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How Can Your Network Help Your Inner Homer?

Posted by Mark Bennett on April 2, 2010

Homer: Just give me my gun…
Gun Shop Owner: Sorry, the law requires a five-day waiting period. We’ve got to run a background check.
Homer: Five days? But I’m mad now!

Your two brains

You’re probably familiar with the idea that we all have two systems of thinking – a thoughtful, logical system and a impulsive, emotional system. Richard Thaler* has a great model for thinking about them: Mr. Spock and Homer Simpson.

Mr. Spock is what Thaler calls your “Reflective System”, i.e. the part of you that stops and thinks of consequences, re-checks calculations and assumptions, etc. Homer is your “Automatic System”, i.e. your “gut reaction,” “fight or flight, “lizard brain,” etc. It’s the part that came in very handy when your prehistoric ancestor was strolling across the Savannah and wished to not be eaten by predators lurking in the tall grass.

Doughnuts. Is there anything they can’t do?

As civilized folk, we try to ignore our inner Homer and be upstanding Mr. Spocks when it comes to making decisions. We’re taught that making decisions rashly or under emotional stress should be avoided.

When angry, count to ten before you speak; if very angry, swear.    – Mark Twain

That’s wonderful advice, but while we can identify obvious situations where we know we need to wait to cool down or spend extra time doing research, we are still incredibly vulnerable to subtle tricks that cause us to make faulty decisions, even when we think we are being quite logical. Homer may be dense at times, but he also can be quite sneaky. For even while our inner Mr. Spocks are supposedly making cool, logical decisions, our inner Homers are influencing them by how we weigh certain risks, how we look at future needs vs. immediate wants, etc. These all impact how we decide no matter how hard we try to cut off that influence.

This is where your network can come to the rescue. We typically see networks as a way we can not only find out things from others, but also as a way to perhaps influence others. Well, it works in both directions. It turns out that while our inner Homer is pretty powerful in prioritizing his own immediate reactions for reasons to do with survival, so is our inner Homer’s tendency to need the acceptance, praise, attention, approval, etc. of others. Our prehistoric ancestors that lived in cooperative groups increased their chances of survival and hence the passing of their genes to future generations.

Put your inner Homer to work!

So when, for whatever reason, we’re still on a path not in your best interests (e.g. can’t quit smoking, downplaying project danger signals, floundering in a fulfilling job, discounting marketplace trends, etc.) and personal motivation doesn’t seem to be enough, use Homer’s need for approval to help you alter your behavior.

Here’s the catch: you need to have built a network that can really help you, not one that will just reinforce your biases. Just as having diversity in your network for working on “logical” issues helps you reduce your blind-spots, so it is with working on these “emotional” issues. For instance, it won’t do you much good to help you quit smoking if your network is entirely made of smokers. Likewise, it doesn’t help you spot and take seriously trends that threaten your competitive position in the marketplace if your network is made up of carbon copies of your experiences and outlook on trends.  But also keep in mind that you are more apt to be influenced by your network the more you share in common with those members. So you have to mix it up a little: common interests and beliefs in some areas along with different beliefs in other areas with certain folks, plus different common interests and beliefs with other folks.

——————————————————————

*Check out “Nudge: Improving Decisions About Health, Wealth, and Happiness” by Thaler and Sunstein. Richard Thaler is well-known for his work in behavioral finance.

Posted in influence, leadership, social network, Uncategorized | Tagged: | 5 Comments »

Are We Human in the Network?

Posted by Mark Bennett on February 21, 2010

At an HR Happy Hour a while back, Mark Stelzner made the important point that, “You are the most important tool in the network.” This is absolutely correct, yet within it also lies a hidden danger.

Mark was making the crucial point and reminding us on the call that while which technology tools to use will be an important part of our decision making, a social network has no value without the participation of people in that network. In other words, the technology provides the platform, but it is not the network; the people are the network.

What’s so bad about that?

Here’s the hidden (at least to some) danger: people make up the network and the more that people participate, the more valuable the network can become. However, if the network becomes too much the primary value to its users to the exclusion of the individual, the risk is that the identity and humanity of the numerous participants can become diluted, even to the point where it affects their perception of their own identity and humanity. That is paradoxically the opposite of what was supposed to happen.

A recent book by Jaron Lanier, “You Are Not a Gadget: A Manifesto“, discusses this problem and its philosophical, ethical, and economic effects. While his focus is mostly on Web 2.0 technologies in the public internet, some of the thinking applies to enterprise social networks just as much, especially in the way that management shapes the culture of its use.

Our SVP of Fusion HCM Development, Clive Swan, puts the concern well by wanting to make sure that we don’t end up treating people as “interchangeable carbon-based units.”

How can this happen?

