Jeffrey Saltzman's Blog

Enhancing Organizational Performance

Archive for the ‘Goal Setting’ Category

The Planet is in Trouble. What’s Your Organization Doing to Help?

leave a comment »

The UN set an ambitious humanitarian goal. But they can’t achieve it alone. 

 

Come learn what leading executives are doing to help the UN fulfill the Sustainable Development Goals (SDGs).

Last September, the United Nations set an ambitious global humanitarian agenda by establishing the Sustainable Development Goals (SDGs), a list of 17 goals meant to improve the lives of people around the world over the next 15 years. Accomplishing these goals, which includes ending poverty, eliminating hunger, and achieving gender equality, among other things, is a colossal task, and one that will require the cooperation and dedication of people from organizations beyond the United Nations and member countries. Join us on September 27th at 12:30 pm EST for a lively discussion with members from four organizations who are actively making an impact toward the fulfillment of these goals. We are honored to have the following panelists: Dawn Rittenhouse, Director of Sustainable Development for DuPont; Mark C.Weick, Director, Sustainability and Enterprise Risk Management at Dow Chemical; Dr. David S. Wilkie, Executive Director, Conservation Measures and Communities at the Wildlife Conservation Society; and Norine Kennedy, Vice President, Environment, Energy and Strategic International Engagement at the United States Council for International Business (USCIB). Find out what their organizations are doing to make a difference, and why committing to the help fulfill these 17 goals makes good business sense. Register Here!

 

Written by Jeffrey M. Saltzman

September 20, 2016 at 1:00 pm

Posted in Goal Setting, Vitality

Sunk Costs

with one comment

The patient in the ICU had given instructions for no heroic life support. Heroic is of course subjective as one person’s routine might be deemed heroic by another. Never-the-less over a period of almost two weeks the measures taken would be described by most any observer as heroic. How did it happen?

It started as simply some abdominal pain. A trip to the ER revealed a small perforation in the intestine, a complication of diverticulitis. The patient was admitted, put on intravenous antibiotics and a small amount of supplemental oxygen. At first the antibiotics seemed to be working, but then the patient took a turn for the worse. An abdominal abscess was discovered, the dosage of the antibiotics being given was increased and a pathology report led to a change in the type of antibiotic being used. Again, positive signs emerged. Up to this point fairly routine healthcare.

After a day or two the patient once again took a turn for the worse with the infection having turned into sepsis, an infection of the blood itself. Sepsis led to edema, where the fluids that normally travel in the bloodstream leak through small blood vessels into surrounding tissue, including the lungs. The patient now required large amounts of replacement fluid via IV as without the fluid in the blood itself, blood pressure plummets. Pressers, a class of drug to raise blood pressure, were now begun to help counter the loss of fluid. Increasing the amount of fluid of course also increases the amount of fluid leakage. And the continual fluid build-up led to each breath becoming increasingly more difficult. Abdominal pressure also caused by the fluid buildup was increasing to critical levels and it was putting dangerous levels of pressure on the internal organs. The patient was obviously struggling. A decision to intubate the patient, to breathe for the patient had to be made, it was thought that a few days, at most, of being intubated would allow the body to fight off the infection. It was only one small additional step. The family gave the go ahead to intubate.

The infection continued to rage and it was now thought that the abscess that had been discovered needed to be physically drained in order to help the body heal. A procedure was scheduled as it was only another small additional step. The abscess was successfully drained, but the patient did not improve. All of this had now been going on long enough that nutrition had become an issue. A nutritional IV bag, a very small additional step was hung and added to the numerous other medicines and fluids the patient was receiving. A few more days went by. Small signs of improvement were noted. Diuretics were started at a low level to relieve some of the pressure on the internal organs. As soon as the diuretics kicked in the blood pressure once again plummeted. One option that was out on the table was major surgery to clean out the abdominal cavity from additional abscesses that had developed. The odds of the patient surviving the surgery were not good. It was clear now that things were on a continual downward trajectory. If you took a step back and looked at the patient surround by beeping and whirling machines, IV bags, and numerous sensors, it was clear that the desire for no heroic measures had not been met and the culprit was sunk costs.

