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Archive for November 19th, 2009

The War on Talent

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I will describe a somewhat contrarian approach to the War for Talent, attracting and retaining the best and brightest, as a way of opening up new avenues of thought and encouraging debate on a topic that is critical for all of our organizations. Our approach to this topic, the paths we choose to go down, will in large part determine the future success of all of our organizations. Given this, let’s make sure we go to war with our eyes open, examining all possible avenues and methodologies we can choose from to make sure we can win not only the battle for talent but to ensure long term organizational success. 

The War on Talent can be thought of as having two main components. The first is building a “brand”, creating a sense among the job seekers that the organization is one which attracts bright people (people like me), sends out clear messages, enables them to get their job done and provides for them the sense of a meaningful future, treating them well. The second component is creating an environment, an organizational culture, where people want to stay and are constantly striving to perform at their highest potential. Luckily these two components are inter-related and we will examine both, using a combination of case studies and foundational concepts.

I was originally going to title this article “The War for Talent”, but I started thinking about “The War for Talent”, and wondered “what does that really mean”? Are companies battling with each other to attract a limited resource – talented people who can make them successful? In a country that just past 300 million, a world population of billions, is there not enough talent to go around? Does that really make sense? Are organizations looking broadly enough in their search for talent? Do they recognize talent when they see it? It is a tough world out there, isn’t it, with employees ready to jump at the first better opportunity that comes along. How do they define that better opportunity? Is it all about money, career, the grass being greener?  Loyalty to an organization is dead, right?

As organizations battle to attract the very best they believe they are looking for a competitive edge. Is that really the case? What about all those talented people within the organization who decide to leave? Is there anything that can be done to prevent or slow down the hemorrhage? There are a number of organizations which instead of worrying about their high turnover rates, lament about not having enough turnover. Is that really a problem? Or is it that the organization has created a culture that allows the talented people that they attracted in the past to go stale, to lose their innovativeness and the only solution they can think of is to “clean house”. Is that a copout, a way of avoiding the real issues?  

After much thought, I changed the title of the piece to “The War on Talent”, as I am not so sure that this War is with other companies or organizations in the competition for employees as much as it is with the potential employees themselves thinking about joining your organization and with the current employees of the organization. What do I mean by that?  The War on Talent is when organizations do their level best to drive out of the organization the talented staff that they have worked so hard to attract and this driving out establishes the organization as not necessarily the best place to be, thereby making the attraction of new talent more difficult. Before you dismiss this notion out of hand lets look at some data.

“To keep a lamp burning we have to keep putting oil in it.”- Mother Teresa

I took a look at a massive (millions of employees) database of employee attitudes and cut the data by company and tenure. The results were very striking. In every company the most positive employees were the ones with less than one year tenure, the newly hired. In as little as 6 months sometimes stretching out to 18 months the data began to decline. Often the least favorable employees in an organization are those with 5-7 years tenure. After that time period you began to see either a gradual recovery, but usually not back to the initial level, a flattening of the pattern or occasionally a continuing decline.

New employees come in with a high level of excitement, a can do attitude. Then after a period, they are out of training, or no longer the new person getting the attention, or wondering why their brilliance has not yet been recognize and they begin to deal with the more frustrating components of working through organizational bureaucracy to get their work done. 

At 5-7 years serious questioning begins to occur. Did I make the right career decision? Is this the right company for me, the right industry? Should I jump? People who make it through that period of introspection and doubt (and stay) begin to see a long-term career being possible at the organization they chose (cognitive dissonance also comes into play in that if I am investing so much time here it must be good, because if it wasn’t, I am not making good decisions.)

Remember all this data is collected on the people who stayed. You could logically argue that the more disaffected and less satisfied had already left the company and are not in the results – those who left can often be described as the most talented, those who had little or no difficulty finding other opportunities. Providing career guidance, mentoring, coaching, special experiences at the 5-7 year mark in someone’s tenure could help them get over the disillusionment hump.  

What are the key drivers of this employee disillusionment? When does disillusionment get to the point where employees begin to actively seek out alternative employment? What attracted employees to the organization in the first place? What can be done to change the organization so that it can attract and retain the very best talent?

Organizational culture can be thought of as consisting of 3 main components: Message, Performance and Future. A very simplified depiction of the MPF framework:

  • Message: Am I sending the right message in a consistent fashion throughout my organization? Do people know what they are supposed to be accomplishing?
  • Performance: Are people getting what they need (in the broadest sense) to be able to deliver on that message – to get the job done?
  • Future: Do people feel recognized and feel like they have a future with this organization?

The data on employee disillusionment when looked at though this lens falls across the entire framework, indicating the importance of each area in achieving organizational performance. (Numbers 1, 2, 3 above indicate areas of where suboptimum conditions exist, only 2 out of 3 factors of performance in place).

Disillusioned employees are created.  Specifically, the data suggests they are created by having their attitudes decline in the following areas:

  • Message: consistency of policy and communications;
  • Performance: organizational effectiveness, being efficient, planning, innovativeness, decision making timeliness, and training for one’s job (all of these diminishing ones ability to actually perform on the job, people get frustrated by not being able to get their jobs done – they want to do a good job);
  • Future: rewards and recognition (especially dissatisfaction with pay) and considerate treatment.

Communications is one of those areas that never seem to score very well on organizational assessments and since poor communications can literally drive people out of the organizations the question is why is it so critical and what can be done about it? There is a trait found in animals and people that have been fairly extensively studied called the Intentional Stance. This trait probably evolving out of defense mechanisms to keep animals alive, occurs when an animal assumes that a movement or an actively that it notices is felt to occur intentionally. “That is not the wind you heard through the trees but another animal that is stalking you”. By acting based on that assumption you may always be more cautious but also more likely to survive a bit longer. There is no reason to assume that this is not the case with humans as well.