How can primacy of the network affect our perceptions of our own identity and humanity? The network acts in many ways as a mirror that can powerfully affect our perception of ourselves. It doesn’t affect us all the same way and to the same extent, but it happens nonetheless. This effect isn’t a new phenomenon; the propensity for individuals to lose their humanity when they see themselves as an anonymous member of a mob is well-known throughout history. What’s changed over time is the acceleration of that effect through technologies that support things like mass media, assembly lines, and the internet. When radio and film propaganda was used effectively in changing almost entire nations’ images of themselves (by turning the cameras and microphones onto the population itself in carefully controlled ways), we almost lost the world. That danger hasn’t passed either.

As before, it’s not the technology itself that causes the problem, as much as we’d like to blame it. Rather, it’s the warping of the technology to achieve certain self-serving effects directly, or it’s the unintended side effect of some other nobler aim. So, for instance, we hear about the wonderful ability to tap into the experience of our workforce to extract knowledge so that we either improve productivity or stop the loss of knowledge as people leave the company. But here’s the catch: when the network solely becomes a mechanism for people to extract slices of information from “the network” (i.e. information that other individuals provided, but was blended into a homogeneous, albeit organized, mass), then the individuals that made the network even possible in the first place become secondary to the network itself. This can insidiously work its way into the culture with no one really seeing what’s happening because everyone is utterly focused on the first-order benefits.

Re-humanize Yourself

I work all day at the factory
I’m building a machine that’s not for me
There must be a reason that I can’t see
You’ve got to humanize yourself

- The Police

So, we must be vigilant both as management and as individual contributors. Management must adhere to the borrowed phrase of, “first, do no harm.” Resist the temptation to load the organization with too many policies and procedures that end up just obscuring the greater goal. Instead, communicate to people what the purpose of collaboration technologies are, along with general guidelines. Avoid the problem of unintended consequences by making sure that business goals in the use of collaboration technologies don’t create perverse incentives.

As individuals, we must all keep a look out for creeping anonymity. Maintain your identity on your enterprise network and nurture the identities of others. Recognize people and their contribution. Resist the temptation to always just “get in and get out fast.” Sure, there will be times when time is pressing and you need an answer fast or you need to answer somebody else fast. Just don’t let that so dominate your interaction with the network that you have become just a “gadget”. There are times when anonymity might be called for like with surveys, but the majority of your activity should be identified with you and convey as much of the whole you as you can.

Photo by brtsergio

Posted in social network, Uncategorized | Tagged: | 8 Comments »

Focus on Failure!

Posted by Mark Bennett on February 6, 2010

funny dog picturesNo, this is not advice to try to fail, but rather if (and when) you do fail, you’ll want to expend some time, thought and energy into actively learning from that failure. This is hinted at by an interesting finding from some neuroscience research done at MIT, which has implications not only for individuals, but organizations as well.

The research showed that the part of the brain that tracks success and failure appears to change and process more efficiently after success, but not after failure. What does that mean for us? Here’s a telling quote from the HBR article citing the research:

“But after failure,” Miller points out, “there was little change in brain activity.” In other words, the brain didn’t store any information about what went wrong and use it the next time. The monkey just tried, tried again.

In other words, left to its own devices, our brains will likely not learn from failure. Fortunately, we have the ability to recognize that fact and take steps to correct it. We can pause after failure and seriously ponder what went wrong – what was the cause of the failure? But that takes time, thought and energy to figure it out.

Now, consider what you might be short of in an organizational culture dominated by fear. That’s correct; there’s never enough time, don’t stop to think – act, and the energy generated by fear is more typically applied to shift the blame or hide the failure than in learning from the failure. So, without Psychological Safety, as Victorio puts it, you get a compounded problem with failure. First, as we already know, people will be averse to taking risk in general. That means fewer opportunities for innovation, profit, etc. Secondly, when failure does occur, its ability to even have any positive learning effect at all is almost entirely wiped out. No learning occurs automatically and, since more effort is spent hiding the failure or shifting the blame, no learning from thinking through the failure occurs either. Since no one sees any benefit from taking the risk, the cycle is reinforced and even fewer risks are taken and even less learning occurs.

However, if your organization has tolerance for thoughtful risk-taking, the cycle can be turned positive. Just recognize that a bit more effort is required to make a failure become a learning experience. Avoid what happens to the monkeys!

Posted in failure, fear, learning, risk, Uncategorized | Tagged: | 12 Comments »

Some Great Books from 2009

Posted by Mark Bennett on January 3, 2010

Here are some very good books and if you haven’t read them yet, you might want to check them out. The list is restricted to books published in 2009 that I read (there are several others published in 2009 that I still have on my reading list). The list is grouped somewhat by topic. Enjoy!