Sunk costs is a common factor in human decision-making. It is when a series of incremental decisions or investments are made, each one by itself relatively small. Each one requiring an investment in capital, effort or other resources that is made more likely because of the investment in capital, effort or other resources that have already been made. If the patient described above had known of the eventual end state of all of these incremental steps the decision path may have been different. Unfortunately, even highly skilled physicians are not omniscient. We begin to head down a certain road with our decisions and as we head down that road it is increasingly difficult to say to ourselves “we are on the wrong road, it is time to get off”.  Sunk costs. The expenditure of resources makes it increasingly more likely that an additional expenditure of resources will be made to achieve a goal, even as that expenditure makes the goal less and less attractive or worthwhile.

It happens in all sorts of situations. You buy a cute little house, which you thought was reasonably priced. You find out that it has termites. You fix the problem, and then find out it needs a new roof. After the new roof, a new hot water heater is required, then in quick order you deal with refrigerators, stoves, leaky windows, poorly done wiring from a previous renovation, a broken furnace and an air conditioning system that is refusing to work. When you take a step back, you realize that your cute little house has turned into a money pit and if you had known up front what was going to happen you never would have bought it in the first place. Most of us are also affected by a sense of positivism or optimism regarding outcomes arising from our decisions, along with the difficultly of deciding when to get off the path.

In the New York Times (1/10/16) there is a story about how the economic slowdown in China is affecting commodity prices around the world. What path are the producers of these commodities taking as the value of the commodities in the market plummets? From the Times: Chile is expanding its largest open-pit copper mine….India is building railroad lines that crisscross the country to connect underused coal mines…. Australia is increasing natural gas production by 150 percent….Oil sands in Canada are just starting to produce….Iron ore mines in West Africa are coming online…Freeport-McMoRan is finishing up a $4.6 billion dollar expansion of a copper mine in Peru.” It is so big it will consume 10% of Peru’s electricity production when operational. Freeport-McMoRan’s board, taking a step back and seeing the big picture asked the CEO to step down.

So is there anything that can be done to better recognize that you have begun down a path of sunk cost decision-making? Can you improve your decision-making abilities? The answer to both of those is yes. Decision-making, like other skills, can be practiced and practice and training can result in improvement in your decision-making. The first step? Understanding how people fall into certain decision-making paradigms traps.

 

Written by Jeffrey M. Saltzman

January 10, 2016 at 12:14 pm

Timelines

with one comment

“Time is an illusion.” – Albert Einstein

The US Postal Service just announced that in the New York and Los Angeles metropolitan areas it would immediately begin delivering Amazon packages on Sundays (New York Times 11/11/13). The announcement, a recognition that American’s shopping patterns have been forever altered by Amazon, and coming at the start of the 2013 holiday shopping period, may give the post office a much needed boost to its profitable package delivery service. Sunday delivery of packages will be, for the moment, a clear differentiator for the post office, since no one else offers that service and for consumers it gives them a way to receive their purchases even faster. It is likely to be especially useful to Amazon Prime customers who get 2-day delivery included in their membership and those who have no one at home during the Monday-Friday work week.

Amazon and the Postal Service are making a pretty safe assumption that when someone purchases an item online they desire to receive their purchases as quickly as possible. It is in Amazon’s best interest to get the package to the consumer, as it helps to eliminate a competitive advantage of bricks and mortar stores and it is in the consumer’s best interest in that they don’t have to delay receipt of the goods they have purchased. Their respective timelines are operating in a congruent fashion and because of that it seems a safe bet that the offering will be very popular. And until Amazon can download your purchases directly into your home 3-D printer, Sunday delivery of packages may be the best way to shorten delivery timelines.

Timelines, however, don’t always line up between two people or entities in a congruent fashion, and in fact non-congruent timelines are the source of much conflict between people, organizations, investors and countries around the world. When timelines between two efforts or events don’t line up there is an increased potential for failure of whatever those efforts or events are, with the corresponding finger pointing of whom and what organization or country is to blame. Timeline incongruences are often overlooked as a potential risk factor that can derail an effort or event.

Think of a school system for instance. It may look at gradually improving test scores as a long-term trend that their policies and practices are on the right track. However, to parents, a long-term view of the trend of test scores is irrelevant to what they want as consumers of educational services for their children. They want the system to be at its best for their child, enrolled in the school right now. Not some future promises that things will get better for other “unknown” students. They want their child to do well in life, to be prepared to succeed, even though intellectually the parents know that change is often a gradual thing in organizations, including school systems. Their timelines of what they want can be fundamentally in disagreement with the school systems timelines and a source of conflict.