I have noticed in organizations the same kind of assumptions being made by employees – the Intentional Stance. Things just don’t occur by chance – especially during periods of change – people assume that they are being driven by the active behavior of others – a variation of the Intentional Stance. During major upheavals, say mergers or downsizing or reorganizations, I have had conversations with many employees who assume that members of management know exactly what position they will have down the road and what their responsibilities will be, but because of a desire to hoard information are simply not telling them. The response that no one really knows is often met with disbelief. How many of us had heard the phrase “people here always assume the worst”? Well the penchant for assuming the worst maybe somewhat hard wired into us as a helpful survival mechanism. Organizations need to do an exemplary job at communications to help overcome this natural tendency.

Do communications ever receive praise or can employees ever feel that there is enough communications about what is going on? The answer is yes. The benchmark on communications was a consumer products company that I consulted to. They scored well above anyone else in this area. How did they achieve such high scores on communications? Ready for this….they communicated more than anyone else. And it was communications that employees deemed important to them. Managers have a tendency to treat communications as one of those check the box activities. “Check, ok I communicated, that is done; let’s now move onto other issues.” Unfortunately it doesn’t work that way and communications is a never ending, continuing requirement to creating an optimum culture. 

Nursing shortages seem to run in cycles. First we bend over backwards to attract new nurses to the profession, raising pay, proving flexible hours and schedules, recruiting in far off places, providing housing in high cost of living areas etc.; in general making it attractive to nurses and potential nurses to enter into the profession or to choose our organizations. We then begin to tighten the screws as far as we can, trying to eke out more patients per nurse, more patients per hour, more hours with fewer employees, more flexibility in managements ability to schedule etc. We then begin all over again with studies trying to figure out what we have to do to attract more nurses. Is the war for talent or on talent?

In one study nurses who had left hospitals within the last 9 months were asked, why they left and if they would consider returning. This study included approximately 10,000 nurses across 160 hospitals. Out of these nurses fully one-third said they would consider returning. What was the biggest reason why they left? No one asked them why they were leaving and reached out to them asking them to stay. The indicated that they would have stayed if asked and if they had their “grievance” dealt with. The grievance often had to do with their immediate supervisor and dealt with “Performance” frustration – the inability to get their work done. Again, they wanted to do a good job and felt like they were prevented from doing so. Realize that some of those in management dismissed the nurses concerns about not being able to do a good job, so that there can be differing points of view, but also realize that the nurses were acting on their own perceptions and not those of management.

How important can it be to examine your culture and make sure that it is healthy, what you want or need it to be. One Pharmaceutical found out after a few years of conducting employee surveys regularly, covering matters of importance to the employees and most importantly involving those employees in the solutions to issues that were identified from the survey that the employees no longer felt it was necessary to have 3rd party representation. The union was decertified. Trying to decertify the union was not the driving force behind the survey process and implementing actions based on the survey results. However, when employees felt that their needs were being met through the normal business processes that were implemented; they did not see a reason to have a union represent them. Both sides decided to call off the war on talent.

An area of intense debate right now in the employee survey and culture measurement industry is whether surveys should be conducted in an anonymous or identified fashion. With the advent of electronic, integrated personnel systems with finally, fairly accurate data, much information can be passed to the survey provider that in the past would have been asked for on the survey itself. In fact much information can be passed that was never previously available or asked about. All of the surveys are still confidential, and the survey responses are anonymous to the organization being surveyed. But in identified surveys the consulting firm knows who is who in terms of responses. When matched up to records from the personnel system, very powerful analyses can be conducted. For instance, how top rated performers rate rewards and recognition vs. others in this organization? (In one organization where this was done the only difference I could find between top rated performers and poorly rated performers was on feeling valued by the organization. It did not affect the likelihood of staying or leaving. It did not change other aspects of their behavior or whether they felt that their performance appraisal was of value in helping them improve. So it appeared that the performance appraisal system simply created two groups those who felt valued and those who did not.)

Another very power analytic method is called Life Cycle Surveys. With a regular surveying process we can track “the same employee” through socialization (what attracted them, what was their path of entry, how orientation is going, is the job what it was originally described to be etc.), though early to mid-career (views towards training, advancement, pay etc.) to exiting (reason for leaving, where they are going, would they consider coming back etc.). By tracking the same person through their career, it becomes possible to develop warning indicators of turnover at the individual level, not simply for groups of people, to know which avenues of selection yield lower turnover, which employees tend to end up as the highest performers, how to better recognize talent etc. The potential is simply enormous. 

There are multiple ways of course of recognizing talent and we have a thing or two to learn about the recognition of talent from fish. What could fish possibly know about talent recognition and turnover? Fish do know a thing or two about employee selection – coral reef fish specifically. They employ a very interesting method to determine whom they should hire while interviewing candidates for a job.

Coral reef fish experience what must be an uncomfortable sensation. Parasites tend to attach themselves to their skins. In order to rid themselves of these parasites they visit and employ “cleaner” fish to remove the parasites. But how does the coral reef fish know which “cleaner” fish will be best at removing the parasites? They have developed some skill at employee (fish) selection, skills that are useful for human managers to understand as they look at potential candidates for a job. 

The cleaner fish have a choice as they work on cleaning the coral reef fish. They can work diligently eating parasites and cleaning off the coral reef fish, while not taking what has been described as a delicious bite of mucous membrane (I assume it hurts to have a cleaner fish bite your mucus membrane), or they can chomp on the membrane and get a more tasty meal then just parasites. It has been shown that when other coral reef fish are nearby (potential customers) and watching the cleaner fish, the cleaner fish are more likely to behave appropriately – foregoing nibbles on mucus membranes. This gives you a sense of what appropriate supervision can do but it also demonstrates that the cleaner fish know what is expected of them on the job. (I wonder who wrote that job description.)

Where it gets really interesting is that coral reef fish who have witnessed the desired behavior on the part of the cleaner fish are more likely to choose those that behave in the desired fashion for their own cleaning. They are in essence interviewing candidates for the position by observing the cleaner’s on-the-job performance and then selecting those that perform best. They seem to instinctively know that one of the best predictors of future behavior is past behavior. (I had to go to graduate school to learn that, so I wonder what that says about me.)