Enterprise 2.0 / Collaboration

Driving Results through Social Networks: How Top Organizations Leverage Networks for Performance and Growth by Rob Cross and Robert J. Thomas

I referred to this book in Not One of Us, When More Isn’t Always Better, and Is Bacon at the Center of the Universe? It covers the whole range of scale from individual performance and productivity impact of collaboration to the impact of collaboration on organization innovation, projects, and processes as well as the impact of organization culture and strategy on collaboration. There are many solid use cases provided. Cross focuses on social network analysis as a way to understand how information flows through an organization, how it goes into decision making, etc. I wrote about his work being done through manual surveys at Fortune 500 companies prior to leveraging social networking software two years ago in Finding Value in Enterprise Social Networks.

Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results by Morten T. Hansen

I wrote about this book in When More Isn’t Always Better. It is primarily focused on large-scale collaboration and paints it in the starker colors of “good vs. bad” collaboration, highlighting the hidden costs of collaboration without some kind of business purpose and understanding of tradeoffs. Hansen lays out the hidden traps companies fall into with collaboration, identifies the barriers to collaboration, and three levers to avoid the traps and overcome the barriers. It has many use cases as well. Oliver Marks has a great post about this research and our colleague Christine found this great Economist article about the book. Hansen recently wrote about collaboration failure in the intelligence community due to persistent issues regarding incentives, workforce mix, and talent mobility in this Harvard Business Review article.

Enterprise 2.0: New Collaborative Tools for Your Organization’s Toughest Challenges by Andrew McAfee

McAfee coined the term “Enterprise 2.0” a while back as a way to identify not just the technologies of Web 2.0, but the way in which organizations would use them to get improvements in productivity, innovation, etc. I wrote about McAfee’s work two years ago in Finding Value in Enterprise Social Networks. McAfee has a great way of presenting four different, real business value based use cases that were not being addressed adequately by existing (pre Web 2.0) collaboration technologies (i.e. “Groupware” and “Knowledge Management”), then sort of leaves you hanging (a great “sticky idea” mechanism), then introduces the concepts of Web 2.0 in an accessible, non-techy way, and finally comes back around to show how the four use cases were successfully addressed by various Web 2.0 tools. Furthermore, each of the use cases focuses on a particular level of interaction from close-knit workgroups out to people with shared interests who may not even know each other.

Social Media at Work: How Networking Tools Propel Organizational Performance by Arthur L. Jue, Jackie Alcade Marr, and Mary Ellen Kassotakis

I wrote about this book being published in Talking about OraTweet in Social Media at Work. This book is similar to McAfee’s in that it is less about the technologies themselves as it is about how companies can best adopt and exploit them to gain competitive advantage through increased productivity, innovation, and engagement. This book is also loaded with relevant, real-life use cases that demonstrate how Web 2.0 tools were able to address a tricky problem, trigger innovation more rapidly, etc. It also addresses the organizational adoption issues head-on, such a threats to power and status quo and offers advice on how to tackle those issues.

Risk

The Failure of Risk Management: Why It’s Broken and How to Fix It by Douglas W. Hubbard

I referred to this book in HR: Why Improve Your Analytical Intelligence? and HR: Why Broaden Your Risk Perspective? Hubbard’s book is an eye-opener about how badly most companies are handling risk, due in large part to misguided comfort in following supposed “best practices.” Hubbard pulls no punches and is especially vehement in targeting “fluffy” risk analysis approaches that use things like “heat maps” that are based on “scoring.” His main objection is that these approaches have no way to be really tested as to whether they work because there really isn’t a testable measurement being used. He refutes those who object by saying that some things just aren’t measureable by providing examples of how to do it (some of which are taken from his previous book, How to Measure Anything: Finding the Value of Intangibles in Business.)

The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty by Sam L. Savage

I also referred to this book in HR: Why Broaden Your Risk Perspective?. It’s a great companion book to Hubbard’s but takes a lighter approach. The first thing that Savage does is dispense with the arcane terms used so often in statistics that drive most people away. He correctly identifies that as a leading cause for why so many people miss out who could benefit from actually understanding what statistics really has to say about uncertainty and risk. He then goes into a whole series of examples to show what he means about how people get themselves into trouble. The book weighs in at 360+ pages, but it’s divided into 47 bite-sized chapters, some of which he signals can be skipped if you don’t want to do math.

Workforce Strategy

The Differentiated Workforce: Transforming Talent into Strategic Impact by Brian E. Becker, Mark A. Huselid, and Richard W. Beatty

I wrote about this book in HR: Why Improve Your Analytical Intelligence? It is a continuation of their “HR Scorecard” and “Workforce Scorecard” books, although reading them is not a prerequisite, nor is the book a rehash of the previous material. Instead, it introduces enough of the basics from them and expands on them to focus on how to best invest in your workforce so as to maximize its impact on your strategic success. In many ways, I saw this book as a companion to Beyond HR: The New Science of Human Capital by John W. Boudreau and Peter M. Ramstad. Between the two, you’ll have an excellent framework from which to construct or modify your HR strategy.

