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Enhancing Organizational Performance

10,000 Children

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The Wall Street Journal in a series of articles wrote up a detailed account of how Bear Stearns imploded leaving JP Morgan and the Federal Reserve to patch together a solution. The series discussed how Bear’s CEO, Alan Schwartz, in meetings with his direct reports, called the precipitous decline in the value of the firms stock over a short period of time “a whole lot of noise”, a reference to a passing moment. Client after client were pulling their assets from the firm resulting in a modern day version of a run on the bank. The Wall Street Journal goes on to say that in a business such as Bear’s that rely on “Trust” and relationships that a decline in “Trust” could lead to the demise of the firm.  But I don’t think that “Trust” or a decline in “Trust” really captures what went on. I think a more appropriate concept would be “Confidence” of which trust is a component. When Alan Schwartz was talking to his direct reports he was trying to calm their nerves and instill “Confidence”. They likely trusted him already as they had relationships with him and worked with him day-to-day, but what they seemed to lack (according to the article) was confidence that a course was being charted for the firm that would lead out of their current difficulties and to a successful outcome. The lack of confidence in Bear, by its customers resulted in a seminal and final moment for that storied institution and its 13,000+ employees.

Confidence as a broad concept is defined as “a state of being certain, either that a hypothesis or prediction is correct, or that a chosen course of action is the best or most effective given the circumstances. Confidence can be described as a subjective, emotional state of mind, but is also represented statistically as a confidence level within which one may be certain that a hypothesis will either be rejected or deemed plausible.”

Among the deaths counted in the earthquake that ravaged central China’s Sichuan province are an estimated 10,000 school children. This tragedy is still unfolding and is of course heartbreaking to watch. The parents of these school children are now taking on an unusual role for people within the communist state, that of protester. Many of them appear to be angry that the schools that serviced their children, from poorer backgrounds, collapsed in the earthquake to a much greater degree than schools that serviced wealthier families and other nearby government office buildings. There is speculation that corruption and official indifference caused the schools that collapsed to be built in a substandard fashion. The unstated assumption is that officials either did not care as much about poorer families or thought they could get away without imposing the same due diligence on the buildings constructed to service the poor. Due to that corruption and indifference parents have lost the one child they were allowed to have, they have lost their sense of future, they have lost their confidence that the government was at least minimally looking after their interests. Parents are often willing to put up with much hardship and suffering if they feel that they are working towards a better future for their children. The parent protests are increasing and a riveting picture appearing in the New York Times and flashing around the internet shows a local official on his knees pleading with the parents to discontinue their march and allow the local party to investigate why so many school buildings collapsed. Parents ignored his pleas and continued their march. One public official associated with the schools was quoted as saying that each family would be compensated $4500, several years’ worth of wages for each child that died. I don’t think the parents are looking for money.  Some statements from the parents were quoted in the New York Times. “We don’t want their money. We just want this corruption to end.” “We demand that the government severely punish the killers who caused the collapse of the school building,” “The people responsible for this should be brought here and have a bullet put in their head.” “Why can’t you do the right things for us? Why do you cheat us?” The lack of confidence of the parents that the system is looking after their interests and their children in a fair and just manner may be creating a seminal moment for China. But 10,000 children is a very high price to pay for societal change. And when society decides that the price it has paid for the continuation of the status quo is too high it will change.

On Saturday, March 25th, 1911, on the top 3 floors of the ten story Asch building located at 23-29 Washington Place, on the lower east side of Manhattan a fire broke out. The incident became known as the Triangle Shirtwaist Factory fire and resulted in the deaths of 148 of the 500 workers in the factory, who either burned or jumped to their deaths. This was and continued to be the worst industrial accident in NYC until 911 occurred. One exit stairway had been chained shut, the flimsy fire escape soon collapsed as people struggled to flee, the elevator stopped working and the remaining staircase was inadequate for the number of people in the building. The workers were mostly young immigrants, some only 15 years old who toiled for 14 hour shifts, 60-72 hours per week. The average weekly wage was between $6 and $7. After the fire the owners were put on trial and were acquitted but then lost a civil suit which compensated the average family $75 for each killed worker or about 11 weeks worth of wages. I don’t think those parents, survivors or relatives were looking for money either. They had lost confidence in the current system, organized themselves and the outrage that followed the deaths caused new and enhanced safety requirements for buildings to be enacted and also resulted in the slow improvement of working conditions for factory workers throughout the USA. “The people demanded restitution, justice, and action that would safeguard the vulnerable and the oppressed. Outraged cries calling for action to improve the unsafe conditions in workshops could be heard from every quarter, from the mainstream conservative to the progressive and union press” (Cornell University Archives). It was a seminal moment, but 148 lives was a very high price to pay for societal change.

Confidence, it is critical to our everyday lives. Without confidence not only would many of our institutions collapse, but our society overall would cease to function. Whether you deposit money into a bank is determined by your confidence that the money will be there when you need it, that the bank will not disappear, squander or lose your money. Whether you go to a hospital when you are sick is driven by the confidence you have that going to the hospital would in fact help heal you. Interest in our national elections, the percentage of voter turnout, is clearly dependent on whether voters are confident that their vote is meaningful. Whether you stay with your current employer or seek employment elsewhere is driven by your confidence that you will benefit by staying put or benefit more by going elsewhere. Whether you go to college or not is driven by your confidence that going to college will result in positive outcomes for you personally. The value of our money, our paper currency, is dependent on the confidence that people have that the government has the means to stand behind the currency. When you buy or use a product from a company you need to have confidence that the product will work as advertised or you would not buy it in the first place. The list could go on and on.

Confidence© could be thought of as having two very broad components, Organizational Confidence© and Personal Confidence©. Organizational Confidence is confidence in the various organizations or institutions that we interact with and Personal Confidence is confidence in our selves, of our future or abilities and each of these dimensions has an internal and an external component.

Confidence Organizational Personal

Each cell in the confidence table above could be defined based upon the overall concept being assessed. For instance if we take Employee Confidence© as the concept to be assessed, Organizational Confidence-Internal would cover the quality of the management team and the business processes that are in place. Organizational Confidence-External would cover the positioning of the organization in its markets and the robustness of the industry that the organization operates. Personal Confidence-Internal would cover job security and how bright the future appears for you at your current employer and Personal Confidence-External covers your ability to find another comparable job to the one you have.

Consumer confidence measured and tracked religiously could be thought of within this framework as well, as could Military confidence, Political confidence, Educational confidence, Health confidence etc. Confidence becomes an over-riding rubric allowing for various slices of confidence, differing types of confidence to be defined and measured. Each type of confidence may likely predict to varying societal outcomes or organizational performance depending on how it is defined and measured.

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

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Written by Jeffrey M. Saltzman

November 13, 2009 at 7:54 am

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