What can we learn from this about employee selection? Human behavior often has parallels in other animals. When psychologists study personality characteristics it has been found that as people age it becomes very difficult for them to change and by 30 years of age or so, personality traits seem locked-in. One theory of personality describes how people can change if they undergo a “unfreeze – change – refreeze” experience, but the “unfreeze” events, events that have the potential to “unlock” personality characteristics or behaviors tend to be of a fairly significant nature for the person. The point being, people tend towards consistency in the experiences they seek out and in how they behave and in fact one of the best indicators of how an employee will perform on the job is past job performance.  Don’t expect a 40 year old manager who acts immaturely to suddenly find a mature side or someone who exhibits marginal ethics to suddenly walk the straight and narrow, or an employee who is generally sloppy or last minute in their work to suddenly become fastidious and timely – at least not without a very significant event to propel them. Even then the rates of recidivism will be extraordinarily high.

The goal of psychologists when they construct assessment centers or develop job based testing for selection is the same as the coral reef fish, that is to set up a situation where on-the-job behaviors can be observed in order to get a sense as to how the candidate will perform in the future; in the case of the psychologist from a simulated or historical standpoint and in the case of the fish by direct observation. The use of biodata, such as job history, the number of jobs held (previous turnover), promotions, credit worthiness, even speeding tickets etc. is another method to examine past behavior.

Selecting the right employee for the job in the first place, one that fits correctly into the organization and has the necessary skill set is absolutely critical. But do not take the above example about fish and the tendency of people to behave consistently to mean that there is no benefit to developing or training employees. In fact just the opposite is true. Employees can benefit tremendously from having someone “show them the ropes” if you will of how to be a highly performing employee in the organization. They may have in place the correct personality or skill set but they may lack experience or some other component that would allow them to excel, to be a highly performing employee. Development for these people can be very advantageous – especially early in their careers. However if you have an experienced employee or manager who consistently exhibits behaviors that are not appropriate (biting mucous membranes for instance), don’t keep holding out hope that they will someday change their behavior if just given one more chance – it may be a fools vigil.

“Nothing is more difficult, and therefore more precious, than to be able to decide.” – Napoleon Bonaparte

Written by Jeffrey M. Saltzman

November 19, 2009 at 4:10 pm

What if your child is below average in English?

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A question was posed to me the other day. What if your child was really good in math but below average in English? In a world of limited resources and time should you work to improve your child’s English abilities, or should you pour your resources into an area where your child has the potential to really be a superstar?  In other words, do you give up on the English and concentrate on math or do you forego a shot at becoming a math superstar to spend some time and resources on English?

As a parent the answer that comes to mind is that you do both. We have unconditional loyalty to our children so you figure out a way to make both of them happen. You bring English up to an acceptable level and you work on providing whatever edge you can in the math area. Let’s not allow that easy answer however and say that doing both is not possible. What do you do?

What if your child was an employee, an employee who was really good in one area but sorely lacking in another? Is your loyalty in this case unconditional? Where do you put your effort now?

What if the choice was between two customers? One customer was average in their satisfaction with your services the other customer was dissatisfied. If you have to make a hard choice due to limited resources, is it more beneficial to an organization to resolve the dissatisfied customers complaints or should you concentrate on making the average customer absolutely thrilled? How do you create a loyal customer?

Where do you get the biggest payback for your expenditure of resources, time and effort and is it always a matter of payback? These are questions that people within organizations as well as others struggle with every day. 

In the area of customer research I have seen some data that suggests that thrilled customers are at least 3 times more likely to repurchase your product, willing to spend 10% more for perceived value add and are much more likely to recommend your product or service to others. This data also suggested that dissatisfied customers are already lost, they are typically already actively looking for alternatives to your product or service. So the case here was made that taking an average customer and making them thrilled has more benefit to the organization. But how did the dissatisfied customer get that way in the first place? Are there systemic issues within the organization that will raise their heads again and affect your now thrilled customer?  Without that kind of root cause examination, you may be diligently working utilizing wishful thinking as a way to thrill your customers. Just to make matters more complicated I recently attended a meeting where an expert on customer research suggested that this pattern varies by industry! Ah the world is never simple, and just when I thought that a categorization was possible to simplify my thinking process it turns out to be complicated. (See posting on Organizational Entropy).

What are we to do with an employee, an employee who excels in one area but may be sorely lacking in another? Here again the answer is more complicated than it may first appear. There are certain areas that are zero tolerance in my mind. Anything less than a high level of performance should be unacceptable. These are areas like working safely, sexual harassment, and ethics. Let’s put those zero tolerance issues aside for a moment.  I have never seen a job performed absolutely identically by two different people. Each person has unique strengths and abilities and they tend to make a job their own by bringing to bear that uniqueness. I believe that an organization is stronger when it can take advantage of those unique strengths, that potential diversity, rather then attempting to force everyone into the same mold. Saying that, there are some issues that need to be performed at a minimally acceptable level, across the board, and effort needs to be expended to bring an employee up to that level. If an employee can not achieve that level they may not be a close enough fit to stay in the organization. Is loyalty to an employee unconditional? No it is not, but neither should employees be treated like disposal assets, fungible assets or to be moved around as needed like pieces on a chess board.

What was my answer to the original question? What if your child was really good in math but below average in English? I said that you do both, improve the English up to a minimally acceptable level and give them the edge that may make them a mathematical superstar. Now I am left wondering if that should always be the case even when that appears not to be an option.

Written by Jeffrey M. Saltzman

November 19, 2009 at 3:46 pm

Curses

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“It is the peculiar and perpetual error of the human understanding to be more moved and excited by affirmatives than by negatives.” – Francis Bacon

Curses are another form of wishful or magical thinking, and though there are positive curses, most of the time they are thought of in a negative sense, in an attempt to bring harm to someone else or another organization. While most people use curses as a way to relieve pent up feelings of anger, maybe helping to prove wishful thinking’s health benefits, others will utilize curses believing that they will bring benefit to themselves while harming others. Since there seems to be a built-in tendency on the part of the human brain towards wishful thinking, and that human thought can alter events and even objects, it is no wonder that so many people actually believe in magical or wishful thinking and its power to affect events.