Photo by by mrkathika

Posted in book reviews, collaboration, risk, social network, Uncategorized, web2.0, workforce strategy | Tagged: | 7 Comments »

Is it Time to be Optimistic Yet?

Posted by Mark Bennett on December 18, 2009

Again, a trick question. At the end of the year, especially ones that have had so much turmoil, uncertainty, and economic pain, thoughts turn to whether the next year will be any better. It’s the same psychology behind setting resolutions and so forth, i.e. January 1 presents a “new beginning” or a “fresh start.”

People generally like to know what the future holds so they can either look forward to the good things that will happen or do something to avoid the bad things.* Businesses are the same. We then look at the past to try to spot trends, check what the experts say, do “wisdom of the crowds” investigation, etc. As always, the rule about everyone’s opinions still applies.

At Steve Boese’s HR Happy Hour last night, the topic was “2010: Looking Ahead” and some prognostications were thrown around. Naturally, whether to be optimistic or not also came up and it was interesting to see the different reactions to that. On one end, some folks want proof that it was time to feel good about the future. On the other end, some folks see optimism as the driving force to making things turn out good no matter what. The real answer to the question comes from taking a bit of both and understanding how an optimistic outlook coupled with an acknowledgment of harsh reality is key.**

In other words, realize that there are no guarantees about what the future holds and that waiting until everything is proven is a recipe for constant disappointment and/or missing out. However, also realize that things won’t always just get better on their own either (at least not for you or in the way that you had hoped), so you need to be taking conscious actions that weigh the risks and rewards. This includes the conscious decision to take no action (as described so well by Mark Stelzner.)

These decisions and actions are not always as simple as we’d like them to be and that’s also behind why we always wish for exact predictions. We say, “Tell me what the right move is so I get the most benefit without making any mistakes!” A short reflection on where unemployment is today shows how well predictions have worked out so far.

So now, companies are looking ahead and asking what to do when the day does come that hiring picks up and they worry they’ll lose their top talent. Point solutions like “do more training”, etc. are suggested, but more integrative solutions are called for that take into account the complex interplay of turnover, career development, engagement, talent inventory, and business strategy.

No one really knows what 2010 will hold, so there is no “perfect play.” Instead, companies need to think through the different ways that things are likely to go and take proactive steps today that will leave them options to take when it becomes more clear what conditions really are.

So the real answer perhaps is that there isn’t necessarily a “right time” to be optimistic so much as it benefits you to have an optimistic outlook both to keep yourself going (i.e. believe in yourself and you can prevail) as well as to keep your mind tuned to spotting opportunities (i.e. take prudent risks). At the same time, you need to confront the facts as they stand today and the very real possibility that conditions won’t get better for everybody in the near future.

*”Flash Forward” presents the interesting prospect of what would happen if people really did have a glimpse of what their situation would be in six month’s time. It addresses the classic issues around prophecy without context, determinism, destiny, and free will.

**see the “Stockdale Paradox” as described in Jim Collins’ “Good to Great“:

“This is a very important lesson. You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.” – Jim Stockdale

Photo by allieosmar

Posted in predictions, risk, Uncategorized | Tagged: | 8 Comments »

HR: Why Broaden Your Risk Perspective?

Posted by Mark Bennett on November 18, 2009

2552346073_069722ec21_bStrategy is founded on risk and risk is inherently subjective to the views of the people involved, including employees and management. As a result, HR has a great opportunity to improve the way in which risk impacts strategic success for the business, going beyond the more tactical or operational perspective HR has previously taken.

All economic activity is by definition “high risk”. And defending yesterday–that is, not innovating– is far more risky than making tomorrow.
Peter Drucker

HR and Risk Up to Now

Although it might be over-generalizing, for quite some time, HR has mostly focused on risk in terms of how to identify and address workplace risk items such as harassment claims, EEOC violations, health and safety liability, etc. These are all vital areas to be risk-managed, but to be more strategic, HR needs to broaden that perspective to include how it can positively impact business risk.

Risk is frequently misunderstood and mismanaged[i]. This misunderstanding and mismanagement can have unexpected, even dire consequences due to people’s varying comfort with risk and the complex ways that people in general react to it. Here’s a sobering real-life example of just how that can happen[ii]:

Blowing It on Business Risk and People – an Example

In oil & gas exploration, the odds are high against finding anything, let alone a find suitable for extraction. People working in this field apply their diverse expertise towards figuring which locations are most likely to be profitable. In addition, there is the added pressure to locate larger, more profitable reserves, which are even harder to find.