The teachers themselves may look at their course material as a gradually evolving, ever improving body of information, but the student typically only goes through the course once and that incongruence has at it source a fundamental difference between the timelines that a teacher is operating under (a teaching career that could span 30 or 40 years) and the student (taking the course once for 12 weeks).

There are endless stories of timeline incongruence between Wall Street’s quarterly-driven expectations for publicly traded companies and what those companies feel that have to do in order to build a robust, lasting enterprise. Sometimes public companies will be taken private when the timeline incongruence, along with other factors reaches a breaking point. Other times companies that could go public choose to remain private in order to operate with a longer-term view.

At an individual level, when you try to compress what you can get done within a shorter timeline, the potential for error or worse increases dramatically. At one extreme people are “multi-tasking” trying to fit more and more into an abbreviated period of time. Incongruence in the timeline exists between what it actually takes to do a good job on something, how much time and attention you should devote, and the expectations that you can do more and more activities within a compressed period of time. Many managers today feel that they must “multi-task” to be viewed as capable in their jobs. But ask yourself, how would you feel if a cardiac surgeon was multi-tasking while operating on your heart? Perhaps banging out a tweet while looking for that bleeder? Or what would your comfort level be in a combat situation walking behind the multi-tasking person responsible for spotting landmines? Does managing a group deserve the same level of focused attention? Or when talking to an individual, what does a singularity of focus, all of your attention on that person, in that moment in time, what does that buy you? Plenty.

While it is not uncommon for despair to take the form of immediate suffering and pain, ultimate despair seems to be driven when no positive potential future is seen for oneself or one’s children. And while people who can see a path forward to a better future are often very positive, even in trying circumstances, if you can’t see that better future, attitudes and behaviors can quickly turn in a very negative direction. It doesn’t matter if you are living in poverty in the rural south of the United States, within an inner city urban center, barely hanging on in a refugee camp, trying to survive a natural disaster or being controlled by a “benevolent” government. If you can’t see a bright future on your timeline, not the timeline of an organization, society or government, negativity will flourish.

Incongruent timelines may also be having a large and perhaps largely ignored impact on various peace negotiations around the world between countries. Americans tend to be fairly impatient, wanting to see progress on an issue within a fairly short period of time. Our maximum timeframe of focus is usually about one election cycle. But what if you are in negotiations with someone who has a very different timeline view than you? What if you are negotiating with someone who is thinking in hundreds or thousands of years and not driven by a 4-year election cycle? Their goal is not necessarily to achieve “immediate” progress on an issue or to resolve a conflict and put it behind them. With a long-term timeline view, the goal may be to simply do what it takes to pass time until more favorable conditions present themselves, 10, 50 or 100 years from now. And when you are dealing with multiple countries, each of which who view their ultimate success as being guaranteed by a higher power, the chances of a successful negotiation with immediate improvements in conditions is diminished.

Albert Einstein may be right about time being an illusion from a physicist’s view point, but from the view point of countries, people and individuals, all of whom live on a timeline, incongruence on respective timeline intervals and scales can at best cause miscommunications and at worst complete failure of the event or efforts underway.

© 2013 by Jeffrey M. Saltzman. All rights reserved.

Visit OV: www.orgvitality.com

Written by Jeffrey M. Saltzman

November 12, 2013 at 9:30 am

The Organization as Omnivore

leave a comment »

An omnivore has certain advantages. Not being a picky eater, an omnivore can wander away from its traditional food source and expect that it will find some thing or other to eat when it gets to wherever it is going. When an omnivore, however, really wanders into unexplored territory and comes across completely foreign food, it faces a dilemma. The omnivore’s dilemma is a term first used by Paul Rozin and essentially states that omnivores as they move around must find new foods and new food sources, but at the same time must be wary of them until proven safe. Is this new food something that it can safely eat or is it a food, like certain wild mushrooms, that should be avoided at all costs? How can it know?

Jonathan Haidt describes omnivores as having two competing drives or motives. Neophilia is an attraction to new things, and neophobia is a fear of new things. And it has been shown than in the omnivores we call humans, neophilia and neophobia are not binary conditions but rather exist along a spectrum with each term anchoring one end of a “neo” scale.  People who score higher on neophilia are more open to new experiences, including meeting new people and considering new ideas. Neophobic people do not prefer new experiences but do prefer tradition, guarding borders and boundaries either physical or social.

