectives and to compare different mindsets to one another, which we refer to as “perspective shifting.” 
4. Finally, mentalization is key to our ability to shape the perspectives of others [which we therefore call “perspective shaping”]. (1)

Taking each level into consideration optimizes your chances of achieving the desired outcome.

Let’s apply the above concepts to the task we faced.

In order to prepare effectively for the upcoming visit, we recognized the importance of gaining the perspectives of our visitors.

Perspective gaining is a gradual and interactive process by which we gather information about increasingly complex mental states of another person and combine it with social information that we already know about the person (or about people in general), while taking contextual and situational factors into account.” (1)

We had easy access to the Dutch CEO to gain his perspective on the matter. Essentially, his desire was for the investor to provide the company with additional financial backing rather than resorting to cost-cutting measures that would result in the dismissal of essential employees. 

When it came to the investor, however, we had no such access, and therefore our understanding of her perspective was limited to her expressed intention to cut costs by reducing the workforce. I decided to reach out to another Dutch colleague, whom I considered to be a discerning judge of character, to learn more about the investor’s personality based upon their past interactions.

On the basis of our perspective gaining efforts, we concluded that our two visitors were diametrically opposed in terms of their perspectives on how to best resolve the company’s current financial difficulties, and in terms of their personalities.

When we took their roles within the company into consideration, we understood that the Dutch CEO regarded the company as his livelihood, whereas the investor viewed the enterprise as more of a “passion project.” 

Additionally, we learned that the Dutch CEO could be characterized as having an analytical mindset, prioritizing numbers and facts in his problem-solving approach. On the other hand, the investor seemed to lean more toward an intuitive thinking style. While she also employed logical reasoning, experiential elements played a significant role in her decision-making process.

Taking all the above into account, our story needed to have two story lines.

First, we needed one that would lead the investor to gain a sense of pride in, and a personal connection with, the Indian subsidiary. We wanted to reflect that she had made the right decision to invest in both the parent company and its subsidiary in India.

Second, we needed to help the investor gain an understanding of the broader impact that a reduction in force in the Indian subsidiary would have on the viability of the entire organization. This was important, as it would enable the investor to shift between her own perspective and that of the management team. In other words, we needed a storyline that would promote the investor’s ability to shift perspectives.

Perspective shifting (simultaneously holding and rotating multiple views in mind) is a form of “dialectical thinking” — analytical reasoning that pursues knowledge and truth when faced with questions and conflicts. (1)

This ability to shift perspectives would make the investor better able to decide what was best for the organization as a whole. Perspective shifting is a precursor to perspective shaping as it initially helps a person to evaluate the pros and cons of different approaches or courses of action.

Perspective shaping is our conscious and controlled use of mentalization to impact the mental states and behavior of other people in order to meet our objectives. (1)

Thus, the next stage of our narrative involved assisting the investor in shifting from a negative view of the Indian operation to a more favorable one.

Ultimately, our storytelling approach had to remain fluid and adaptable to new information, allowing us to ensure that our narrative remained effective and consistent throughout our visitors’ stay.

How did we communicate our story?

Regarding the first storyline, in order to foster the investor’s sense of pride in, and personal connection with, the subsidiary, we instructed all employees to dress smartly when coming to the office each day. Normally, the dress code was casual, to say the least.

We requested their participation in engaging with the investor throughout the week — welcoming her warmly when she arrived at the office on the first day, greeting her each morning during her stay, showing her the projects they were working on, sharing their background stories — all to make her feel included and at home. 

Our Indian colleagues were always friendly and engaging, however, they tended to become reserved in the presence of people who they perceived to hold a higher status. Sensitivity to status is quite pronounced within Indian culture due to their deeply ingrained hierarchical structure, often based on factors such as caste, wealth, occupation, rank and education.

Additionally, we reorganized the office space. Due to the company’s ongoing financial difficulties, the workforce had been gradually reduced in the previous year, but we hadn’t moved to a smaller office. As a result, all of the employees were huddled together in a small corner of the office, surrounded by rows of empty desks and dividers. We removed half of the furniture and divided the rest spaciously across the work floor, with individual employee workspaces positioned generously throughout the office.