The decision on whether to bid on a lease and then drill is based on “pessimistic/low, likely/medium, and optimistic/high” estimates[iii] for how much can oil or gas can be extracted. If the “likely” estimate is large enough, then a bid is made and if that succeeds and drilling is approved and the actual output is on track to meet that large estimate, the folks behind that estimate are very happy as they can expect some kind of bonus.

However, it’s easy for a manager to only see the “optimistic” estimate and let that “frame” their expectations. Then, when in fact the more realistic “likely” value does result instead, the manager perceives a “loss” and they can end up taking it out on the troops. This did happen to a team and they were told they wouldn’t get a bonus because “the company wants those higher outputs” i.e. the optimistic level.

And here’s what happened next. The team then saw that only results that met the “optimistic” estimate get praise, so they naturally became more conservative in their estimates. They lowered their “optimistic” estimate to be closer to what they normally would have given as the “likely” estimate. In turn, the “likely” estimate was lowered as well. Because of these more conservative estimates, when budgets were decided, the allocations didn’t go to that team as much because their estimates are now lower than those of other teams. With a lower budget, that unit couldn’t bid as much on the leases (especially the riskier but higher potential ones – remember that the competition is bidding higher because they have higher, non-distorted estimates) so they missed out on more of the big finds.

Since there were fewer large finds returns were lower for the whole company. Investors were expecting higher returns when they chose the company, since they already understood it was higher risk. As a result, lower earnings and less capital were available for the company, it couldn’t compete, and eventually it was acquired.

What HR Can Do

All of this happened because management didn’t understand the relationship between the company business risk and the incentives and motivation of the people working there. If HR had an understanding of the strategic impact (e.g. company survival) of this relationship and had a role in making sure that managers understood it and practiced it as well, this poor management decision could very well have been avoided.

This was just one example from oil & gas exploration, but the same scenario plays out in a multitude of “high-risk” businesses ranging from software development and airplane manufacturing to drug development. However, the difficulty that management in particular has with dealing with the interaction of risk and incentives can even disrupt the competitiveness of “low-risk” enterprises. HR’s ability to apply its expertise with people coupled with a broader, strategic perspective of risk can bring huge advantage to a company.

Photo by hellolapomme


[i] The definition of risk is not well agreed upon, but we will use the following: the existence of more than one possible outcome where some of them are undesirable (e.g. loss or catastrophe). Risk only has real meaning when a decision must be made and human decision makers are decidedly not “risk neutral.” That is, they will not simply choose the highest “expected values” with cold logic, but will favor certain choices over others depending on factors such as current wealth, level of possible loss, gain, framing, ownership, etc.

[ii] Credit goes to “Why Can’t You Just Give Me the Number?” by Patrick Leach, an excellent, succinct book that shows executives how to manage risk and make better decisions using probabilistic thinking. Also recommended is “The Flaw of Averages” by Sam Savage and as previously mentioned, “The Failure of Risk Management” by Douglas Hubbard.

[iii] The medium or likely value has about a 50% chance of finding at least that amount. The high or optimistic value has only about a 10% chance of finding at least that amount. In other words, they might happen occasionally, but not on average.

Posted in risk, Uncategorized | Tagged: | 6 Comments »

Yankees Win World Series – What’s the Verdict on Moneyball?

Posted by Mark Bennett on November 13, 2009

2671689242_7fec1f87c6_m

All you need is a stone and a sling. Neither sword, nor armor.

To borrow some phraseology from Kris Dunn, “Wrong question, Sparky.” The takeaway from Moneyball is not about it being right or wrong, but how it asks you to reconsider the way you look at how talent creates value for your organization. The aftermath of its publication in 2003 teaches us that the larger game never ends; that there is no single optimal answer for all time. There’s no trick to winning either, but rather a way to see what others are currently missing or choosing to ignore, use that to your advantage, and also obtain insight into building a better strategy from it. A lot of people are still missing that point.

Public Service Announcement: This post is not all about baseball nor the ins and outs (no pun intended) of winning baseball divisions. Rather, it asks: Why should HR people still care about the Moneyball story, especially since 1) it has almost been played to death the last six years, and 2) it seems there’s all this proof that it didn’t work.

People still debate the “correctness” of Moneyball. They point out that the stars of the book, the Oakland A’s, didn’t win their division and the Yankees, with the largest payroll, won everything. Even many who agreed with the way in which the A’s had utilized measures that other teams ignored are now observing that it is no longer a competitive advantage since the other teams with larger payrolls were adopting those very measures. Many readers took away from the book that it was just a trick and once the trick had been exposed, the advantage was lost, so what was the point?