Now an omnivore’s survival as it wanders into new territory, much as the Vikings or Columbus did, depends on having evolved a disgust reaction to foods or environmental conditions that were certain to harbor pathogens or which could prove deadly. Omnivore flexibility only goes so far. For instance, you would be hard pressed to find an omnivore that would eat rotting meat, as only very specialized types of animals, such as vultures, can manage that without getting sick. Disgust as it turns out is also not binary but exists along a continuum along with neophobia and neophilia. And you guessed it, neophobics, people who are more fearful of new experiences preferring tradition; and those who feel a need to closely guard social or physical borders, have a more readily triggered disgust mechanism.

Organizations face the omnivore’s dilemma continually. Do they hire leaders from the outside, exposing themselves to potentially new ideas, new ways of doing business, a willingness to try some “new food” which unfortunately might prove poisonous, or alternatively might lead them to previously unattainable success? Or do they promote from within, utilizing those who have risen from the ranks, have found success in the organization’s current methods and processes, and are deeply imbued with the organization’s existing culture and ways of doing things? That is a surefire method of guarding one’s social and physical boundaries, which might lead to either the continuation of a success story or alternatively to obsolescence as the organization is stagnant and unchanging as environmental conditions change. If the leader of the organization is neophobic or neophillic will it affect which path they choose?

If one organization acquires another organization do they take the best of both cultures, processes and procedures, forging a brand new entity or do they bend the newly acquired organization to the will, the culture, the methods and processes of the acquirer? Do they guard their borders or are they neophillic, open to new experiences and the ideas of new people?

As organizations consider which products to bring to market, or which markets to enter, how to grow in their existing markets they have choices regarding when to stick to the tried and true and when to strike out, as Columbus did, in search of the new world. One path is not inherently safer or more sure than the other for both paths carry risks. How do you choose which path to take?

The omnivore organization roughly parallels the decisions that must be made in an ambidextrous organization. An ambidextrous organization is one that can maximize its current performance while at the same time building future potential. That is a balance that must be struck but is at the same time somewhat of a conflict or challenge. When you are building future potential, you are by definition not maximizing current performance, and if all you are doing is maximizing current performance, you are throwing away your future.

Leaders of organizations that are successfully ambidextrous relentlessly talk about the need to maximize current performance and to build future capacity. Their management teams below them tend to have differing groups focused on either the current performance or building potential, but not both at the same time. It is at the top that all points of view should be listened to, considered and the balance must be struck, by leaders that are practiced at being omnivorously ambidextrous.

© 2013 by Jeffrey M. Saltzman. All rights reserved.

Visit OV: www.orgvitality.com

Written by Jeffrey M. Saltzman

July 1, 2013 at 7:20 pm

Direct Questions, Actions, Outcomes, Tipping Points and Gun Control

leave a comment »

Here is a little secret about employee surveys, if you want to know about something it is often best to directly ask about it. Surprised? It may seem like common sense when someone says it, yet there is a lot of obfuscation out there, a lot of confusion, some purposeful, some simply based on a lack of knowledge. People tend to be honest when answering survey questions and direct questions with direct answers often give you the information you need to take corrective action. The best way, for instance, to determine if your employees are thinking about leaving is to ask them if they are thinking about leaving, or if you want, how long they plan on staying. How do I know that people tend to answer those pretty sensitive questions honestly? There were a number of times where that question was asked and then a year or two later we went back to find out if those who said they were leaving left, or those who indicated they were staying were still there. By and large both were true. People tend to answer honestly and they tend to act on what they say they are going to act on.

On 360 surveys, those are surveys where you ask a manager to rate themselves, for their boss, subordinates and peers to rate them as well, you get the best data when you ask about observable behavioral things. Don’t ask about “emphasis”, “spirit”, or “caring”, which are things that people may have to surmise from behavior, ask about the behavior you want the person exhibiting directly. If you want to know whether a boss cares about their employees, define what caring means in your organization, in terms of what behaviors a boss should be doing or not doing and ask about those behaviors directly. It works. And then when you  need someone to change, it is a lot easier to talk about which behaviors they need to start doing and which ones they need to stop then to tell them they need to show more “spirit” or be more “globally focused”, which can simply leave them floundering.