Appearing February 6th in the New York Times is a story about a small research lab at Princeton University. “Over almost three decades, a small laboratory at Princeton University managed to embarrass university administrators, outrage Nobel laureates, entice the support of philanthropists and make headlines around the world with its efforts to prove that thoughts can alter the course of events… The laboratory has conducted studies on extrasensory perception and telekinesis from its cramped quarters in the basement of the university’s engineering building since 1979…. But at the end of the month, the Princeton Engineering Anomalies Research laboratory, or PEAR, will close, not because of controversy but because, its founder says, it is time.” The history of wishful and magical thinking is long and is enticing to many of our fellows on this planet, especially in places where the basic tenets of science are not well established.

The very best curses (if there can be such a thing) in my opinion are those that make you stop and think about what they really mean. Three curses that fit that description and are linked together (their origin is a bit unclear) and in order of increasing severity are: May you live in interesting times, May you come to the attention of those in authority and May you find what you are looking for. Some curses are related to sporting events: The curse of the bambino is very well know, but recently annulled. There are many other curses perceived to be related to sports or to those participating in sports. One is that athletes appearing on the cover of Sports Illustrated are likely to suffer setbacks in their careers or to become injured.

Confirmation bias refers to a type of selective thinking whereby one tends to notice and to look for what confirms one’s beliefs, and to ignore, not look for, or undervalue the relevance of what contradicts one’s beliefs. For example, if you believe that during a full moon there is an increase in admissions to the emergency room where you work, you will take notice of admissions during a full moon, but be inattentive to the moon when admissions occur during other nights of the month. A tendency to do this over time unjustifiably strengthens your belief in the relationship between the full moon and accidents and other lunar effects.” (Skeptics Dictionary)

“Curses seem to have been a regular part of ancient cultures and may have been a way to frighten enemies and explain the apparent injustices of the world. There is no evidence that anyone has successfully invoked occult powers to do harm to others, but there is evidence that those who believe they have been cursed can be made miserable by exploiting that belief. Fear and the human tendency to confirmation bias and selective thinking can sometimes lead the believer to fulfill the curse.” (Wikipedia)

The power of the mind, while of dubious efficacy on external events has been demonstrated to have power over internal body processes – partly due to the power of positive thinking. The US Food and Drug Administration states that “Research has confirmed that a fake treatment, made from an inactive substance like sugar, distilled water, or saline solution, can have a “placebo effect”–that is, the sham medication can sometimes improve a patient’s condition simply because the person has the expectation that it will be helpful. For a given medical condition, it’s not unusual for one-third of patients to feel better in response to treatment with placebo.” “Expectation is a powerful thing,” says Robert DeLap, M.D., head of one of the Food and Drug Administration’s Offices of Drug Evaluation. “The more you believe you’re going to benefit from a treatment, the more likely it is that you will experience a benefit.” What about the power of positive expectations in organizational life? Are there benefits from that as well? From my experiences with various organizations I would have to respond affirmatively, though I can’t point to any definitive work proving that.

For someone who has a strong belief, a curse is in essence a negative Placebo effect. They expect something bad to happen and will begin looking for it. When something unfortunate happens, as it is likely to do in life, a ready explanation is available.  From an organizational standpoint and an interpersonal standpoint, I don’t think many of us would have to think very hard before we came across someone who we have crossed paths with or an organization, upon which we could lay a well deserved curse, the telephone company or the cable company somehow spring to mind. But in general organizations and most people are indifferent to such things.

The thing is, if you have organizations filled with people, and people have these natural tendencies, it becomes a very interesting thought experiment regarding how to maximize performance of the organization. Superstitious beliefs and the belief in wishful or magical thinking while not hard to find in places like the USA is even more predominant in the 3rd world, where large portions of the population may not be exposed to the common scientific rationales as to why things happen. I remember one organization in China I was working with that had to bring in an expatriate human resources manager, because the previous Chinese one, had died during a business meeting and this was viewed by potential replacements as an ominous sign and not one of them would take the position. 

Managements of organizations can have a tendency to assume that organizations are filled with logical rational beings and that their customers make decisions that way as well. However, some recent work seems to point in some other interesting directions. “The best decisions do not always derive from analytical reasoning, says Dr. Matthias Rosenberger, research associate at the Faculty of Economics and Business Administration at Chemnitz University of Technology. The fact that emotional and subconscious principles, that is, the gut feeling, significantly influence our decisions is verified by latest research findings in psychology. Intuitive decisions are more reliable and make us feel more comfortable.” But what are these gut feel decisions based upon?

Without mystery there is no freedom to choose. 

Written by Jeffrey M. Saltzman

November 19, 2009 at 3:42 pm

Out of the Organizational Crucible

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“Out of intense complexities intense simplicities emerge.” – Winston Churchill

Organizations today face unrelenting challenges, the pace of change quickens, quality must constantly be improved, costs must be reduced to remain competitive, workload increases, and management and staff spend an inordinate amount of time trying to determine “how to do more with less”. Stress is high and getting higher – and there is no end in sight. One of the most common conversations I have with CEOs, when I present findings on their organizational culture, revolves around the unrelenting pace that their organizations face and what can they do to help people cope with the pace of change. This conversation is almost always prefaced with a caveat: “the workload and pace of change are not going away, in fact they are likely to increase, so don’t tell me to not drive the organization as hard as we do”. What is an organization to do?

One thing is very clear. There are plenty of things that can be done to help the members of the organization cope with the situation but they all can be thought of under one main heading:

Give people as much control as possible.

Sometimes great catastrophes can be used as a window providing insight into more common day-to-day issues.  Five years ago, I was in the unique position of being able to examine data from a company that was in the middle of their employee culture survey when the planes hit on 9/11. This company had a facility near the World Trade Center (WTC). This facility was destroyed and the employees had nowhere to go. The management employees who were found a place to work and had the responsibility of getting the company up and running again, who knew their future and the future of the company was in their hands, experienced rather dramatic improvements in attitudes. Other employees who spent time at home, without tasks, none of whom lost a day of pay or benefits or got laid off, saw a drastic decline in attitudes. Those who had some degree of control over their future, who felt somewhat efficacious, came through a very significant trauma with far more positive attitudes than those who were having feelings of helplessness.

