Change: What do we want? When do we want it?

Why is change so difficult? We don’t do it very well that is for sure. In spite of a whole industry that has sprung up called change management, the way change is implemented in organizations is very often one of the lowest scoring responses you see on employee surveys. Along with a low score on the way change is handled overall, roundly criticized also is the sufficiency of resources being devoted to successful implementation of the change, as well as doing sufficient planning around the implementation of the change. Another part of the answer is that there are so many moving parts when it comes to change, and many of those parts are unseen and unknown.

For instance, I recall a friend telling me about a change he was helping to implement in the US military. It involved some new software that would speed things up and provide better information to decision makers. The installation was going very well and the benefits were obvious to everyone, except to the secretary of a general who was going to have to learn a new way to do her job. She did not want to do that, and she was in a position where she could sabotaged the system, not damaging it per se, but making sure that it produced less accurate results more slowly than the current way she did her work. The system was never implemented.

Change of course is constant. Nothing is for sure except change. It is the state of the world. So if it occurs so regularly and we have so much practice at it, why do we do it so poorly? I would lump the difficulties around change implementation into 2 big buckets.

1. Structural Blockages – things that have to do with poor execution of a change such as poor planning, resources devoted to change, not fully understanding the implications of what the change will impact, poor design of new systems, poor communications and training on the change etc.
2. Human Blockages – things having to do with our very nature as humans, our limitations and how we react to changes in our environment.

Structural blockages are relatively easy to overcome, if you have the resources to do so. Human blockages, which are often not considered in change management, are much more difficult to compensate for or overcome for it can be very difficult to unwind a few million years of evolutionary tendency. Some of these human blockages arise from fear, some from inertia and some from bias.

One of our human biases for instance is to search for and give credence to only information that supports our already held positions and to reject information that undermines them. Supporters of this position or that will gleefully hold up a case study, with an “n” of 1 or 2 and say “see, I was right all along”, and they will ignore those hundreds of times or the overwhelming majorities of times when their position was refuted by the experience of others or by hard, scientifically grounded, data. This method is often intentionally used by those arguing for a position and along with the sister method of the slippery-slope argument nonsensical positions are taken. This is over-generalization at its worst.

I am reminded of a story about a blade of grass on a golf course. The odds of any one particular blade of grass being struck by a golf ball are very low, but the odds of a blade of grass being struck are 100%. It all has to do with how you frame the questions and how you go searching for answers. And humans are very very good at finding the answers that they want to find.

One piece of research asked those with a certain position on a hotly debated social issue whether they, if presented with irrefutable evidence that the basic premise of their position was wrong, would change their minds. While the group thought that others should change their opposing position to mirror their own, if presented with evidence that they were in error, the members of this opposing position could not bring themselves to say that they would change their position if irrefutable evidence against their point of view was given.  In other words, I’ll accept the science if it supports my point of view, but will not accept it if it does not support my point of view.

Another aspect of change that makes change so difficult is that it requires an expenditure of energy, and organizations want to operate with the lowest expenditure of energy possible. As I have written elsewhere, in Organizational Entropy, organizations build systems and bureaucracy to reduce the amount of energy they need to expend. That type of energy is represented by all different types of resources such as finances, time, effort and talent. In the balancing dance between maximizing current performance of an organization and building its future potential, future potential represents a greater degree of change and a larger expenditure of organizational energy and resources and so there is a natural push against change and for the status-quo that must be overcome.

One of my earliest vivid memories is one where my older sisters took me to march in a Vietnam protest. It must have been 1967-1968 and I don’t recall it all that well as I would have been 7 or 8 years old. But I do recall the turbulence that society went through as the war was played out nightly on the evening news and the difficulty of getting change to occur with respect to that war. The difficulties we have with change play out in our organizations, in our politics and in our society at large. And I am not so sure our ability at creating, accepting or implementing change is going to get better any time soon.

WYSIATI

Daniel Kahneman coined the acronym WYSIATI which is an abbreviation for “What you see is all there is”. It is one of the human biases that he explores when he describes how human decision-making is not entirely based on rational thought. Traditionally, economists believed in the human being as a rational thinker, that decisions and judgments would be carefully weighed before being taken. And much of traditional economic theory is based on that notion. Dr. Kahneman’s life’s work (along with his co-author Dr. Amos Tversky) explodes that notion and describes many of the short-comings of human decision-making. He found that many human decisions rely on automatic or knee-jerk reactions, rather than deliberative thought. And that these automatic reactions (he calls them System 1 thinking) are based on heuristics or rules of thumb that we develop or have hard-wired into our brains. System 1 thinking is very useful in that it can help the individual deal with the onslaught of information that impinges on us each and every day, but the risk is when a decision that one is faced with should be thought through rather than based on a knee-jerk reaction.

System 1 decisions are easy, they are comfortable, and unfortunately they can also be wrong. But wrong in the sense that if one learned how to take a step back and allow for more deliberative thought prior to the decision, some of these wrong decisions or judgments could be avoided. A simple example from Dr. Kahneman’s book “Thinking Fast and Slow” will illustrate the point.

“A bat and a ball together cost $1.10. The bat cost $1.00 more than the ball. How much does the ball cost?” Fifty percent of the students who were posed this simple question, students attending either Harvard or Yale got this wrong. Eighty percent of the students who were asked this question from other universities got it wrong. This is System 1 thinking at its finest and most error prone. It is fast, easy, comfortable, lets you come up with a quick answer or decision, but one that is likely wrong. Knowing who reads this blog I’ll let you figure out the answer yourself.

WYSIATI is the notion that we form impressions and judgments based on the information that is available to us. For instance we form impressions about people within a few seconds of meeting them. In fact, it has been documented that without careful training interviewers who are screening job applicants will come to a conclusion about the applicant within about 30 seconds of beginning the interview. And when tested these initial notions are often wrong. Interviewers who are trained to withhold judgment about someone do a better job at applicant screening, and the longer that judgment is delayed the better the decision.

This notion of course flies in the face of Malcolm Gladwell’s best seller “Blink” in which he talks about the wonders of human’s ability to come to decisions instantly and a whole generation of manager’s have eagerly embraced his beliefs  - including a few CEO’s I know. Why? It is easy, it is intuitive, it is comfortable and it plays to the notion that I am competent and confident in my work. The only problem is that when put to serious scientific scrutiny, it is often wrong.