The point was that it wasn’t about coming up with a trick. That’s the narrow view. Moneyball told a story about how an organization that had a constrained payroll was forced to rethink the strategy for winning the most games. Rethinking your strategy is the point. That this story took particular twists and turns just made it unexpected, concrete, credible (to some), and in some parts, even emotional (i.e. “sticky”). It should come as no surprise that the specific steps, measures and outcomes didn’t maintain an advantage or last. The fact that your steps and measures don’t produce the same results they used to does not necessarily mean you throw them out, especially to revert back to previously discredited measures.

That is itself another takeaway; competition never rests and you must keep searching for the next thing that will help you win. One very good way to keep winning is to focus, as Peter Bregman writes, on playing the game you can win. Malcolm Gladwell recently wrote a piece for the New Yorker about this very kind of thinking. In “How David Beats Goliath,” Gladwell gets into David’s thinking:

In the Biblical story of David and Goliath, David initially put on a coat of mail and a brass helmet and girded himself with a sword: he prepared to wage a conventional battle of swords against Goliath. But then he stopped. “I cannot walk in these, for I am unused to it,” he said (in Robert Alter’s translation), and picked up those five smooth stones.

In other words, David figured he wasn’t going to win playing by the other guy’s rules, so instead he focused on something less conventional. Conventional wisdom at the time was that you fought brute force with brute force: sword against sword, armor against armor. Nobody thought any other route had a chance, so why bother? It’s not about playing a one-time only trick either; it’s about confronting the harsh reality of a situation and choosing the option that gives you the best chance.

There are people still applying the real lessons of Moneyball (and many other books that came before and have followed) and are finding/rediscovering insights into how to win, how to play the game they can win, or even change the game so they win. Kris Dunn and Tom Davenport show how basketball teams are benefiting from focusing on measures that better reflect the overall benefit to the team when a player is on the court vs. individual measures. This would seem to have some application in business as well. But again, this isn’t all about finding a trick that nobody else has discovered yet. Sure, it’s great when the competition is still looking in the wrong places while you trounce them, but you also want to use this information to get better understanding and insight into how your business and the marketplace, and the pieces that comprise them, actually operate and interact. That is what will really help you continue to win going forward.

Photo by hawkexpress

Posted in strategic hr, top talent, Uncategorized | Tagged: | 4 Comments »

HR: Why Improve Your Analytical Intelligence?

Posted by Mark Bennett on October 30, 2009

268139464_64e5934e87_mHey! Come back!

Before you roll your eyes on this one, start having flashbacks to terrible experiences with calculating standard deviations, or trying to wrap your head around multiple regression analysis, and then run screaming from this post, this is not about you trying to become an expert at statistics! Trust me!

It’s about you understanding how analytical tools and methods can help HR have an impact on applying talent to strategic success. Besides, no less than Josh Bersin said at the recent HR Technology Conference® 2009 Talent Management Analyst Panel, “Get used to it.” And that’s a good way to look at it. Too often, HR has been shut out of strategic input because of the perception that it doesn’t speak the language of analytics sufficiently to measure and understand the relationships between various parts of the business (e.g. Human Capital) and profit (or whatever financial result you wish.) Once you have that better understanding, it will enable you to make a stronger case for why HR can provide valuable input and leadership in business strategy and execution.

By now, we’ve had the importance of measuring pretty well pounded in, particularly in the context of Finance. Increasing your financial intelligence is key to participating more in driving strategic decision-making around applying talent to improve business results. Being able to show to senior management the link between what you know about your company’s talent to financial results entails both measuring talent in terms of levels of performance, competency, skills, connectedness, etc. as well as measuring relationships between those measures and the other parts of the business that drive financial performance. What do analytical skills have to do with measuring those parts and their relationships?

Measuring is not Counting

To help answer that question, let’s take an example from “How to Measure Anything: Finding the Value of Intangibles in Business” by Douglas W. Hubbard. Picture the problem of measuring the population of fish in a lake; let’s say in order to know if a restocking effort was successful or not (a good ROI problem). A lot of people will say, “Drain the lake and count the fish.” They could then report there were exactly 22,573 fish and we’ll say that confirms the restocking investment was a success, although all the fish are now dead.

A better approach (certainly for the fish) entails using analytical methods to estimate the population of fish in the lake. If there is sufficient confidence in the estimate of the population before and after the restocking effort, you will be able to tell if the restocking effort was a success or not. Did you have to know every tiny detail of statistics to make a decision based on these estimates and the confidence level? No. How about to show the before and after picture to some “lake executive” who had to give the green light on the restocking effort? No. You just had to know enough about analytical methods to know that the application of them made sense in this case, and either determine you made the right call or get the point across to that executive.

As the authors of “The Differentiated Workforce: Transforming Talent into Strategic Impact” quoted a general manager, “I couldn’t do a regression analysis, but I knew what one was. And the results…made sense to me.” Further, they write, “Improved analytic literacy has a direct impact on the decision making at several levels in a typical HR organization…At the highest level, improved analytical literacy changes the perspective on the financial resources committed to HR…they consider a significant portion [of the HR budget] an investment.”

Principles of Uncertainty

HR labors under the false assumption that everybody else has “precise numbers” and there seems to be a perception that HR can’t come up with the “hard numbers.” The classic story is of the CEO asking the head of HR if they know the company’s headcount and the response is wishy-washy. The thinking is that people are either working for the company or they are not, so what’s the problem? What’s the count? Sure, in a company of a few hundred people, you might actually have a very precise figure. However, we know that depending on the industry, economic conditions, etc. as the number of employees gets larger, it gets a bit trickier to know the headcount with precision. There is a lot going on and even if you are using an HRMS system, the simple fact that humans are involved and entering transactions (or not), makes the number transient and constantly changing. In other words, one minute, you could see 59,268 and a minute later see 59,273.

This is not that different from the folks in Accounting keeping track of Receivables, the folks in Production keeping track of Inventory, or the folks in Development keeping track of Project Completion. In the case of Accounting and Finance, it gets even more interesting when it’s time to report; for instance, general accounting principles require the company to estimate the amount of Receivables that will be uncollectible and there isn’t any hard and fast equation for doing that. Different methods are used to estimate these values, some of them analytical.

The point, as Hubbard writes in his latest book, “The Failure of Risk Management: Why It’s Broken and How to Fix It” is that measurement is better understood as the reduction of uncertainty about the value of something. Once you see it that way and gain enough analytic literacy to feel comfortable with the results from those tools and methods, you’ll be able to move forward more readily with driving and demonstrating positive impact on strategic business results.

Photo by The Michael

The Failure of Risk Management: Why It’s Broken and How to Fix It

Posted in analytics, finance, strategic hr, Uncategorized | Tagged: | 4 Comments »

HR: Why Increase Your Financial Intelligence?

Posted by Mark Bennett on October 21, 2009

141273960_06f6cd3412_mWhen in Rome…

si fueris Romae, Romano vivitomore; si fueris alibi, vivito sicut ibi*

My last post asked: how can the perception of HR’s function as being primarily about governance and compliance oversight be dealt with, in order to allow and encourage its role in maximizing the strategic impact of talent?

A key first step is to learn “the language of business” i.e. Finance. Why? Here’s a list from a book** I recommended a while back, outlining the benefits of financial literacy to HR:

  • Move HR from a Tactical to a Strategic Organization – be trusted with organization and talent development investment decisions.
  • Evaluate Your Company Critically – spot trends or problems and understand more of the stories behind the numbers.
  • Understand the Business – knowing how your company makes money is key to your HR strategy.
  • Understand the Bias in the Numbers – have the power to challenge, when called for, the assumptions made by the finance and accounting departments.
  • Form Relationships with Finance – help to align more the efforts of finance and HR for their mutual benefit.
  • Use Numbers and Financial Tools to Make and Analyze Decisions – improve your ability to make better investment choices regarding projects and programs.

It turns out that Trish McFarlane at HRRingleader is addressing this same step in an “HR 101″ series on the Creative Chaos Consultant blog, devoted to what an HR professional really needs to know to be successful. There’s also a great article, “Do HR Managers Have the Skills They Need?” by the same authors of the book, which covers exactly the discussion Beth Carvin and I were having here. Namely, it isn’t all on HR’s head or senior management’s head to enable HR to have a positive impact on strategic use of talent, but a shared responsibility. Here are the factors they listed at the root of the problem:

  • Avoidance – HR folks not “dealing with it” and learning about the numbers (as  Josh Bersin and Naomi Bloom said at last month’s HR Technology 2009 Conference(r) Talent Management analyst panel and Naomi’s closing keynote).
  • Perception – Even when HR professionals do know the numbers, the business side still retains the outdated notion that they don’t.
  • Assumptions – Exhibited when companies don’t encourage their employees to be on the earnings call, for instance, because “it’s too complicated” and “they wouldn’t understand.”
  • Trust – A common theme repeated in this blog. In this case, not sharing financial data with employees because you don’t trust them results in people having nothing real to learn from or apply their learning to. Maybe that was the intended effect.

Note that some of the last two issues are not limited to HR, but can be universally applied to all company managers and employees. In fact, there is another article, “The Dismal Financial IQ of US Managers” that covers this pervasive problem and its consequences in more detail. Even though the authors have a vested interest in pointing out these problems (they have a couple of books and a consultancy that address them), the impact is unmistakable.

*”If you are in Rome, live in the Roman way, if you are elsewhere, live as they do there”

- attributed to St. Ambrose (from Wiktionary)

**Financial Intelligence for HR Professionals: What You Really Need to Know About the Numbers by Karen Berman, Joe Knight, and John Case. Despite the drab title, this book is actually quite fun to read (really!) and does not take very long to read (a few hours.) It’s written in a friendly style that comes right out and tells the HR reader which things matter, how they matter, and which things really aren’t as crucial to know so you don’t get distracted by them. Each section is loaded with examples from recent history (especially scandals) linking HR areas of responsibility to financial problems for companies.

Photo by pdbreen

Posted in finance, hr transformation, strategic hr, Uncategorized | Tagged: | 7 Comments »

Join the Internal Enterprise Conversation, Already in Progress

Posted by Mark Bennett on October 19, 2009

2866399803_f10bdde231_mConversations among employees (vs. broadcasts from corporate) have always taken place in organizations – they just haven’t always been easily seen by the leaders. These conversations continue to take place inside, outside and across organization boundaries and recently, social technologies have substantially amplified their volume. These amplified conversations then get the attention of management, and not always in a constructive way.

The enterprise’s interests are better served by participating in these conversations, particularly through the effective use of social technologies, rather than by ignoring, rejecting, or banning their use. The result is not only higher employee productivity, more effective innovation, and greater employee engagement. It also results in the organization making more informed business decisions by having a better understanding of what makes the company “tick” and by being more aware of key events and conditions. Finally, the organization can have at least some input into the conversation as well, but only if it participates.

What are the conversations about?

Steve Boese posted a great summary of the findings in an IBM research paper on how employees were using social networks and why. One of the paper’s most eye-opening findings, and one that organizations should note, is that employees appear to use social network within the enterprise more for reaching out to employees they don’t already know and for building stronger bonds with them and their other “weak ties.” This is interesting to know as it is in contrast to what most detractors cite as why social networks within the enterprise would be a productivity drain. Those detractors often label it “Facebook for the Enterprise” and point out that a primary use of Facebook is just to keep current on what close friends are doing and gossip on things that have nothing to do with work, ergo it is a waste of time in the workplace. The research paper shows the error in thinking that is the primary use.

Beyond reaching out to create and build stronger ties, what else is happening? As mentioned in this earlier post on last month’s HR Technology® Conference, Nokia’s Matthew Hanwell related how his company gradually adopted internal use of social technologies. Steve also has a terrific summary of the points from that presentation. It turns out that employees sometimes also used the social technologies for general discussions about work. For instance, they might discuss overall state of the market, business profitability, and so on. They might discuss various benefit programs. In general, topics often on employees’ minds regarding things that impact their employment.

The upshot is that employees use social technologies to discuss the things they would still talk about even if the technologies didn’t exist or were banned. It’s the same thing they have always talked about and for good reason; it’s their career and their livelihood. For instance, the IBM paper shows that why employees have these conversations over internal social networks is reflected in the way they use them. Both developing one’s career and campaigning for a project are particularly assisted by reaching out and strengthening weak ties. That notion was covered in this previous post about the advantages of being more “central” in a given network through the creation and maintenance of diverse networks. You get more benefit from diversity of connections than simply pure quantity. (More to the point of this post, it’s about the diverse conversations and not just the connections themselves – you have to actually use the connections.)

How can the enterprise join the conversations?

Hanwell’s presentation showed that at first, fear drove much of the reluctance to permit social technologies in the enterprise in the first place. What would employees say? Could moderators keep up? In other words, worst-case thinking that in turn triggered further rationalizing rejection – such as governance costs – of the technologies. However, once key stakeholders understood that the conversations were happening anyway (including using external social technologies like Facebook) and that there was much to be gained by observing and participating in them, they gave the green light.

Most obstacles to the enterprise joining the conversation are self-inflicted. During the HR Happy Hour at the HR Technology conference, we talked about how organizations need help in overcoming the fear that puts up obstacles to successful adoption and use of social technologies. Jason Seiden pointed out the “risk-aversion” obstacle – in particular how it surfaces in staff departments like HR – which in many cases see only downside in backing an initiative like this. This is very much driven by how HR is viewed by the organization. As long as a given HR department is exclusively chartered with (and therefore measured on) compliance and governance oversight, and not with maximizing the strategic impact of talent, putting social technologies under its control will likely result in not much adoption, use, or benefit.

How can that perception be dealt with? We’ll hit that in another HR Technology – themed post soon.

Photo by cliff1066™

Posted in conversation, HR Technology, social network | Tagged: | 14 Comments »

 
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