It feels like you can’t pick up a newspaper, turn on the TV or look at the internet recently and not read about people dying due to gun violence. The Newtown school massacre was devastating, hitting close to home and seeing six and seven year-old children killed certainly means to me that something significant has to change. The status quo is not acceptable. Six and seven year-old children have every right to expect to come home from school and we need to make sure that we do what it takes to make that happen. There are going to be competing viewpoints of what that means, and what actions we can, should or are we willing to take to make that happen.

In the spirit of evidence-based decision-making and direct actions and outcomes, I looked at how each state was rated by the Law Center to Prevent Gun Violence on strictness of gun laws. I wanted to know if stricter gun laws have an effect on deaths in that state due to firearms. The states which had the toughest gun laws include: California, New Jersey, Connecticut, Massachusetts, Hawaii, New York, Maryland, Illinois, Rhode Island, and Michigan. The states with the most lax gun laws include: South Dakota, Arizona, Mississippi, Vermont, Louisiana, Montana, Wyoming, Kentucky, Kansas, and Oklahoma.

So now I wanted to know which states had the most number of deaths due to firearms and which the fewest and how that compared to the strictness of the gun laws. Of the ten states with the most deaths due to firearms 90% were given an “F” grade on their gun control laws. One was given a “D” grade. Of the states with the fewest deaths from gun violence 60% were given a grade of “A” or “B”, 30% got a “C” grade, and one, Vermont got an “F” grade. Vermont is an anomaly; it has poorly rated gun laws, but relatively few gun related deaths. The rest fall into line, those states with stricter gun laws have fewer gun deaths. Said another way, seven of the ten states with the strictest gun laws also make the list of the states with the lowest death rates due to gun violence. Direct action, direct outcome.

Out of curiosity, I went a little further. I visited the US Census Statistical Abstract and looked up a couple of facts about the states with the strictest and most lenient gun laws. By no means was this a thorough analysis, but I wanted to look anyway.  As a measure of educational attainment, I looked at the percent of people within the state with a degree beyond a college bachelor’s, could be a graduate (e.g. Masters, Ph. D)  or professional degree (e.g. dentist, doctor) of some sort. Of the ten states with the most gun deaths, 8% of their populations, on average, have a degree beyond a college diploma. Of the states with the fewest gun deaths, 12% have a degree beyond a college diploma. So there is a 4% difference in graduate degree attainment between the states with the most and those with the least deaths due to gun violence. Does 4% represent a tipping point? Does a little education go a long way towards reducing gun violence? In Vermont, our anomaly, 13% of the population have degrees beyond college, and they are squarely in the fewest gun deaths states, in spite of their “F” rating on gun laws.

You could argue that having a more educated population is not the primary cause of lower gun deaths and without additional analysis I would be hard pressed to counter that. But education certainly can be considered a surrogate measure of other outcomes as well. For instance, economic success is closely linked to education. On average people with a bachelor’s degree, according to the US Census, have a 39% likelihood of earning $100,000 or more per year.  For people with a degree beyond a bachelor’s that number rises to 58%. For those with less than a bachelor degree the percent who earn at least $100,000 per year drops rapidly to the low single digits, depending on educational level achieved.

In other words, educational attainment is very strongly linked to economic success and in states with higher educational attainment there tends to be both stricter gun laws and fewer deaths due to gun violence.

A chicken or egg question which comes up fairly often about culture change is whether you first try to change attitudes about a topic, or first try to change behaviors with respect to that topic in order to change the culture for the long-term. While you want to work on both, much success has been achieved by making behavioral changes first, and then having the resultant attitudinal changes follow. The behaviors, what people do day-to-day, reinforce and help create the attitudes which create the culture. But if you still have the old behaviors in place they constantly push you back towards the old attitudes and culture. This has been true on topics as diverse as equal rights in society, quality control procedures in manufacturing, seat belts use in automobiles, customer service orientation and I believe will be true for getting control of the gun violence now sweeping our society.