The WTC disaster greatly magnified within this company attitude shifts that you see in companies undergoing less traumatic change. In the ordinary course of business companies undertake mergers, reorganizations, and process improvements resulting in changing job responsibilities. What the employees experience—the stress—in those situations will be the same (albeit not necessarily to the same degree) as the employees making their way through the WTC disaster.

So what lessons can be learned? In times of change, to the extent that you can provide employees—whether they be the management staff of the organization or the workers on the shop floor—with some sense of control, some sense of say in their own future, in whatever fashion that you can, you are helping to improve their ability to get through both the normal stresses they face day to day, as well as the stress they face under extraordinary circumstances.  Where employees cannot be given control, having a decision-making process as transparent as possible, explaining the situation fully, and letting them know what decisions will be made under what circumstances, will help employees deal with the uncertainties of constant change. Here are some of the mechanisms that can be used to do this:

  • Increase employee involvement in day-to-day decision making that effects them;
  • Increase communications to and from employees about the business and the decision-making process;
  • Install processes whereby employees’ voices can be heard—meaningfully;
  • Take action on employee ideas and let them know what actions you are taking and why;
  • Set up cross-functional, cross-strata committees to develop and implement organizational change, so that change is done with the employees and not to them;
  • Utilize a collaborative model/process for change; and
  • Treat employees as you yourself desire to be treated.

People’s reaction to stress falls along a continuum. Some handle tremendous stress with very little problem while others buckle under the slightest stress. Some employees show no signs of stress (until the heart attack occurs) and others begin immediately to show many symptoms (lack of sleep, inability to concentrate etc.). Given the varying nature of how individuals react to stress you will not be 100% successful, but to the extent that you can assist them it is in both the employees’ and organization’s best interest.

Organization Entropy

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Organized systems want to operate with the lowest level of energy expenditure possible; it seems to be the natural state not only of living organisms but of our human organizational creations as well. Some animals, for instance, are nocturnal in order to conserve energy and not exhaust themselves during the hot part of the day.  Other animals follow strategies that allow them to pass through what would be tough times by hibernating through them. These “procedures” that the animals follow are strategies to help them cope with their environment.

Human organizations as well put into place rules and procedures by which they are going to operate to help them cope with their environment. The purpose of these rules is to allow the organization to make decisions using “standard operating procedures” as a guideline and hence remove from the organization the need to “think” about the decisions being made. For an organization to think, time and resources are required, an expenditure of energy.

But removing the need to “think” about some decisions carries with it an inherent risk – the risk of mediocrity or worse, the risk of extinction. In order to make decisions in a routine fashion, organizations try to come up with a solution that prevents the worst case scenario, works in most situations, fits the largest number of people, in the largest number of circumstances. I think though that organizations often make up rules for the smallest part of the distribution those at the bottom tail end of the distribution.

It has been shown time and again that for a given behavior within an organization that a normal distribution of that behavior will occur. For instance some people will never take sick days, other will take a few each year (when they are sick) and a small percentage will find any reason (a sniffle, a headache, the feeling of getting sick) to avoid coming to work.

Organizations have a tendency to count, it is easy. Here is the number of sick days you are allowed to take, rather than creating a rule that says if you are sick stay home, if you are well, come to work – and then manage the people who abuse the system. Are the rules that the organization puts into place for the average person within the organization or for those at the bottom tail of the distribution? Interestingly, organizations will espouse the one rule as policy, here are your number of sick days, then operate according to the other. It becomes a way of saying “gotcha” for those that abuse the system, but it actually shows a lack of respect for the majority and a lack of desire to inject energy into organizational decision making, the kind of energy needed to deal with those outside of acceptable parameters.   

For any circumstance that is outside of the range of responses that the organization has based it’s procedures upon, you run the risk of the decision not being optimal for that situation or the particular person. Yet many organizations slavishly apply these “solutions” to everyone. The outcome of that is to force standard or average solutions on potentially non-average circumstances. As organizations grow they adopt more of these solutions to help handle the increased number of decisions that need to be made. Bureaucracy is a form of organizational entropy.

In organizations where management is not working harmoniously these solutions can be a defense mechanism, allowing feuding managers to avoid interacting with each other. By having a standard set of rules we don’t have to talk, to engage, we can simply let the organization run itself.

For living organisms, when a non-average, out of range situation occurs, disrupting the routine, there is the potential for great risk, including potential extinction. Will the Polar Bear now faced with global warming be able to cope with the lack of ice flows at the North Pole? Ice flows that “procedure” says are used to hunt seals from? Can the Polar Bear now adapt to a non-average environment one that is out of its range of experience, or will it continue to try to apply standard operating procedure and face possible extinction?

Here is an assumption about people at work. I have yet to see any evidence that contradicts this assumption and have seen much evidence that supports it. In general most employees want to do a good job at work. There is a small portion of employees that do not fit this statement and unfortunately organizations generally create rules for this subset rather than the majority. They manage for the exception. Isn’t it ironic that the ‘average” person wants to do a good job and yet our organizations create procedures, not to deal with the average, but to deal with the outliers, the exceptions? These rules are then often indiscriminately applied to everyone. Does that mean that our organizations are less fit than their natural counterparts? Are we less or more resilient when the normal situation shifts?

Humans of course are only doing what comes naturally to them. In order to make decision making easier we have a tendency to categorize people into groups, to create stereotypes. These stereotypes are not only often wrong; they do a tremendous injustice to those who have been categorized. Categorization is a way for a person to use less energy, not to have to think about the decisions being made. This behavior at the individual level will at best lead to mediocrity or potentially bigotry as well as missed opportunities to enjoy the rich diversity of the human state of being. Organizations made up of human beings with their frailties make the same mistake; they paint with a broad brush.

A Rabbi that I greatly admire wrote in a recent editorial, “…generalizations are dehumanizing. The most amazing and indisputable characteristic about our humanness is that each of us is unique….Sameness is a delusion. Sameness is contrary to nature and destructive of the human spirit.” He speaks of the same human spirit that organizations need to tap into to unlock their potential. What can be done in an organization to avoid this pitfall?

First let’s take a lesson from state-of-the-art manufacturing. Mass customization allows a consumer to tailor a product within a given set of parameters to fit their needs. The products instead of sitting on the shelf are manufactured as needed to fill the specific order and the specific need. The use of technology allows the orders to be completed in a fashion and at speed similar to traditionally mass produced items. The days of “you can have it in any color you want as long as that color is black” are rapidly disappearing. This concept of mass customization, I believe can be successfully applied to our organizational policies and practices not just to manufacturing.

Secondly, organizations need to examine what they actually reward. It is well known that organizations get the behavior that they actually reward, not necessarily what they espouse.  Supervisors are given recognition rewards to distribute to their people, but they themselves are rewarded for coming in under budget. How do you come in under budget? One way is to not give out the recognition rewards! It is often a very healthy exercise for an organization to review what they are actually rewarding.

Thirdly, we have to be prepared to inject a bit of energy into our organizations to overcome the natural tendency toward organizational entropy. Sometimes it is simply a matter of being willing (and the messenger not being killed) to run non-routine situations up the line. Or even better, with the appropriate people in place, to drive down the decision making process so the non-routine can be handled locally. I have been in many organizations where running something up-the-line, if it happens often is not good for one’s career, the classic case of organizational entropy.

Fourth, people learn lessons from having average solutions applied to them and shift towards the center of the distribution in terms of the way they interact and deal with the organization. They, just like the Polar Bear, learn to deal with the average situation by behaving in a certain way. We need to encourage diversity of behavior and procedure so that when the situation is no longer average we can adapt. I term this the “cautious embrace of variance” and have written more extensively about that elsewhere. 

What about all that hard work we do? It certainly feels like we spend a lot of energy here getting things done. Yes, that is true, people work very hard in organizations; but I want to draw a distinction between people in organizations working hard and organizations seeking to operate with low expenditures of energy. Living systems get an “energy” input that creates order, only to begin a run down to lower energy states (disorder) until more energy is put into the system from the outside. Food or fuel of some sort is taken in to re-energize the system. But some animals, to increase their odds of survival fill a niche, unoccupied by others, that may require greater expenditures of short-term energy.

That means that organizations to the extent possible like to run on auto-pilot, without thinking about the “routine” decisions being made. How much can one spend on a meal when you travel? Do you fly coach or business class? Who can pull the lever and stop the production line? Can a salesperson authorize a discount? Who can commit to a client deadline? How many sick days do you get? How many vacation days?

Can organizations learn from nature, those animals that occupy niches that may require more energy use but can lead to greater survival odds? I think so, but they will have to expend some energy to do so.

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

Visit OV:  www.orgvitality.com

Written by Jeffrey M. Saltzman

November 19, 2009 at 3:18 pm

Slack

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There is enormous pressure for conformity within our society. Are you reading the right books, driving the right car, do your children go to the right schools etc.? Conforming to societal norms confers status. It makes you seem to be like others who are deemed to be successful – others you want to be like.  Authors buy up copies of their books in order to spur demand. (In 1995, the authors of a management book bought 50,000 copies of their book from stores that the NY Times monitored in order to land on the best sellers list, they did, and the book then continued to do well despite mediocre reviews). Restaurants routinely fill the seats by the windows so passersby can see that others have selected to eat at the restaurant. Advertisements for clothes, cars, food, and other products show attractive, successful people using the product, inferring that if you use the product you too can be like these people.

We of course are no different from our cousins in the natural world. Researchers at the Yerkes Primate Center recently reported that apes conform to cultural norms. In this case they performed a task the same way that other apes in the group did, even if an alternative method was available. They wanted to fit in, to be like the others. What was not discussed, and would be a fascinating next step, would be to determine the course of action the apes would take if it were obvious that the alternative method was clearly superior to the commonly used method. Would that confer status on the “innovator” or would they be pushed to the side, their status lowered?

Not surprisingly the desire to conform and the pressures to conform extend to the business environment as well.  Organizations create rules to deal with the 5%-10% of the population that do not conform to its standards. The tendency is to push people to the middle of the distribution, towards behaving like others in the group. This can create a “keep your head down” kind of mentality whose chief beneficiary is mediocrity within the organization. (Some organizations pride themselves on being non-traditional innovative, non-conforming organizations. These organizations may have set up a culture that pushes “conforming to our non-conformity” and that is a topic worthy of a separate piece by itself).  Organizations clearly have to manage their resources in order to achieve their goals, but is anything suffering in the commonly used practices that have developed?

I want to turn to the world of quality control – Six Sigma – for a possible answer. Within the world of Six Sigma there is a paradox that is articulated as follows: to attain Six Sigma performance we must minimize process variability (make our processes and outcomes conform), slack and redundancy by building variability, slack and redundancy into our organizations. In other words, in order to constantly improve performance, room must be made in the organization for the investigation, the vetting of alternative methods and procedures.

Wait a minute, today’s organizations are lean and mean. You have to constantly do more with less. Organizations are downsized, resulting in fewer people but the amount of work required does not often get adjusted. You can’t be efficient and get all this work done if you build in extra resources in order to test new procedures and methods. But you must. Long term process improvement and organizational success are dependent upon it.

With the goal of improving the organizational performance in mind, the path does not begin with the concept that what we need to do is to stamp out all variability, to make everything conform to a certain standard. Variability needs to be understood (through rigorous measurement), it needs to be controlled (in order to minimize defects or errors), but removing all variability eliminates the ability of the organization to learn from itself and eliminates opportunities to improve. Variability is needed in order for improvement to occur.