A few months ago I introduced this concept to an HR group I was talking to. I explained how untrained HR people in a rush to judgment will jump to conclusions about someone, perhaps too rapidly. One 30-year HR veteran insisted that this may be all well and good but of course did not apply to her. After all, with her 30 years of experience her rush to judgment was of course going to be accurate. She “just knew” who were going to be good employees. I let it drop, and I think I was labeled a trouble-maker by the group. That is a label I can embrace.

We tend to develop stories based on the information at hand; piecing the information we do have into a narrative, often without asking the question, “what information am I missing”? In the area of survey research I have often seen researchers confidently presenting the “drivers” of one type of behavior or another. Say for instance, the drivers of employee engagement. But since the analysis is based on a “within” survey design, the only drivers that can possibly emerge are those that you asked about in the survey in the first place. So the researcher, in designing the 30-50 item survey, is limiting the drivers to those items that they decided to ask about in the first place. The researcher likely has in their head a model of what is important in driving engagement when designing the questionnaire, a model that was designed based on another 30-50 item or fewer questionnaire. It becomes a tautology, it becomes true because I tested it and it came out as true, but the only thing I tested is what I already believed.

There are techniques that can be applied that lead towards more deliberative and better decision-making processes. If you were walking briskly down a busy road and someone asked you “how much is 17 x 24?” you would do what every other human would do to figure that out, you would stop and think.

Managing Risk vs. Uncertainty and why it Matters

“As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.”

-Albert Einstein

The distinction between risk and uncertainty arose from the field of economics and is based on the work of Frank Knight. According to Knight, “risk” refers to a situation in which the probability of an outcome is known or can be roughly determined, while uncertainty refers to an event or an outcome whose probability is not or cannot be known. A common example used to illustrate the point is that games of chance are risky (because the odds of winning vs. losing can be calculated) and the outcome of a war with its multitude of changing environmental situations on the ground is uncertain. But it is not as simple as all that, it certainly can be very confusing, and a deeper understanding of risk vs. uncertainty can help people make better decisions.

People board airplanes routinely, strapping themselves into what is essentially a lounge chair (even if it is an uncomfortable one), inside of what is little more than a controlled missile, whose paper thin walls of plastic and metal guard you against external conditions that could not possibly sustain life, while jet engines furiously burn enormous quantities of highly explosive fuel within a few feet of your location, hurtling you and your lounge chair through the sky at hundreds of miles per hour, with thousands of pounds of airplane coming back to the earth with a typically ungraceful thump, on small rubber wheels (which always look flat to me), and then hoping that the plane will somehow slow down and avoid plunging into the water (I land at LaGuardia), or worse. Why in the world would they do that? Because it is not all that risky. Airplanes have very good track records and there are very few accidents. We can manage risks, uncertainty is more difficult.

But what about Wilber and Orville when they first attempted flight? They were not dealing with risk they were dealing with uncertainty, for there was little real understanding of whether man could build airplanes that could stay aloft for a period and then safety return the occupant to the ground. There was no track record to calculate risk upon, there were no computers to run simulations, there were no wind tunnels which could test airplane models. Yet facing this uncertainty they persevered.  Events can begin with uncertainty and then as track records about them build they can become simply risky. Though, some people who treat a situation as risky, when it is actually uncertain, can accumulate really awful track records of performance.

For instance, Gerd Gigerenzer of the Max Planck Institute analyzed the performance of 22 major international banks on predicting currency fluctuations.  These annual forecasts of currency values which occurred from December of 2001 to December of 2010 were used by the banks to guide their investment decisions. These annual forecasts were wrong, very wrong, for nine out of those ten years. Gred’s conclusion about the track record of the people who produced these annual guides to currency values was that “highly paid people produced worthless predictions.” He went on to explain that based on his analysis the risk modelers at the banks didn’t distinguish appropriately between risk and uncertainty. They treated the currency fluctuations as risky but in fact “it is uncertainty that rules in the real world, where risks can’t be known in advance because of a complex tangle of factors triggers new, extremely unlikely hazards.” What he meant was that many factors that could affect currency values, (e.g. oil shortages, war, weather, natural disasters, deepening recession) were not adequately accounted for in the prediction model and in fact could not be known as they were uncertain. The analysts at the banks though treated them like risks, however, with underlying probability distributions and they got it wrong.

When Steven Jobs, who famously stated that “people don’t know what they want until you show it to them”, produced his first computer he had no idea if people would be able to see its promise, what they could accomplish with it and whether they would buy it. Over the years with each new technology his team at Apple developed there was uncertainty, sometimes uncertainty with great consequence, as some of the products rolled out were “bet the company” kinds of decisions. Steven Jobs reveled in the world of uncertainty and showed that mastering the world of uncertainty can lead to enormous financial reward. But Apple’s ultimate financial success came as those uncertain new technologies became simply risky products. Was there any doubt in anyone’s mind if the iPhone 5 would be a success? The question was not “if”, the question was “how big”. “If” is uncertain, “how big” is risky.

There are hoards of managers out there who want to emulate Steve Jobs, or at least his success or even more precisely his financial success. They look at his management style, which at times bordered on abusive and wonder if that is the path towards their own success. Perhaps if you beat up your employees, driving them really hard, you and your company can also succeed and become like Apple. The scientific literature casts doubt on that approach (big time) as working for the majority of managers (from a risk management perspective). I do know of a few very successful CEO’s whose success could only be described as coming off the backs of their employees rather than through or with their employees. Yet Steven Jobs, with his style, and his ability to deal successfully with uncertainty, like the Wright Brothers, was able to build the most financially valued organization in the world.

In the retail world (and real estate in general) there is an expression, “location, location, location”, meaning that without this fundamental element in place, it simply does not matter if you have great merchandise. You will not be successful. And with Apple it is technology, technology, technology or perhaps product, product, product. The success of Apple should not be attributed to an abusive management style, but rather to Steve Job’s genius in developing technologies and products with an uncertain outcome and turning them into mere risks. Arguments about his management style could be viewed as a red herring – he was successful in spite of it, because of his overwhelming other abilities, not because of it.

If I need to hire 100 people for my sales force and I have developed a predictive analytics approach to helping me select the best 100 out of my applicant pool of 1000, I can determine the likelihood of expected performance outcomes across those 100 new hires by creating a probability distribution. The distribution of job performance across 100 sales people is something that can be known and so my hiring decision can be described as risky, not uncertain. But if I want to know and predict how a specific sales person will perform, that is more uncertain. I can create a probability score for that individual, but I cannot say with certainty what the performance outcome will be as external factors (e.g. a death in the family, a pregnancy, a spouse relocating, a divorce or marriage, a new educational degree, or a new opportunity) cannot all adequately be accounted for. One thing to keep in mind, as the quote by Einstein above describes, is that our models are representations of reality, accounting for only a portion of the variance, they are not reality.

Yesterday, a horrendous crime was committed in Newtown, CT where a 20 year old gunman shot and killed 28 people, 20 of them school children between the ages of six and seven. This was terribly disturbing and I had great trouble concentrating on anything else after I heard the news. As I saw the images of the parents finding out about their children I could feel my heart ache for them. Our own local school, about an hour away from Newton went to a heighten security status. I am concerned that there will be the usual hand-wringing about firearms and second amendment rights and then nothing will be done. This time is has to be different. Our children are dying.

From an uncertainty standpoint it would be very difficult to determine if any one individual is a risk of committing a gun related crime. As with the sales force example above a probability score can be created, but at the individual level what you are dealing with is closer to uncertainty than risk. Common-sense gun laws would suggest background screening and eliminating those with various mental illnesses and track records of violence or abuse from gun ownership.

But beyond that if you look at the methods that can be used to manage risk, and at the likelihood of gun violence, more guns simply provide more opportunity for guns to be used in gun violence. It is a simple relationship. Red herrings are constantly thrown up about arming people to stop the perpetrators of gun violence, as though if we simply have more bullets flying around that fewer people will get injured or killed. Very unlikely. The arithmetic simply does not add up. From a risk management standpoint fewer guns mean fewer gun crimes. Period. End of sentence. Trying to create the odd one-off scenarios whereby having the right person in the right place with the right weapon and the sensibilities to stop a crime in progress without creating further injury to other by-standers is just not logical.

A first step would be to ban the type of firearms that allow for mass-murder to happen within a few seconds without reloading.  Our ultimate goal from a risk management standpoint should be to reduce the number of guns available. Period. Given the difficulty of dealing with uncertainty, you cannot accurately reduce the number of guns available to only those who will commit gun violence, you will get it wrong. So the solution must be one that works with the probability distribution. Ultimately, we must reduce the overall number of guns that are floating around in our society. To paraphrase a quote about eating an elephant – how do you remove 300,000,000+ guns from our society? One at a time.

© 2012 by Jeffrey M. Saltzman. All rights reserved.

Visit OV: www.orgvitality.com

Is Your Organization Rated R or PG-13?

I was driving my pre-teen daughter to school this morning when it occurred to me to ask her to collect some data for me. I was wondering about how her friends would characterize their lives. Would they say that they live a G, PG, PG-13, or R rated lives? Given the circle of friends my daughter hangs out with I was expecting a G or PG rating to emerge. What I got instead was a rolling of the eyes and a “oh…dad”, telling me that I was not going to get any data at all.

I did start to think about organizations that I have knowledge of and came to the realization that various organizations could be given a rating in terms of the degree of civility and tone of their discourse and how they handle discussion leading to decision-making.

Now let me begin by saying that while organizations may vary by degree of formality of conversation, most are very civil places that encourage professional discussions to occur and disagreements to be aired, but there is some wiggle room in that civility. And some of that wiggle room may lead to higher organizational performance. I am of the mind that organizations should shoot for a PG-13 rating in their discussions to maximize a good airing of the issues and hopefully lead to higher performance. If organizational discussions hover around G you would have to wonder if any real disagreements are aired, and if aired whether any real degree of emotional sentiment on the part of those who disagree with someone else would be expressed. A PG-13 rating would seem to lend itself to a good degree of decorum and civility but also to some bluntly honest conversation and disagreements without being abusive.

We all have heard of R rated organizations where people regularly go around saying #$&^@S! that, or !!&##@), and while I have to honestly say that I don’t care about the swearing, in fact I mostly don’t really even notice it, I know that others do. When I do notice it, my immediate thought is that I am listening to someone with an impoverished ability to express themselves and therefore they must resort to simple swearing to convey their emotions or depth of feeling about an issue. I can remember a meeting I was attending where the CEO of an organization decided to make a point by using some swearing, he sounded silly to me perhaps impoverished linguistically, but his senior managers who were also in the room were all atwitter at the chosen language. Ok, it was the mid-west, but still you would think that the management team would not be so reactive to a few chosen words.

I am going to try again, I am looking for some data. How would you characterize the discourse and discussions around decision-making in your organization? Would you give it a G, PG-13, or R rating?

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© 2012 by Jeffrey M. Saltzman. All rights reserved.

Visit www.orgvitality.com

Body in Motion

The first of Newton’s laws of motion states “a body that is at rest will remain at rest unless an outside force acts on it.” His second law states “a body in motion at a constant velocity will remain in motion in a straight line unless acted upon by an outside force.” Those same laws seem to apply to the world of employee survey action taking.

Some of those who get survey results never seem to get around to taking action based on the survey results they have in hand. And just like a body at rest, they tend to stay at rest doing nothing with the findings.

• The survey results provided may not be definitive enough for them and they may request additional analysis after analysis until they get around to doing just about nothing.
• The survey results may point to action that is difficult or overwhelming and so the easiest path may again be to let things be just as they are and do nothing.
• They survey results may point to behaviors that go against closely held beliefs that the manager may have, so even though the data says one thing, he or she may simply know in their heart the “right thing to do” regardless of the data.

In one study which pointed out some of the obstacles to having action arise from the survey process, (Wiley & Brooks, 2010), the 3 top obstacles to taking action on a survey were identified as:

• Accountability (12%)
  • Holding organizational members responsible for their role in the survey program; ownership and clarity of assignment
• Resources (12%)
  • Especially time (given the other demands of manager’s job), but other resources as well: training, technical, financial
• Importance (12%)
  • Management (especially executive management) attention to and support for survey

But looking on the positive side for a moment, what are the benefits of taking action, even if it may not be the perfect action based on the survey results? If you look at survey data longitudinally and track which employees saw results from a previous survey vs. those who did not (from within one organization), and which ones saw action arising from the survey vs. those who did not, the data strongly suggests that seeing the data and seeing action, drives a very positive shift in the next survey iteration on critical business performance metrics.

• In one organization for instance if 75% or more at the department level could recall actions arising from the survey their average employee engagement score rise by 5 percentage points.
• In that same organization, those departments where less than 50% could recall actions arising from the survey score their employee engagement scores went down by 13 percentage points.

The benefits of taking action, even if it is not the perfect action are very clear. A body in motion tends to stay in motion, and in our fast changing world, staying in motion; constantly improving organizations based on insightful data which is tied to the organizational strategy is a very impactful way to help performance.

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© 2012 by Jeffrey M. Saltzman. All rights reserved.

Visit www.orgvitality.com

First, Do No Harm

The notion of “first, do no harm” arises from the world of medicine. While that exact phraseology is not part of the Hippocratic Oath the intent is certainly there.  From the original oath, “I will prescribe regimens for the good of my patients according to my ability and my judgment and never do harm to anyone.”  Late in the 1800’s medical professors began to use the phrase in writings and in their lectures to students. The notion was further refined to have health care providers “consider the possible harm that any intervention might do…and recognition that human acts with good intentions may have unwanted consequences.”

As an example of good intentions having unintended consequences, it has been reported that Libyan rebels who where supported first by the United States air bombing campaign, and then NATO, overran weapons depots of the Kaddafi government, selling the mustard and nerve gas shells they obtained from those depots to the terrorist organizations Hezbollah and Hamas, through Iranian channels and funding.  As the materiel was being transported through Sudan’s well known arms smuggling routes on its way to the Gaza Strip, the individuals responsible for the arms transfer mysteriously had their car hit by  a missile.  The good intentions of supporting the overthrow of a dictator, resulting in the unintended consequences of putting extremely lethal mustard and nerve gas into the hands of those who would not hesitate to use them on civilian population centers. Protecting civilian population centers as an ethical standard seems to apply to the Libyan rebels only when those population centers are theirs.

First, do no harm, and its implication of perfect knowledge, when taken to the extreme of unintended cause and effect has the potential of resulting in greater harm through paralysis and inaction. What are the longer term consequences, if for instance I was running a company that had expenses that were greater than income, and I chose to do nothing about it? I freeze because the consequences of the potential actions (e.g. forcing early retirements, layoffs, freezing or reducing salaries, forced part-time, cutting benefits, eliminating expenses) will result in harm to a subset of individuals, the harm however, will be greater in terms of the number of people affected when the company subsequently fails.

What if a rapidly spreading disease kills 50% of those afflicted, and I choose not to distribute a vaccine that will save the lives of 50 out of 100 afflicted people, but will result in the deaths due to allergic reactions of 5% who otherwise might survive, am I guilty of greater or lesser harm? By distributing the vaccine I can save a substantial number of lives, but by acting I will knowingly kill people, but not as many as would otherwise perish. Most choices are not easy and often have unintended consequences. But what about when people act, not taking the unintended into account at all?

Contrasting the role of behavioral expectations in the roles of medicine vs. business, Jonathan Baron of the University of Pennsylvania writes, “the positive obligations that stem from ethical codes are almost always contingent on voluntary promises and agreements. Likewise in business, almost all positive obligations arise from contracts, even if the contracts are only implicit.” His point of view would conclude that the obligations that arise from an ethical moral code are voluntary, while those that arise from business are legislated through a contract. Therefore, using this logic, obligations that arise in business cannot be assumed to be executed in an ethical manner unless they are contractual and/or by extension regulatory.

The number of and types of scandals that have been evident in American business recently seems to support this notion. In the Forbes Corporate Scandal Sheet they actually state that “ we’ll follow accounting imbroglios only–avoiding insider-trading allegations like those plaguing ImClone, since chronicling every corporate transgression would be impractical–and our timeline starts with the Enron debacle.” It then goes on to list scandals that hit 21 major companies from 2002 alone. It is easy to be cynical about ethics in corporate America when you could pick up the Wall Street Journal from virtually any day and read about some ethical scandal or another.

What are the obligations of those working for or supporting organizations that are involved in unethical or immoral practices? Should workers follow some sort of code of conduct, an oath to uphold business ethics that they take upon being hired by a company? And maybe once a year they renew their vows? Should workers be able to point to an outside moral code of conduct when an organizational leader asks them to do something that crosses the line? How could a company object?

In one study Dan Ariely, MIT professor and author of Predictably Irrational found lower levels of cheating on a test when the participants were reminded of a moral code just prior to the test.  Organizations cannot actually be unethical or immoral, only people can. People are the only ones who can behave ethically or unethically and it is people who direct organizations. That is why organizations are very rarely charged with a crime, but people within organizations can be. Organizations tend to be charged only when the illegal behavior has been systematized across the institution.

The challenge will be in the definition of ethics itself. And with some of the miscommunication/varying definitions that stem from incongruous meanings of the term ethics, depending on where you sit in the organization. For a typical worker, ethics often revolves around relationships, trust, being true to your  word. If the management of an organization changes the workers benefits, work schedules, overtime requirements, staffing or workloads, the management runs the risk of being seen as in violation of voluntary promises and agreements which can be deemed as unethical. Meanwhile those in management can look at those same changes and deem them as lawful and not in violation of any contract and therefore see no ethical issue. Managements see ethics as  related more to following the legal letter of the law and based on this standard of ethics, if there is a legal way to break a contract that would be ethical  ehavior, as would be a legal way to reduce headcount etc.  Ethics is a word that holds somewhat different definitions depending on whom you are asking to define it.

But if we as a nation can derive a universal standard of business conduct, say the 15 Commandments of Business Ethics, no lets shorten it to 10 (thank you Mel Brooks), and have every worker (management as well as non-management) subscribe to those standards we may make a positive impact on what we  view as ethical behavior.

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Ariely, D. (2009) Our Buggy Moral Code, TED Talks, http://www.ted.com/talks/dan_ariely_on_our_buggy_moral_code.html

Baron, J. (1996). Do no harm. In D.M.. Messick & A.E. Tenbrunsel, Codes of conduct: Behavioral research into business ethics. pp.  197-213. New York: Russell Sage Foundation.

Debka, (04/07/2011) Special operations team hit top Iranian-Hamas arms smugglers in Sudan, http://www.debka.com/article/20821/

Forbes.com, The Corporate Scandal Sheet, (08/06/2002) http://www.forbes.com/2002/07/25/accountingtracker.html

Hippocratic Oath (4/17/2011) http://en.wikipedia.org/wiki/Hippocratic_Oath.

Jolton, J. & Saltzman, J. 2008, Preventative Maintenance: How Industrial/Organizational Psychologists Can Build and Maintain  an Ethical Culture, SIOP annual convention.

© 2011 by Jeffrey M. Saltzman. All rights reserved.

Visit OV: www.orgvitality.com

Is Being a Leader Inherently Unethical?

If you review the various major models of leadership out there a glaring hole becomes rapidly evident, and that is the relative lack of ethics as a trait, skill or critical behavior of leadership. In a cross section of studies reviewed by Peter Northouse (2010) on leadership traits and characteristics, only one major review (Kirkpatrick and Locke, 1991) out of six, listed integrity or ethics as an important defining characteristic of leadership. Roughly the same results occur when other leadership models are reviewed including those that focus on leadership skills or style, a situational characteristics approach to leadership, a contingency theory or path-goal theory approach, or exchange based approaches to leadership. Only models describing transformational leadership and authentic leadership seem to have substantial ethical or moral components to them. Since the development of most of these theories is driven by data-based experiments, it leads one to questions why ethical behavior does not show up in so many of the major approaches to studying and classifying leadership.

That finding is in stark contrast to what you would find if you just asked a group what characteristics they want in their leadership, (let’s start with the folks in Egypt for instance and ask what they think about corruption), and would certainly be at odds with the vast majority of competency models that exist in corporations for defining the skill sets needed for their leadership as well as it’s prominence in performance management systems and 360 surveys which assess leadership. One Fortune 20 firm in their management competency model caveats the whole thing with *****all always done with the highest integrity*****, another starts off their competency listing with a very strong statement about ethical behavior and on and on.  So there seems to be a substantial gap between many of the influential models of leadership and what is actually happening in the organizational world.

Some of the leadership theories seem to get at ethics tangentially, for instance that a leader needs to take into account what followers desire and what their personal goals are as they set organizational goals, and by taking those follower goals into account they are acting ethically. That also seems to miss the mark, as most leaders in organizations have a vision of where they want the organization to go and while they may ask for input and help in fine tuning the tactics to get there, the leaders are often hired specifically for their vision and are paid big bucks to implement those visions. So leaders are influencing followers to do things their way and to buy into their vision without having a significant say in exactly what that vision is. Does all this add up to leadership being inherently unethical? At least as far as these definitions are commonly used?

The purpose of a theoretical model is to bring order or structure to the phenomena that surround us. Those phenomena can be observed directly, indirectly or they can be hypothesized. People have a natural tendency to build models, as it is a hardwired into our brains as a mechanism by which we cope with and process the vast amounts of information that impinge upon us every day. One common use of models in everyday life is to speed decision-making by reducing information processing time. Some people build useful and accurate models and some build models that are based on flawed assumptions, poor information, bias, bigotry, or worse.  When people build models that they use in day-to-day activities, they are called heuristics or rules-of-thumb.

“Its 20° F outside and something is falling from the sky? Could be snow or sleet, likely not rain, and in any case it may be slippery driving out there this morning.” Those assumptions about icy conditions when it is below 32° F and precipitating are based on a model that we each have in our heads about driving conditions as they relate to temperature and precipitation or moisture. We use the available information within the context of our model to make predictions and to guide our behavior.

“When you meet a human being, the first distinction you make is ‘male or female?’ and you are accustomed to making that distinction with unhesitating certainty.” – Sigmund Freud

You make that male/female distinction with unhesitating certainty because of the heuristics that you have regarding which body shapes, facial characteristic etc. are classified as a woman and which are classified as a man. When those heuristics are thrown off, you end up spending a much greater amount of time making your judgment and there are those, who, when their heuristics are thrown off become decidedly uncomfortable.

Most organizational members, using their own heuristics, would not hesitate much in classifying a leader’s specific behaviors as being ethical or not in their view, using an “ethics – I know it when I see it” kind of approach. Yet the definition of ethics and the specific behavior of what is ethical and what is not can be exceeding difficult to get everyone within an organization to agree upon, as people view ethics through different lenses, depending on where they sit within the organization. (Jolton & Saltzman 2008)

Beyond every day heuristics, models in a more scientific sense tend to include or be useful as:

• A formal statement of a problem, which if done well will require clarity about what the different variables and parameters in the model are, and how they are interrelated.
• A guide in identifying knowledge gaps, suggesting a focus for where more information needs to be obtained.
• Gaining theoretical insights which define the interconnections between various factors extending our intuition.
• Quantitative testing. Quantitative predictions will not only say that X will increase, but how much.
• Interpretation. When measuring the phenomena of the model directly is not possible, it may be possible to measure the outcomes or surrogates of the phenomena and then to use that as an interpretation of the model. (Warning, this is a source of potential bias. For instance in social models where assumptions are made that certain outcomes are due to the wrong underlying variables but are not actually causally related.)
• Forecasting and prediction. Prediction tends to be more rigorous than forecasting. For instance, I could forecast that the sun will come up in the east in the morning, which is based on an understanding of how the earth rotates. But if I can predict that the sun will come up at 5:41a.m. if I am at 42° N Latitude and 73° W Longitude, that is a prediction based on a deep understanding of the Earth’s movements including rotation, revolution, and precession.

Spinoza writing about ethics in the mid-1600’s, was afraid to publish his work during his lifetime. It was only after his death that his friends published it and then identified him only by his initials, given that his views towards ethics were considered so heretical. What was heretical about his writings? In three of his propositions below you can see that what he was essentially saying about ethics is that it is dependent on the person and the environment. In other words, one person’s view of what is ethical or unethical will vary from another’s simply because of the different natures and circumstances between them.