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

Visit OV: www.orgvitality.com

Written by Jeffrey M. Saltzman

December 25, 2012 at 10:21 am

Why Improving Employee Engagement is not Strategic

leave a comment »

[tweetmeme source=”jeffreysaltzman”]Employee Engagement is often viewed as a magic bullet. All we have to do is increase our levels of employee engagement and all will be well. Is your engineering done poorly? That is because your engineering employees are not engaged enough. They would exceed your customer’s expectations if they were more engaged. Putting your stores in under-performing locations? That would not happen if your real estate people were more engaged. Are your customers unhappy with the quality of your products? If only you could make your sales people were more engaged. This kind of thinking is of course nonsense, but there is a deeper issue here.

Some, if not many organizations have bought into the notion that increasing employee engagement should be part of an organizations’ strategy. But that is like saying reducing an ill person’s fever should be the strategy to get them well, without addressing the underlying cause, like the tumor that is spreading rapidly in their pancreas. Maybe if we brought the fever under control that tumor would resolve itself? Not likely.

As we conduct employee surveys there are several distinct kinds of questions that are used to gage what is happening within an organization and how it is functioning. One question type is called an independent variable. These are items like “do you have the training you need to get your job done?” They are directly addressable if the response scores are low. Another question type is called a dependent variable, such as “I am proud to work for XYZ”. These kinds of questions are dependent on other things driving them high or low, such as, we were just caught up in a bribery scandal, so I am not so proud to work here. How would you address pride in that circumstance? While there may be other underlying issues, simplistically, you would address ethics in order to bring pride back to higher levels. There are other kinds of questions we use in surveys but discussing these two types will make my point.

Good strategy for an organization is strategy that is simply stated, easily understood and directly addressable. Good strategy could be thought of as independent variables. Is your engineering done poorly? Good strategy may be to upgrade or bring resources to your engineering group. Maybe you hire or maybe you acquire or maybe you outsource, but the hallmark of a good strategy is that you can directly address the improvement needed of the engineering function. The engineering employees will become engaged when they have what they need to do their jobs well, are treated in an equitable fashion, with respect etc.

A strategy that states, we will increase employee engagement as the strategy itself, is not directly addressable and does not give the management team any insight into specifically what needs to be done to accomplish that goal. Without insight into the direct strategic actions that must be taken you get warm and fuzzy words that are not directional and will be impossible to accomplish.

Having high levels of employee engagement is a good end result, but it is an end result of other strategic actions you take and is simply not strategic by itself.

© 2012 by Jeffrey M. Saltzman. All rights reserved.
Visit OV: http://www.orgvitality.com

Written by Jeffrey M. Saltzman

August 26, 2012 at 9:37 am

Sense of Direction

with one comment

[tweetmeme source=”jeffreysaltzman”] “You are going to have to help me with this people thing.” That was what the ex-McKinsey consultant turned CEO of a major Fortune company told me years ago. He was the nicest guy. He explained to me how he could handle all of the financials to run his company but this whole people thing, what motivated them, what concerned them, he just couldn’t get his arms around that. He was baffled. What to him seemed like simple business decisions, trim here, reorganize there, in order to fine tune his company’s financial performance resulted in all sorts of emotional morale issues. “Why didn’t people see the obvious?” He thought that there should be no emotions involved in financial business decisions, that if he did what was best for the company, to ensure its survival, that people should not mind (or at least not get emotional about) being moved around like pieces on a chess board, even if it meant losing their jobs. While this company had solid financial performance, it also had a fairly high degree of turnover, with some employees after a pretty short period of time feeling burned out and not being able to continue with the firm. Yet this company also had a high degree of employee commitment and employee loyalty. How was that possible?

I participated in a graduation recently. A group of MBA student’s to whom I taught a leadership class were graduating with their degrees in hand. It was extremely emotional in a positive way for the students, their families and friends that were present. The students were smiling from ear to ear and the parents were beaming. As each student came across the stage, amid the flashing of cameras, I rose shook their hands and congratulated them on their achievement. As each student passed me, I wondered “what direction will their lives now take?”

Sense of Direction. Having a clear sense of direction, a sense of mission regarding what the organization (an organization can be anything from a poker club to a nation state) is going to accomplish, and how people can personally and meaningfully contribute to that goal will affect one’s overall sense of well-being and happiness. It helps to increase a sense of purposefulness which in turn can greatly impact people’s sense of commitment and loyalty to the organization. Most people struggle with this, looking for a sense of direction and purposefulness for at least a portion of their lives, others struggle with this for most of their lives. For the newly-minted MBA’s, they are at an inflection point, where they will be examining the decisions they have made so far and will be reflecting on a host of choices they now have which will affect their own sense of direction and sense of purpose.