I, together with the rest of the management team, had to be circumspect when introducing these changes, taking the perspective of the employees into account. If they knew we were implementing these changes as a strategy to avoid layoffs they might have started looking for new jobs before we were even certain that we needed to let anyone go.

Finally, as the leader of the subsidiary, I would make sure to join the visitors for activities outside of office hours, going out for dinners with them, taking them shopping to buy souvenirs, visiting tourist sites, etc., all the while sharing my passion for India and for the Indian subsidiary, no matter how challenging the job was.

For our second storyline, aimed at shifting and shaping the perspective of the investor, we prepared several presentations. Each member of the management team would give a personally tailored presentation so that our visitors were able to gain a shared view from the perspective of the software development department, the financial department, and human resources.

As the head of the organization, I presented the results of the changes that we had made over the previous months, and laid out our plans for the remainder of the financial year, with measurable objectives attached to each element of our action plan.

I also presented an overview of the financial consequences to the Dutch parent company if they followed through with the investor’s proposed headcount reduction. Terminating employees who had a long tenure, or fulfilled a management role, would yield the highest cost savings initially. However, we would lose so much knowledge and experience that the temporary financial benefit would quickly evaporate.

Moreover, the salaries of our top people did not even amount to a quarter of the compensation that their counterparts were paid in the Dutch office. Letting go of employees who served in supporting roles made even less sense as a cost-cutting measure, as those employees earned only about one-third of what the top people in the Indian organization were paid.

To add greater authority to our second story line, I researched salaries of other Indian software development companies and compared them to ours. In view of the difficulties we had encountered trying to attract new employees to fill vacancies in the past, I suspected that our compensation structure was below market. The market data that I found confirmed my suspicion; we were clearly underpaying our workforce. This meant that we were already at risk of losing our high performers if we didn’t address the market gap. I concluded my presentation by revealing this perspective.

As a final measure, we had our star employees present the projects that they were working on, demonstrating their technical competence and their enthusiasm for the important work they were doing.

As we delivered of our story, the level of “perspective taking” became as important as our efforts aimed at perspective gaining, shifting and shaping.


We were constantly monitoring our visitors’ nonverbal mental state indicators for signs of what was going on in their minds: Were they concerned, satisfied, or excited? Were they in need of more information, something to eat or drink, a rest break?

Was our story compelling?

As soon as I waved goodbye to our visitors at the airport early Saturday morning, I went home and crashed on the couch out of sheer exhaustion. The next day I woke up to the following text message from the Dutch CEO:

 “I don’t know how you managed it, but nobody got fired, some even got a raise.” 

I breathed a huge sigh of relief, as you can probably imagine.

That was not, however, the only positive result that came from our efforts. Following the visit, the investor started reaching out to us occasionally to solicit our opinions on organizational matters. It soon became apparent that the Dutch organization wasn’t going to survive its own dire financial straits. If the Indian subsidiary remained a cost center, it would likely go under together with the Dutch headquarters. Therefore, I proposed to the Dutch CEO that the Indian subsidiary be transformed into to an independent profit center.

At that time the Dutch CEO was not receptive to my suggestion. Sometime later, I also proposed the restructuring to the investor, who did show interest. After not hearing anything for a while, I directed my Indian financial manager to at least start the research on how to separate the Indian subsidiary from the Dutch parent company, and to prepare the necessary documents so we could move quickly if the Dutch board came around. They did finally give us the go-ahead, and I wouldn’t be surprised if it was the investor who championed the issue at the board meetings.

We were just in time to get everything arranged. Two months after the Indian subsidiary became an independent entity, the Dutch headquarters filed for bankruptcy. The Indian operation continued unscathed, and because it hadn’t lost any of its software developers in India, the Dutch headquarters was able to resume operations later that year.

As of this date they are all doing well. I feel privileged to have been part of this organization, and thankful that we were able to make it through some difficult times.





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