Proposition 29:

“No individual thing whose nature is quite different from ours can either assist or check our power to act, and nothing whatsoever can be either good or evil for us unless it has something in common with us.”

Proposition 30:

“No thing can be evil for us through what it possesses in common with our nature, but in so far as it is evil for us, it is contrary to us.”

Proposition 31:

“In so far that a thing is in agreement with our nature, to that extent it is necessarily good.”

Baruch Spinoza, 1677

Given that, one explanation for the lack of prominence of ethics as a critical leadership characteristic in models, may have more to do with the varying nature of the definition of ethics and less to do with the importance of ethics in and of itself.  The common wisdom, as evidenced in organization after organization, is that ethics is critical to successful leadership. Perhaps by furthering the research on the definition of ethics or how ethics breaks down into commonly agreed to subcomponents, we would begin to see it showing up more strongly in the research models of leadership. The ultimate goal of a better definition would be to predict to what degree how much a leadership that is stronger on ethics would outperform those that are not.

References:

Jolton, J. & Saltzman, J. 2008, Preventative Maintenance: How Industrial/Organizational Psychologists Can Build and Maintain an Ethical Culture, SIOP annual convention

Northouse, P.G. 2010, Leadership, 5^th Edition, Sage Publications

Spinoza, B., 1982, Ethics and Selected Letters, translated by Samuel Shirley, Hackett Publishing Company, Indianapolis

Turchin P. 1998. Quantitative analysis of movement. Sinauer Associates, Sunderland MA.

© 2011 by Jeffrey M. Saltzman. All rights reserved.

Visit OV: www.orgvitality.com

 

Psychic Wins Multi-Millions in Lottery

Everyone and their brother is out there trying to make predictions regarding what will happen in 2011. Will the economy improve, will jobs finally begin to appear, will various wars and conflicts resolve themselves, will I get a promotion, will gasoline prices go up or down, what about the stock market, will Elvis put in an appearance, will I win the lottery, etc.?

“Psychic wins multi-millions in lottery.” I am quite certain I have never seen a headline like that. Have you? So if you were truly psychic would you waste your time doing card tricks in a lab, or spend time predicting another’s future on some side street in a second floor walkup shop or would you go for the gold, so to speak? Why waste time providing services to others if you could truly predict what was going to happen?

Why are hawkers of get rich quick schemes not getting rich on their own schemes, but are getting rich by getting others to buy into their schemes? Was P.T. Barnum right? If I could truly buy foreclosed houses and sell them for tremendous profit, why aren’t you doing that yourself rather than trying to convince me to give you my money for your secret to success?

If genius stock brokers are so good at making money, why do they need my money? Why is it not a full time job just managing all the gobs of money they are making for themselves?

I was doing work for a large Fortune 50 company. They had assembled a cross section of consulting firms to tackle an issue they wanted researched and resolved and I was invited to participate. One of the other consulting firms kept vigorously pressing their solution as the one that would resolve all of the client’s business issues, all they had to do was adopt it and pay them a lot of money. Success was guaranteed. The very large and extremely well known firm that was so strongly promoting their concepts was on the verge of bankruptcy at the time. I had to ask, in as gentle way as I could, why weren’t they employing their own magical solution in order to save their own company. I mean if it was good enough for their clients why aren’t they taking their own medicine?

As a teaching assistant in grad school, I had a question posed to me about Nostradamus that has bothered me enough that 30 years later I still remember it. A freshman student asked me if I believed in the teachings of Nostradamus. I immediately responded in the negative without giving it much thought. I knew who Nostradamus was, but my tendency was to dismiss such nonsense out of hand – it was not something I wasted time upon. The student then followed up with “Have you ever read Nostradamus”? I had to answer that “No, I hadn’t.” (I also have not read Scooby Doo or Josie and the Pussycats). Then came the obvious next line – then how can you dismiss it?  I needed to have a more thoughtful reply rather than simply dismissing what to this student was a real belief. I am still kicking myself for not having a better reply handy with perhaps some facts and figures. The issue is that you can’t possibly have facts and figures at hand to reject every charlatan’s claim as there are simply too many charlatans with false claims out there. In order to deal with the flood of claims you need to develop your own heuristics that allow you to evaluate the claims one at a time in a logical fashion.

The bottom line though is that if these kinds of approaches did not work with at least some regularity with people and organizations they would no longer be used. The fact that they are not that hard to find in our day-to-day world means that they do in fact work often enough that the perpetrators of these solutions/hoaxes continue to use them.

There are a few factors that make us susceptible to these come-ons including a human’s tendency towards biases, such as confirmatory bias (accepting only information that confirms your existing beliefs and rejecting information that does not), the bandwagon effect (a desire to go along with the crowd, to fit in by believing what others believe). There is even a bias that you have, which makes you assume that you are less biased than others (well of course you don’t have that bias, only others), along with a host of others. There is also a human tendency to assume intelligent cause of an action. So that noise in the woods is more likely to be assumed to be a bear rather than just the wind, which has obvious survival benefits. And the human tendency to want to believe in higher powers, that someone at the top of the organization (no matter the size) knows what they are doing, can give the fortitude to persevere in the face of adversity. Of course each and every bias which developed because of its survival benefits also has a downside, and can make us susceptible to manipulation by others.

Any researcher, who regularly peers into datasets to read the evidence of what is contained within, must remain cognizant of the potential biasing and other factors that can cause misinterpretation of the evidence at hand. Any decision maker who understands the factors that can influence their decisions, is on a path towards making better decisions. And any person who can evaluate information coming at them from a evidence-based basis is more likely to steer clear of charlatans. Try this next time you walk into a psychic’s shop. When the proprietor asks you what they can do for you, ask them why they don’t already know.

© 2010 by Jeffrey M. Saltzman. All rights reserved.

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Information…Please!

“From the children’s point of view it was hard to tell a neighbor from a relative. She is like a sister to me was said in all sincerity. Door-to-door living over long periods of time made these people true kin to each other. The only difference between neighbors and relatives was that the neighbors went home to sleep; the relatives could climb into bed with you.” (Sam Levenson, Everything but Money).

The fact that neighbors went home to sleep and relatives could climb into your bed was information that helped a small child differentiate relatives from neighborhood friends in a crowded, confusing world encompassing the tenements of East Harlem in the early 1900s.  Information, we are always searching for more in order to help us make sense of our world, to help us interpret the events by which we are surrounded, to help us make better decisions, but then we are often selective about which pieces we are going to view as credible, accepting some bits while seemingly randomly rejecting others.

There is an old tale coming out of the Middle East that is often spoken of in terms of conflict resolution, but seems to have more to do with information or the lack thereof. It goes something like this. There was a nomad who sensed he was nearing the end of his life, and so called his three sons together. He spoke to them, “I want to tell you how I plan on bequeathing the family’s 17 camels. To my oldest son I give half of my camels. To my middle son, I give a third of my camels and to my youngest son I give one ninth of my camels.” A week later the old nomad passed away and the 3 sons took to fighting over how to split the herd of camels between them. They went to the wise woman of the tribe, who mediated disputes and described the situation. She said to them, “I don’t know how to resolve your dispute, but here, I have one camel, take it and see if it makes you happy.” So now the three sons had 18 camels to divvy up. The oldest took half of the camels, or 9 of them. The middle son took a third of the camels or 6 of them and the youngest took one ninth of the camels or 2 of them. Well, 9 plus 6 plus 2 equals 17. So they had one camel left, which they gave back to the wise woman. It is a fun math exercise and makes you stop and think. What is the missing piece of information that helps you understand the story? The old nomad did not bequeath all of his camels in the first place, only 17/18^th of them (1/2+1/3+1/9 = 9/18+6/18+2/18 = 17/18), which of course was impossible to do if you only had 17 camels to start with.

The conflict resolution part of this comes from an outside observer, the wise woman, being somewhat removed from the situation, being able to see a way forward from the impasse – how to divide up the 17 camels according to the nomads desires. The information part of this comes from the understanding that what was originally specified was not mathematically possible. But what is possible, and what needs to get done anyway is not always in alignment. We often need to think beyond what conventional wisdom says is possible and figure out ways to accomplish goals and mankind, in spite of our inherent flaws, is pretty good at that. And information helps, it can help a lot, but sometimes information, even compelling information is not only rejected but triggers a response of trying to get everyone else to reject the compelling information as well.

Some messages carry more effective information than others. Information that is unexpected or surprising tends to have more impact. Sean Carroll, a noted physicist, writes in From Eternity to Here, “If I tell you that the Sun is going to rise in the East tomorrow morning, I’m not actually conveying much information, because you already expected that was going to happen. But If I tell you the peak temperature tomorrow is going to be exactly 25 degrees Celsius, the message contains more information, because without the message you wouldn’t have known precisely what temperature to expect….Roughly speaking, then the information content of a message goes up as the probability of a given message taking that form goes down.” So out of the world of physics comes the notion that if a piece of information, a message, is unique, unexpected, or novel, it carries with it inherently more content, and more important content than often repeated, or completely expected information and messaging.

David Brooks produces a column summarizing notable social and psychological research, and in his December 7^th column he wrote, “Classic research has suggested that the more people doubt their own beliefs the more, paradoxically, they are inclined to proselytize in favor of them. David Gal and Derek Rucker published a study in Psychological Science, call “When in Doubt, Shout”, in which they presented some research subjects with evidence that undermined their core convictions. The subjects who were forced to confront the counterevidence went on to more forcefully advocate their original beliefs, thus confirming the earlier findings.” (NY Times, 12/07/10). This coping process was originally proposed by Festinger, the father of cognitive dissonance theory, which states that when people’s behavior and thought patterns are incongruent, I advocate one thing verbally, but actually behave not according to those beliefs, that dissonance sets in which must be resolved by changing beliefs or behavior.  So here is a notion that appears to go against the world as physicists know it. In the human mind, or at least among some of us anyway, if strongly held beliefs are challenged to the core, rather than giving up on that belief and saying, “Oh well, I now have better information, it was very meaningful since it was unexpected, going against my core beliefs and now I can make a better more informed decision”, there is a tendency to not only hang on to those core, now challenged beliefs but to actively try to get others to sign on to the belief as well, a belief that the person who is proselytizing about it may no longer fully believe him or herself. By getting others to embrace the shaky belief it shores up one’s own doubts and the dissonance that exists can be resolved.

Think of the implications of this in the business world. For instance, say I was selling lousy, junk mortgages. I am presented with information that says “if you proceed on this path you will put not only your own company at risk by the entire economy.” My reaction could be, rather than stopping my behavior, to try to get others to emulate my risk taking to resolve any dissonance that has set up within myself.

Think of the survey that was just conducted on the Don’t Ask, Don’t Tell policy in the US military. Each time the evidence suggests that the vast majority of those in the military feel that repeal of the legislation would have no effect on battle readiness, there are members of congress who raise additional barriers and continue to try to persuade others, to proselytize others, to their point of view. When faced with clear evidence that threatens their core beliefs, rather than accepting that evidence and changing they simply try to be more convincing to others in order to resolve potentially dissonant feelings. As an aside, I took a look at the survey itself that was used to collect the information on feelings towards Don’t Ask, Don’t Tell and my professional judgment is that the survey took a very conservative approach, asking questions in such a way that would lead to the least favorable result possible. Not that the research team was trying to bias the results, on the contrary, it appeared that they were setting the bar very high so that when the data did come in the results would be uncontestable, but contested the results are regardless.

Let’s say you are working in a company where an executive has an idea regarding how the future of the company should unfold. He or she has a lot of skin in the game regarding that idea or concept. That executive is presented with incontrovertible evidence that the idea is a dud. Given what we have just reviewed what might be the executive’s course of action? And more importantly how can organizations of any type overcome the bias that might arise?

Some of the techniques that can be used in these instances to overcome the inherent bias include:

1. Oversight – of the individual by others within the organization who can pass informed judgments on the concept or idea.
2. Checks and balances – on the absoluteness of power. Rather than one person having the authority to send the organization off in a new direction, a board-type approach can be of benefit, especially for big decisions and especially if the board solicits from its members…
3. Independently arrived at judgments – one method to derive better decisions from a group is to have each member of the group develop independently arrived at judgments prior to comparing notes.
4. And, independent assessment of the concept or decision by an outside group without a special interest in the outcome. Using what is perceived as an unbiased outside party, who can pass professional judgment on the concept, can lend additional credence to the conclusions drawn.

Even with these techniques, and even with the best of intentions you will still have some people without the ability to let go of their cherished beliefs and notions even when the facts indicate that those beliefs are clearly in error. The behavior by some will be to dig in their heels and to do their upmost to convince others of the correctness of their unsubstantiated beliefs as they struggle to come to grips with the information that they have received.

© 2010 by Jeffrey M. Saltzman. All rights reserved.

Visit OV: www.orgvitality.com

Energizing Against Mediocrity in Organizations

Organizations are companies, producing products and services for sale, but they can also be volunteer fire departments, bridge clubs, reading circles, religious organizations, or schools. Let’s define an organization as any group of people who get together for the accomplishment of shared goals that are better and more easily accomplished together than by any individual alone. And let’s define mediocrity as being average or similar to other organizations. With some rare exceptions, the last thing an organization wants is to have its products or services to be viewed as hum drum, just like anyone else’s.

Imagine you are looking into a room with a divider down the middle. On one side of the divider there are 2000 molecules of oxygen and on the other side there are none. There is a hole in the divider allowing the oxygen molecules from one side of the room to move to the other, if in their random bouncing around they perchance pass through the opening. At the beginning of this thought experiment, when all of the oxygen is on one side of the room, you have a greater degree of order than when some of it begins to diffuse to the other side. How many ways are there (various combinations of molecules) to have all of the oxygen molecules on one side of the room while the other side has none? The answer is that there is only one way to accomplish that. How many ways are there to have one oxygen molecule on one side of the room and the other 1999 on the other? The answer is 2000, because any one of the 2000 molecules could be the one to move the other side of the room. Now, how many ways are there to have 2 oxygen molecules on one side of the room and 1998 on the other? The answer jumps to 1,999,000, because there are that many combinations of any 2 molecules that can theoretically move to the other side of the room.

So if you think of perfection as having all the oxygen molecules on one side of the room, neat and tidy (a state of low entropy), there is only one way to accomplish that, and as you move away from perfection (a higher state of entropy) the number of ways to accomplish oxygen diffusion rises very rapidly, in fact it rises logarithmically. If you think of the eventual end state of this thought experiment, that the oxygen gas will equalize itself across the entire room with 1000 molecules on each side of the divider, the  number of ways to accomplish that jumps to 2 x 10⁶⁰⁰ (that is the number 20 with 600 zeros after it).  There are a huge number of different pathways than can be taken to reach equilibrium of oxygen distribution within the room.

Across many physical processes, the world we live upon, over time, tends to move from rare conditions, for instance, all the molecules of oxygen on one side of the room, which can be accomplished only one way, to much more common conditions, i.e. the number of ways in which the oxygen can diffuse itself across the room. And we should all count ourselves as very lucky that the world works this way, or you could be walking around in your neighborhood and all of a sudden find yourself in an area lacking in oxygen. Don’t you just hate it when that happens? “Honey, why are you so blue?” “I was out jogging and ran into an area with no oxygen.”

In many respects the results above reflect the probability of one type of event, equilibrium of the oxygen distribution across the room (very likely to happen over time), against the probably of another event, that all of the oxygen would be on one side of the room (not impossible, but very unlikely). While the number of possibilities for the combinations of which molecules will end up on one side of the room or another is huge, the likelihood of any one molecule, over time, ending up on one side of the room or another is 50/50. The difference in difficulty in determining which combination of 1000 molecules will end up on one side of the room vs. the other, compared to predicting the likelihood of any one molecule ending up on one side or the other is not dissimilar to challenges organizations face in creating effective and efficient organizations as they try to maximize current performance while building future organizational potential.

Organizations may start out with somewhat “rare” conditions, a unique combination of people, or new technology, or a hot product, etc. but as they grow and bring in more and more people there will be a natural tendency for the organization to reflect the characteristics of the population external to the organization, as well as being faced with all of the same problems that commonly occur to other organizations. As an example, technologies and products can be copied over time, becoming a dispersed capability available to many organizations, or someone else can achieve the same result with another technology.

This effect will cause an organization to run the risk of becoming quite average or mediocre if they are not constantly injecting new energy into critical processes. As more and more individuals diffuse into the organization, the natural tendency will be for the internal conditions within the organization to reflect, by and large, the external environment from which they came. If they do not, it means that there is some form of systematic bias at work, which can work in the organizations favor or against the organization depending on the type of bias.

And as organizations need to pick and choose in which activities they should invest and spend resources, which will have the most impact on organizational performance, the natural tendency is that they will begin to look more and more like other large organizations, especially as they continue to grow in size. Since organizations tend to operate within similar environments they all tend to have very many similar issues and struggles. In cases like this benchmarking to look like other organizations, even those others most admired, is an attempt to strive for mediocrity.

Think for instance of a selection procedure that is designed to determine whom to hire. Say there is one opening within an organization and 100 people apply for the job. In order to determine which “one” to hire you put the candidates through a rigorous screen. The research on the screen indicates that higher scores on the screen tend to result in hiring people with better job performance. The operative word here is “tend”. Just as you cannot predict for certain which side of the room a particular molecule will end up upon, you cannot predict with absolute certainty which “one” out of the 100 applicants will be the most successful over the long term in the job, or even if the one selected will actually fail. The best that the research can do is to give you better odds at success. That improvement in odds provided by the selection procedure is when you are taking one person at a time, think of the added complexity if you were to try to determine the best person of the 100, to interact with the others already within the organization, and not just against the job. Which combination of 1000 potential employees will result in an optimum solution? The odds of successfully achieving that perfect combination are quite low, but luckily while there may only be one perfect combination there are thousands or perhaps millions of somewhat less than perfect, but very acceptable solutions to be had.

An organization’s ability to improve those odds leading to exceptional performance, depends on how well and how thoughtfully practices and procedures have been put into place that resist the natural tendency to simply become like everyone else, expending the necessary energy to create the rare conditions that makes them exceptional. Beating the odds requires the constant expenditure of organizational and individual energy.

© 2010 by Jeffrey M. Saltzman. All rights reserved.

Visit OV: www.orgvitality.com