Here is an example to illustrate that point. If you are examining 200 departments within an organization, and there is no variation whatsoever, you can not learn much. You can not learn that in these 15 departments that do “A”, “A” leads to more positive outcomes such as lower levels of employee turnover compared to the 15 departments that do “B”.  In this case “A” and “B” can be the same thing but at different levels. For example “A” might be a high level of employee engagement, whereas “B” might be a low level of engagement. By examining these differences the organization can learn, it can improve. Without variation you can not learn, you can not determine that “A” leads to one outcome and alternative “B” to another.

In addition to the concept of variability, add the concept of redundancy. Redundancy is needed in order to allow experimentation. Redundancy is when two different approaches are available to achieve a desired outcome. For instance using a stamping machine to form a part from a roll of sheet metal, or using powdered metal to form the same part in a mold under pressure. Which procedure is better, leading to lower costs, less waste, fewer defects, and better part performance?

By being able to breathe through the nose and mouth, a redundancy, nature was freed up to experiment with noses for other potential uses – such as the elephant’s trunk. If the elephant could not breathe through its mouth it would be in a precarious position if it filled it’s trunk with water and then needed a breath. By having people perform a task using more than one method it is possible to determine if one method is more advantageous than another. Upon standardizing around the more advantageous method, you immediately begin investigating other methods (in a controlled fashion) to see if those new methods yield even more improvement. This requires slack, the controlled embrace of variability and redundancy.

In work I have done over the years it appears that organizations that have strong diversity programs outperform similar organizations that do not. Having a diversity of people with different backgrounds, skill sets, from different cultures etc. sets the stage for the organization to pick the best or to potentially have knowledge of the variety of process and procedures available to it, to have within the organization different points of view (this is assuming that these different points of view are valued and those with them are not ostracized). It is another way to embrace variability and for an organization to learn from itself.

At the Max Planck Institute, it was recently demonstrated that apes possess a surprising understanding of tools and even make future plans to use them. In one experiment an ape that came into a room, bringing with him the wrong tool to complete a task (and could not go back to get the correct tool), was able to shape the existing tool into a new tool to successfully complete the task. I don’t know about you but I am proud of my cousins, and I wonder if we can learn to shape new and improved business tools out of the ones we currently use.

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

Visit OV: www.orgvitality.com

Written by Jeffrey M. Saltzman

November 19, 2009 at 3:15 pm

The Cynical Organizational Theory

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Sometimes it seems like every organization out there, be it a consulting firm or a corporation, has a theory or model of organizational culture or some component of culture; there are literally hundreds if not thousands of them. Many of the organizations with these models have “data” to back up the claim, to prove that their approach is correct. Can all of these different models be correct? What is really going on here? Are these models robust enough to work in different situations and do they fulfill the basic requirement of a good model; can they be used to make predictions?

I am going to ask you to bear with me for a few paragraphs as I set up what I believe to be an important comparison between the world of physics and organizational theory. I will do my best to make the physics understandable and correct, but realize please that I am not a physicist.  Here goes.

Physicists had a problem. They had theories; models of how things were supposed to work but those models only worked under certain circumstances and were incompatible with each other. Newton’s laws of gravity work very well while you reside on the earth, but Einstein came along and his work on gravity contradicted Newton. Newton thought (and his equations stated) that gravity would effect things over distance instantaneously while Einstein thought (and his equations stated) that gravity traveled in waves and that its’ effects would take time to propagate over a distance through hypothesized gravity waves. They both could not be right. Einstein was proved right through rigorous experimentation.

While Einstein’s work explained some of the mysteries in the universe it was inherently incompatible with quantum mechanics. If one was right the other was wrong. Einstein thought that laws were laws and they should always lead to the same predictable outcome. Quantum mechanics introduces the notion that certain outcomes are unpredictable (such as exactly when an electron would emit light) and led to the famous saying attributed to Einstein “God does not play dice with the universe”.  The original quote was “Quantum mechanics is certainly imposing. But an inner voice tells me that it is not yet the real thing. The theory says a lot, but does not really bring us closer to the secret of the ‘Old One.’ I, at any rate, am convinced that He is not playing at dice.”

String theory or Super String theory is being used to bring all of these differences into alignment. It is the closest thing out there to what is called a grand unifying theory. It remains to be seen whether rigorous experimentation will be able to prove that this is the real answer to how the universe works. It is likely impossible that we will ever be able to measure or examine strings directly but planning is underway to look at some of their indirect effects. A string is hypothesized to be the smallest component of all matter.

Remember at one point it was thought that all matter was made up of atoms and atoms were the smallest component. Then electrons, protons and neutrons were found to make up atoms. Then along came a host of different type of quarks that make up those components. Things continued to get more and more complex, in terms of the number and type of quarks making people very uneasy, since simplicity or elegance of structure was just not there. The kind of simplicity or elegance of structure that makes you feel that something is right whether you are operating in the world of physics or in the world of organizational theory. The breakthrough that simplified things and took it down to once again basic components with simplicity and elegance was strings. All quarks, hence all matter was made up of tiny vibrating bits called strings. The shape the string takes as it vibrates and the speed of it’s’ vibration determine the properties it exhibits.

Side note: The reason we will never be able to view strings directly is partially due to just how small they are (incredibly) and what you need to be able to do to see things. In order to see things you need to use an agent (our eyes use photons), that is smaller than what you are tying to observe; the smaller the agent the sharper the picture. In order to see an atom you can use a stream of electrons which when bounced off the atom and then visualized to reveal its structure. This works because electrons are smaller then the atoms they are being used to see. If strings are indeed the smallest thing that there is, there is nothing smaller to use as an agent to see one and make out its details.

Ok, what does all this have to do with organizational theory?

Organizational theory is not all that dissimilar to the physicist’s predicament. As mentioned in my opening paragraph there are many different theories out there regarding organizations, all with the expected “proof” that they are correct. But due to the nature of these theories, as opposed to the physicists, just because one is correct does not necessarily mean the others are wrong. One could argue that they are all part of the picture, but none are looking at the picture as a whole, or measuring the picture at the level necessary to make out its detail.

What would be required to prove one of these theories above the other would be predictive data. In other words based on the theory being able to say if the data comes out this and this way here is what is going to happen in the organization. No one can do that, nor will they be able to do that in the near future. They can only go so far as to say this is what may happen (or maybe not).

When psychologists have a theory of how things should work and that is then “linked” to real world outcomes, the results are talked about in terms of the tendency for one variable (an item or dimension from a survey for instance) or set of variables to move in conjunction with an outcome. Linkage work has been done with outcomes such as sales volume, absenteeism, injury rates and a host of other metrics. All the linkage work I have seen is not done a priori but rather in a post hoc fashion – meaning the models are not used in a predictive fashion but rather after that fact on a data hunt.

Physicists are able to use rigorous scientific experiments to prove or disprove concepts and theories. And while the units of measure they use can be described as arbitrary, all physicists use the same standardized units. For instance a light year is an arbitrary measure. It is the distance that light travels in one earth year. Why an Earth year? Why not an Earth 2 year or 9 months? Not to mention the fact that the Earth’s orbit time around the sun is changing ever so slightly. Why not a Mars year etc.? Even though the definition is arbitrary, once set the same unit can be used by all physicists as a standard unit of measure.

An inch, another measure of distance, really doesn’t have to be an inch, but by use of a common definition – just how long an inch really should be, communications from one person to another, from one organization to another regarding lengths is possible. This is how things like houses and other objects get built to specifications. (The people who built my house must have had a somewhat different definition of an inch, but that is another story.)

There are no common measures in use today to measure organizational culture across organizations.

A frequently used technique to observe and measure organizational culture is the employee survey. There are several major problems with a survey process used to design the “correct” theory of organizational culture. First, the conclusions drawn from each survey is limited by what is asked. For instance, safety would not show up in a model of organizational culture if the model builder did not include a question about safety as they collected they built the survey in the first place. With no data about safety any model derived empirically, through inspection of the survey results, would show that safety is not important, for it did not show up in the data. Safety does not show up potentially not because it is not important but because it is simply not asked about.

With most organizations wanting to have as short a questionnaire as possible, many topic areas get left off, meaning that models of organizational culture that these surveys are built around are just thought experiments. The composer of the survey has to have a model in mind about what is important to ask in the first place and then uses the resulting data to illustrate that they asked the important questions resulting in circular logic. How do they know about the questions that they did not ask? They could be important as well.

Secondly, the measuring tools used across organizations are not standard. Do we want to build a unique model for each entity – that may be fine, but if each entity needs a different model (…as the number of quarks multiplied), an unease should begin to settle in. Where is the simplicity? And then you really don’t have a model that can be used for prediction but simply a description of the organization at a point in time – a model that works only under certain circumstances.  

Thirdly, some of the models I have run across use internal analysis to define the model and the success of the model. The survey questions that are collected from the organization include both the independent and dependent variables. That means that I may use a question like “how would you rate your satisfaction at the present time” as a dependent variable and a question like “rate the in-house training you have received” as the independent.  

Statistically the two are compared. Are the people who rate training also the ones who are more satisfied? If so training becomes part of our model. This approach is really measuring the internal consistency of the various sections of the questionnaire, they measuring the same thing, as opposed to comparing the training questions to an objectively collected external measure of job performance. Are the people who received training better able to actually perform their jobs? If so then our training is effective and training is an important component of our model. If not, if may simply mean that the training was not done well.  This is akin to saying that I know that the atom is the smallest piece of matter that exists because it is the smallest I can see. It may be the smallest you can see simply because you are not using the right agent. 

Each organization out there measuring organizational culture is using different sets of questions; often times with different scales, many times calling their question set or scale proprietary. This of course flies in the face of ever being able to develop a truly robust theory of how organizations function. Even those organizations that use “normative” questions are suspect. Many times the “norms” are modified to meet a client’s need, wording modification or even worse scale modification are not uncommon.

I recently came across an article which published “norms” of organizational behavior in response to a standard set of questions by country. This article was trying to point out differences that exist by country in response to a standard set of questions. The largest differences in response patterns to a single norm item is often driven by the occupation of the respondent (holding tenure constant) rather than other factors.  When examined, this article did not hold constant the types of organizations, or number of organizations in each country, and it certainly did not hold constant the occupations and tenure levels of the people in each country being asked the questions. The differences they were trying to point out without this context can not be interpreted in any manner, let alone to illustrate expected differences by country. I am afraid that this is the state of much of the world of organizational theory. The data that gets collected within an organization maybe ok, but the aggregation of data across organizations immediately begins to become suspect, and yet these grand theories of organizational behavior are based on just that sort of data.

There is no agreed upon unit of measure, there is no agreed upon methodology on how to measure. There is no smallest unit –  like the string –  that can be pointed to and say “this is what underlies everything”.

Given the state of the science, at best all of these models should be referred to as frameworks – “this is our framework, based on the questions that we have asked previously, that we feel is important to ask here capture to measure your organization’s culture”.

Given my cynical nature of the current state of organizational modeling I am not going to offer you any models, only a framework. What framework do I think is important? What will be my attempt at simplicity, at cutting through the clutter, creating my own version of strings?

In its simplest form I suggest the following. Message, Performance, Future (MPF). An action oriented framework for describing organizational culture and a framework for change.  Just what is Message, Performance, Future?

MPF, is what I believe is the underlying basis of an effective organizational culture- the smallest unit if you will if what is important. It can be applied at all levels of the organizations, from the senior most people in the organization to the first line supervisor. It is an underlying framework that allows other models to be laid over the top. So a model of engagement, or quality improvement, or turnover reduction etc. can overlay this framework.

Message: describing for employees what the organization is about and their role in achieving that goal. Consistency of Message is also important and will be discussed elsewhere.

Performance: the organization providing the employee what they need (in the broadest sense) to get their jobs done – done in congruence with the organizational goals.

Future: to feel appreciated for what you have accomplished and see a future for yourself within the organization.

Written by Jeffrey M. Saltzman

November 19, 2009 at 3:12 pm

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