For an organization, clarity on this subject allows members to self-select, for if I don’t agree with the goals of the organization (stated or otherwise), or what the organization perceives as my role in helping it to achieve those goals, it is pretty clear, that if I can, I should leave. Over time, with a clear sense of direction (stated or otherwise), what an organization can achieve is a fairly tightly knit core of people who are extremely dedicated, ferociously loyal to helping the organization achieve its goals. And yes, there is a risk that too tightly knit of a group will put goal achievement and gain for this core above all else including societal or customer well-being, potentially bending or breaking various articulated operating standards, societal rules, regulations or laws. An inner core can arise, and as C.S. Lewis pointed out a long time ago, people will do almost anything to become part of the inner circle. As with everything there needs to be a sense of balance, swinging too far in any direction is generally not good for people, the organization or society at large.

Knowing where an organization is going, what it stands for and the values it will employ while getting there can be critical to actually getting there. Each person having a sense of direction and knowing how they can contribute to that direction is a fundamental building block for organizational performance and morale.

One aspect of sense of direction having a positive impact is movement, or the direction of the sense of direction. People tend to get frustrated with stagnation and get unhappy pretty quickly about what is perceived as a backward slide, even if that slide is relatively small and from a very high place or performance level. People notice and feel positive or negatively about the direction things are headed, oftentimes more than the absolute level of the measure suggests that they should.

For instance, as we have measured Employee Confidence over the years, what we see are increases and decreases in Employee Confidence on a national level that are related to the direction of a nation’s economy and not the absolute level of economic performance. Employee Confidence goes up if conditions (e.g. unemployment levels, GDP growth) are seen as improving and it declines if conditions are perceived as dropping, regardless of the absolute levels of those conditions. Employee Confidence can be very high in rapidly developing economies as people feel that conditions are improving and that their economy is on the rise, even if the absolute economic standards are pretty low. Likewise, Employee Confidence can be low in highly develop economies with high standards of living if economic performance is seen as in decline.

As humans, we tend to perceive events and make judgments on a relative basis and not on an absolute basis. What tends to becomes normal is relative to what we routinely experience. But every once in a while we are able change the standard dramatically when a critical mass of organizational members compares what they are experiencing to other extra-organizational standards.

Let me illustrate relative decision-making in a simple fashion. Say you needed a pair of shoes and had your eye on a pair that normally costs $300. You are prepared to spend $300 on those shoes. You open the Sunday paper and see that a store 40 minutes away across town has those same exact shoes that you have been thinking of purchasing for half-off or $150. Would you be motivated to drive across town to buy your shoes at half-price? Many people are inclined to do that. Now say you needed to purchase a new car. You are looking at a car that costs $27,900 at a new car dealer near your house. You are prepared to spend $27,900 on that new car by financing it with the bank and paying it off over 5 years. You open the Sunday paper and see that same exact car for $27,750 at a new car dealer 40 minutes away on the other side of town. Would you drive across town to buy that car? Many would say no. Yet in these two examples in each case the buyer would save $150 on the purchase price. You could use that $150 to purchase the same exact things, regardless of where the savings came from, 2-tickets to a Broadway show (partially obstructed view), or a hot dog at Yankee Stadium. Yet there is a tendency for people to be more willing to save $150 when it represents a larger portion of the purchase price, rather than when it represents a smaller percentage. We make relative and not absolute judgments on how worthwhile the savings are.

The same holds true at the organizational level. If organizational performance is seen as improving relative to where it currently is, employees tend to be more upbeat regardless of the absolute starting level of that performance and if it is perceived as in decline, employee spirits will also be in decline (even if you are still the best in your industry). So how could the CEO I mentioned lead a company that achieved high levels of employee commitment and loyalty, even as people were burning out? The answer is that it was an exciting place to be, they were cutting edge, an industry leader with rapidly rising levels of performance, beating the competition and with a clearly articulated vision of where the company was going.

© 2012 by Jeffrey M. Saltzman. All rights reserved.
Visit OV: http://www.orgvitality.com

%d bloggers like this: