What's the Purpose?

Purpose. How organizations and people can complement each other

purpose

What makes us go to work — quick answer? Money. The logic is as impeccable as it is inescapable. We have needs — for food, heat and shelter, for internet and Netflix box sets. These things cost money, so we have to sell our time.

So far so good. If we were rational beings, homines economici, and money was the reason we work, we would of course do no more than the bare minimum in return for our wages. That kinda makes sense: in economic transactions, we tend to sacrifice the least possible in return for what we obtain. We don’t typically give the butcher another fiver over and above the price of our pork chops, and the butcher doesn’t typically throw in an extra chop, free of charge.

You could take a similar perspective about organizations. Why do they exist and do what they do? Commercial organizations provide goods or services to customers, in order to make a profit for the owners — much like people give their time and effort in return for a salary. Public institutions or non-profit organizations are not looking for a financial profit, but have other external performance expectations and targets, which fulfil a role similar to that of shareholder dividends.

This perspective on both individual and organizational motivation is very transactional and, let’s be honest, a bit simplistic. Not many people and organizations actually function like this. Most people and organizations make trade-offs that are more complicated than this. Yet we seem to pay a lot of attention to these transactional aspects.

But It’s Not That Simple, Really

So what more trade-offs, other than time or effort for money can we see? Let’s look at how we, as individuals, might do things over and above the bare minimum needed to earn our keep (and not lose our job).

Imagine a colleague asks us for help, and we drop what we’re doing to respond. You could argue that there is an ulterior, material motive: perhaps we do so because we are building up relational capital that means they will help us in the future. But we don’t really know for certain that they will reciprocate, so in any case, helping others for nothing tangible in return goes beyond the transactional domain. When we put in extra effort to help a colleague, that feels good, and if it means that in the future they act on our call for help, that is more like an added bonus.

Many of us also take pride in our work. We could submit a document without proofreading it, and with typos and unnecessary repetitions left in. Will that get us fired? Most likely not. A flawless document rarely even means that the person receiving it would be able to do their job better. It hardly makes any material difference… Yet we put extra effort into making sure that it’s the best possible document we can produce. And that feels good. Even if it then also helps us grow a reputation of a dedicated person with an eye for detail, that too is an added bonus, and not the main reason.

Can organizations similarly transcend the lowly transactional domain? Consider an employer doing more than simply paying workers the minimum wage needed to keep them. Think of benefits in kind like free coffee, a pleasant working environment, even sacrificing organizational capacity — through dedicating the time of certain employees or through paying consultants — into developing a positive work culture. Is there an ulterior, material motive behind this all? After all, it helps attract the best candidates, supports staff retention and may well boost productivity too. But it’s rare for there to be a cool and considered business case based on just financial or material costs and benefits of doing so. It’s more a case of ‘doing the right thing’ — which is like the organizational equivalent of ‘a good feeling’.

So there’s more to working — as a person or as an organization — than minimizing costs and maximizing revenue. But what we’ve just seen is really just a case of tweaking the boundary conditions. When we work to earn money, of course it’s nicer if we and our colleagues help each other out, and if we find pleasure in doing a good job. But we hardly go to work in order to help colleagues out or in order to generate pride in our work. The same applies to organizations. They must generate a profit or meet performance targets, and of course it’s good in its own right of they can do so while having a good reputation as an employer. But they’re not in business in order to create a pleasant work environment and a positive culture.

The Missing Bit

What is missing in this picture is purpose.

Most of us (going out on a limb here, anyone with robust evidence to the contrary, please leave a comment! :-), deep down, have a desire to make the world a better place, not just for ourselves, but also for others. We have a purpose which is bigger than just doing the bare minimum, and serving just our own individual, narrow purpose. (80,000 hours analysed 60 studies on job satisfaction. Their advice for a fulfilling career: “Do what contributes to the world”.)

Some of people feel this urge really strongly, and are not deterred by risk or practical constraints — they start their own company, or they go and volunteer for Médecins Sans Frontières. But it is not because others are not so eager to gamble with their wealth and health, or because their ambitions are a bit more modest, that they don’t have a purpose. Providing people with a solid, good-looking kitchen table, a reliable car, tasty and healthy paté or neatly-papered walls, or solving people’s problems with opening a bank account, returning a misdelivered item or applying for housing benefit… it all makes for a better world than mediocre or poor variants of these and more.

Shouldn’t that be the purpose of the organizations in which these people work, rather than for the people? For sure. “The Business Case for Purpose”, a report from Harvard Business Review Analytical Services, found that more than 80% of senior managers and executives believe purpose matters for employee satisfaction and customer loyalty. But only 46% thought their company has a strong sense of purpose.

purpose

But there is a real opportunity in combining the sense of purpose of an organization and the sense of purpose of the individuals it comprises. That means more than just communicating the organization’s mission, and hoping that workers will get it and be motivated by its rousing words.

Individuals and organization can help each other in a mutually beneficial two-way process, helping them both develop, refine and clarify their purposes. This in itself encourages alignment — not through repackaging or fudging the meaning of words, but because the connection is made at the deeper level. If you can align around a common desire to contribute to a better world, then the detail is likely to take care of itself. Furthermore,

The purpose of the organization and the purpose of the individual can be woven together. But before the two can be fused together, we need to let go of the unthinking assumption that people and businesses, in general, are driven by material gain (and non-profits by targets). In the absence of a clear purpose, that thought is unfortunately what dominates.

Let us be clearer about what our true purpose is — as individuals, and as leaders in the organizations where we work. As soon as we do this, the whole motivational tradeoff can change. And then the real magic can begin.

 
This post was written by Koen Smets and Paul Thoresen. It appeared originally on Medium.com.

Culture as Organizational Glue: Beyond Rules.

Culture is the essential complement of rules to help organizations function effectively — concluding our three-part series on rules.

visited London for the first time when I was a teenager. As one might expect from a school trip, it contained numerous memorable experiences. Quite a few of these, my parents only heard about many years later.

Aside from those escapades though, two things really struck me during that trip. One of them was that there were penalty notices everywhere on the train and in the station. If you smoked where you shouldn’t, dropped litter, or activated the emergency brake inappropriately, you knew exactly how much it would cost you. That looked like a pretty good deterrent, and I did indeed see nobody smoking, dropping rubbish or pulling the emergency brake handle.

A Flash of Insight from the Bus Queue

The second thing were the queues (or lines) of people waiting for the bus. In one of them, I spotted a fierce-looking punk dude standing courteously and patiently behind an old lady — a most remarkable sight, I thought at the time.

For until that moment, I had never really noticed any big differences in people’s behaviour on trips abroad. I simply assumed people everywhere acted pretty much in the same way because I didn’t know any better. I guess that was the first time I realized (without actually realizing until much later) what an important role culture plays in how people behave.

And that applies not just in bus queues. As this post was taking shape, a snippet from a recent article by John Kay struck a chord:

“If we ask why [mobile phone] tariffs were once simpler and zero-hours contracts rare, and why chief executives only recently began to pay each other millions of pounds a year, the answer is in earlier days reputable companies did not think it appropriate to do these things. So the best answer is not to attack a few topical symptoms of excess, but to restore a culture that recognises corporations are above all social organisations.”

Just read that again: ‘did not think it appropriate’. What a superb description of organizational culture: doing what is appropriate, and not doing what is not appropriate.

Do we need a rule that says we shouldn’t pull the emergency brake willy nilly? Perhaps — but the people waiting for the bus were not neatly queueing because a rule told them so.

Taylorism

Well over a hundred years ago, Taylorism treated workers like mechanic creatures that could (and should) be made to follow precise rules to maximize efficiency. We have come a long way since then. Most organizations don’t need people that are compliant automata following instructions, but people who use their judgement, and make intelligent choices and decisions.

But that is not so easily achieved. As we suggested in The No Rules Illusion, people need guidance to make the ‘right’ choices and decisions. That means they must understand the organization, how it ticks, and what is important.

Rules can provide some of that guidance, but as we argued in The Rules Illusion, they can only take you so far before they become a burden to the organization.

He isn’t just a mean keyboard player.

Just like for the good people of London, guidance on how to act as a member of an organization is largely encompassed in its culture — implicitly or explicitly. Culture facilitates herd behaviour: we see how others behave, and copy what they do, especially in situations where we are unsure. Others copy us again, and so on.

Culture works on the Process, not on the Outcome

Can culture help people make the right decision? Not if we define the ‘right’ decision as the one with the best outcome. But if that is what we did, we would be succumbing to hindsight bias. Lottery winners get a good outcome, but that is not because they are better at picking their numbers than those who lose week after week.

Culture cannot help you win the jackpot, but it can give you guidance on how to engage in the right kind of decision-making. It should help you figure out how to make trade-offs in the organization.

Few people would contest that good decision-making ought to be based on evidence, rather than dogma or gut feel — it almost goes without saying. But to what extent is this actually reflected in an organization’s culture?

If a stranger were to walk around in your organization and observe the people at work, could she actually see them systematically gathering facts, requiring evidence when evaluating proposals etc? Making this behaviour part of the culture is not just a matter of laminated cards or fancy desk ornaments. It is much more a matter of ensuring people set the example and act out the idea at every occasion — not just business-critical decisions, but everywhere, from policies on remote working, to how conference rooms should be booked.

The Value of Values

But collecting evidence, and then weighing up and trading off the lot to calculate the best outcome is only one facet of good decision-making. There is another crucial element of guidance that forms part of the culture: the values of the organization.

Well-chosen values embody what is important for the organization. But values, too, need to be acted out to become part of the culture. Chris Argyris spoke about the difference between Espoused Theory (what we say we do), and Theory-in-Use (what we actually do). (Here is a slightly naff video illustrating the two theories.)

It is not the prominence of the values on the corporate website or on the inspirational posters in the corridors that bring the values to life. Whether it’s ‘the customer always comes first’, ‘respect for each other’ or ‘always be curious’, it is how people adopt and act out these values that will establish the culture. Only then (through the magic of the herding effect) can it help sustain a cohesive social organization.

In London, the advertised penalties I saw during my school trip may have deterred most people from dropping litter, but nevertheless I did see bits of rubbish lying on the ground. What I never saw, though, was the chaotic scramble for the door of the bus I was used to at home — not even at the rushest moments of the rush hour. In London, the punk and the old lady, and everyone else behaved very differently. And that had nothing to do with the existence (or even the absence) of rules.

There is a lesson here: culture is a crucial determinant of behaviour— in society, and in organizations.


This article was co-written with Paul Thoresen. You can find part 1 of this trilogy here, and part 2 here.
Originally published on New Organisational Insights.


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"No Rules" Illusion: Can We Do Without Rules?

No rules illusion is the second article on rules in a series of 3. You can find the first article here.
No rules

Too Much Freedom

Most of us intuitively prefer more freedom over less freedom. But could we have too much of it?

Imagine you could turn up to work and leave whenever you wanted. No 9–5, no formal starting or finishing times or flexi-time. Not even a Monday-Friday working week. Just work whenever you want. Imagine there were no expenses policy. You could take a limo to the airport and fly first class if you so wished, or you could hitch-hike and fly low-cost. Imagine not having a set number of vacation days each year. Just take as much time off as you want.

How brilliant would that be?

You’d be free to arrange your dentist or manicurist appointment at any time and pop out, no questions asked. You’d be free to travel in luxury and arrive at your destination totally relaxed. And if you felt a bit overworked, you would be free to just take another day off, or why not, a whole week.

This is not some crazy future utopia. It is exactly the kind of ‘no rules’ work environment that you’d find if you worked at Netflix. Unlimited holidays and an expenses policy that is just five words long: “Act in Netflix’s best interest”.

Now Netflix is a pretty successful company. Its revenues were nearly $9 Billion in 2016, more than twice what they were three years before. Surely this success is at least in part due to its HR policies. And so other organizations, if they want to be equally successful, should replicate these policies, right? How better to identify the very best practices to follow than by the financial performance of a company?

There is definitely a lot of interest in Netflix’s HR approach. Its unique culture deck has been viewed nearly 16 million times. In the Harvard Business Review article referred to above, the company’s former Chief Talent Officer explains how their unusual HR approach relies on a preoccupation with hiring and retaining top talent — what is referred to as ‘adults’. Such individuals don’t need HR policies, but intuitively know how best to apply their own logic and common sense for the greater good of the organization.

Libertarian paradise

It sounds like a libertarian’s paradise: as close to absolute freedom as you can realistically get, with as few restrictions as possible. But is it too good to be true? Can we really just say “behave responsibly and do what is right”, and leave everything else to the judgement of the employee — even if they are‘adults’? How do people really respond to this?

We are not very good at knowing what is ‘right’ and responding to extreme freedom. Pay-what-you-want experiments, in which customers are given the freedom to decide the price they will pay for a meal, for example, have not been an big success. External factors, rather than an innate idea of the correct price, appear to determine the price people pay. They are influenced by price anchoring (a suggested price) and social proof (what they see others pay). Or they simply don’t buy at all — people feel uncomfortable with the freedom itself to set the price, and it acts as a deterrent.

This makes you wonder how employees respond to such extreme freedom in the workplace. The dynamics in an organization without fixed rules would certainly be interesting. New joiners have their previous vacation arrangements as an anchor, but are then subject to conflicting forces. They might be inclined to copy the behaviour of their colleagues, whether it is more or less than their old benchmark. But alongside this they might experience the pressure to signal their loyalty to their employer by taking only little time off. Or maybe the company proclaims the need of its employees to look after their own wellbeing by maintaining a good work-life balance… but how serious are they really when they say this?

Hard work

Dealing with such conflicts in an environment with no rules is hard work for employees. There is the continual uncertainty in the absence of an objective norm: “am I acting ‘responsibly’, and is my judgement the right one?”. There is the fear of doing the wrong thing, and that this will lead to unexpected and unpleasant consequences.

And it is also hard work for the employer. It is crucial that they only recruit people who totally fit the mould, so there is the constant concern that they may have accidentally hired a not-so-adult person. And there is the challenge of giving meaningful feedback to employees, when there are no objective expectations with which their behaviour can be compared.

All hugely tricky — but maybe Netflix somehow manages to populate its organization with ‘adult’ people? Even if that is the case, that doesn’t mean it be can easily scaled and replicated in very different companies.

But there are signs that not everything is rosy at Netflix itself either. Glassdoor, a website on which employees and former employees can review their (ex-)employer anonymously contains some less than flattering judgements. In the comments you find things like “incredibly high” staff turnover, intense company politics (precisely due to the lack of rules), and insecure bosses.

Such observations make you wonder whether a no-rules environment really is the embodiment of “the reinvention of HR”, as the HBR article’s title implied, with little false (or indeed genuine) modesty.

(Image by Ket Quang)

For sure, it is an illusion that introducing more rules is the way to contain risk, and certainly that you can do this without any adverse effect. But that doesn’t mean that, in general, giving employees complete freedom brings out the best in everyone. Most of us work better when we have unambiguous guidance about what is (and what is not) appropriate. We like to know where we stand.

We may generally prefer more freedom over less freedom. But we are also quite happy to trade some freedom in return for security and clarity, so that our cognitive systems can focus on the job, rather than on worrying whether we’re transgressing some unwritten convention. Some individuals may thrive in this type of strong culture, others may indeed worry about the “Keeper Test” at Netflix. There are many glowing reviews of the Netflix culture, such as this one, but it is definitely not for everyone.

Rules as collective heuristics

It’s one thing to keep rules to a minimum and weigh up the pros and cons of introducing a new rule before doing so. It’s quite another thing for an employer to abdicate all responsibility to the employees, yet still hold them accountable for their actions.

Rules are, at best, the distillate of relevant wisdom: they provide guidance where our own knowledge is insufficient. They are like collective heuristics that help us make the right trade-off, and choose the right course of action without the need for costly deliberative decision-making.

A no-rules model for organizations echoes the flaws of the homo economicus model in economics. Both view people as idealized decision-makers. But real people are humans, quirky beings that need a context that makes sense to them, so they can interact sensibly with each other.

It is an illusion that we can function properly without rules.


This story is a sequel to The Rule Illusion, and was also co-written with Paul Thoresen. This article was originally published on Medium, the New Organizational Insights.


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The Rules Illusion

Organizations should beware of a “rules bias”: a tendency to give in to risk aversion by establishing ever more rules.rule

Trade-off: Restrictions versus Freedom

Any situation in which people coexist benefits from common agreements. We like to know what is acceptable and what is not; what is obligatory and what is not. We also sometimes need help to settle ambiguous matters — it’s good to have a rule telling you what side of the road you’re supposed to drive on, for example. People in general like a sense of completeness. So much so that a whole field of psychology (Gestalt) sprung up around the concept.

Yet rules inevitably imply a trade-off. Every single one takes away a bit of freedom. But provided a rule is well designed, the trade-off will produce net benefits. Unfortunately, rules in organizations do not always meet this condition.

This is a growing concern as organizations — like society in general — tend to become more risk averse. Introducing ever more rules looks like a simple and effective way to lower risk. To quote Jason Averbook from the HR Tech Fest 2016.

Limiting people’s freedom does indeed mean they have less opportunity to do the wrong things or to do them in the wrong way (at least, that is what you hope!) But it also restricts their ability to do things that are worthwhile: experimenting, using their judgement, being creative. How can people learn from experience if their options are curtailed by a forest of rules?

Just like in the real world, stricter rules in an organization are rarely effective in stopping the most egregious transgressions. People intent on acting foolishly, irresponsibly or fraudulently will not be stopped by rules any more than drivers who speed through a village at 50mph will change their behaviour if the actual speed limit is reduced from 30mph to 20mph.

You could safeguard against rules that hinder people doing the right thing while failing to solve the presumed problem by ensuring the rule-makers themselves are subject to the rules they make. At least they would then experience first-hand the benefits and the costs involved.

Ineffectiveness rules

In practice, those who make the rules are often insulated from the true consequences. The lack of a good feedback mechanism to adjust the rules would be bad enough if the rules were based on evidence and logic. But it’s often even worse, because rules often originate from received (but dubious) wisdom, unproven ‘common sense’, or reactions to one-off events. Rules that are based on beliefs rather than evidence, and never tested, are unlikely to produce net benefits. Yet such rules are precisely the ones the makers feel most protective of. Attempts to budge them meet with the backfire effect. That’s how we end up with sledgehammers to crack a nut.

Sledgehammer meets nut (via Stevepb/pixabay)

And it’s not just the behaviour of the rule-makers that is the problem. There is often not much transparency around the purpose of rules, and how the trade-offs were made. So the people for whom the rules are intended will only see the downsides to them, and not the (intended) upsides. The result is predictable: human ingenuity trumps rules. People will always find ways to beat the system and circumvent rules they see as unhelpful and counterproductive. And so the sledgehammer often fails to crack even the nut.

Many rules were originally intended to be guidelines to help shape behaviour, but instead over time get codified into rigid laws. Often most people in the organization no longer know why the rules were even implemented. And yet depressingly, “Rule Nazis …. They cling to the rules like Leonardo DiCaprio clung to that door in Titanic — as if their lives depend on it. And they make sure everyone else does too, even when the rule doesn’t make sense or stands in the way of productivity,” as Heidi Grant says.

The Psychology of Rules

The psychology of rules goes further, though. They are pointless without enforcement, but how do you go about this? Are the rules applied fairly? Are the punishments for infractions distributed equally? If not, you can easily see how it can harm morale. Generally the onus for enforcement falls to the direct manager. But how much orientation, training and reinforcement have they had on fair justice? A recent post on the Science For Work blog sets out how important this sense of justice at work really is. Poorly enforced rules can easily undo all the other efforts.

Despite all these concerns, in some organizations there is a pernicious tendency to take back control through more rules. The example that was chosen in a recent article about effective emailing is rather typical of this trend:

Compare this with the culture at Timpson, a nationwide UK chain of shoe repair, key cutting and engraving shops. CEO John Timpson, in a CIPD report on High Performance Work Practices: “If a kid comes into the shop and only has £10 from his saving tin to do an engraving for his granny, our shop staff can take a decision to accept the business even though we would have charged a lot more under the normal circumstances.” Timpson staff are trusted to use their judgement to decide what is right. Small wonder the company doesn’t need paid advertising and can rely on word-of-mouth.

Rules mostly creep in one by one. As their number grows, they contribute to a culture of conformity, rather than one of intelligent judgment and empowered employees who do what is right.

Maybe such hard compliance is exactly what you want. But it’s worth making really sure, because the control it gives you can be illusory. If your organization relies on bright people responding intelligently to the complex interactions with your customers or service users, or with their colleagues, then you had better think twice before you implement yet another rule. Otherwise you might find yourself having to appoint someone to change dumb company rules.

Don’t let rules rule your organization.

(This story was co-written with Paul Thoresen and was originally published on New organizational Insights)


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The Asshole Trade-Off

Asshole

The Asshole in the Room

It is dangerous to mix metaphors*, but I’m going to do it anyway. The asshole in the workplace has long been (and still are to a large degree) the elephant in the room.
There is a lot of attention for employee engagement, 360 degree feedback, coaching and development replacing conventional performance management and so on. But few dare to mention that some people at work are simply insensitive douchebags. You can do what you like to improve engagement, give constructive feedback or help employees to grow. If they have to work with assholes it’ll have little effect.

The No Asshole Rule

Few people or are more expert in the field of the workplace asshole than Bob Sutton, a professor of Management Science at Stanford University. And none have done more than he has to put assholes on the agenda, so to speak.
In 2007 he published The No Asshole Rule: Building a Civilised Workplace and Surviving One That Isn’t – probably still, 10 years on, the management book with the most straight-talking title. He doesn’t apologize in the least for using a term that might offend some sensitive folk. Euphemisms like “jerk” and “bully” just don’t capture the true effect of such people.
The book advocates keeping assholes out of the workplace. Simply don’t recruit them, or, if they’re there already, get rid of them. People choose to be assholes, and there is no good reason to tolerate them in the workplace. When I first read the book I thought it was pretty clear that the No Asshole Rule was a straightforward solution to the problem of assholes at work.

Trade-Offs

Life is not so simple, of course. Sure, some people are just obnoxious and selfish, and have no regard for the effect of their behaviour on others. Some might even enjoy annoying those around them, or treat them like dirt because they believe it’s going to help them progress. Losing such people does not just deliver a net benefit, it has no discernible downside.
But sometimes assholes do force trade-offs. Imagine that one of the stars in a professional services firm brings in business worth millions of pounds, but is also a patent asshole. Getting rid of them would put a big dent in the revenue. How much should a company be willing to sacrifice to enforce a strict ‘No Assholes’ rule?
And there is an even more problematic group of assholes. Maybe some people are not just productive assholes. What if their productivity is a direct result of their being an asshole?

Ritchie Blackmore & Steve Jobs


This thought occurred to me when I was watching The Ritchie Blackmore Story, about the legendary guitarist with Deep Purple and Rainbow. A very single-minded guy, he determined at an early age that he was going to become the best guitar player he could be. More relevantly, he had a reputation for unceremoniously firing musicians from the band who didn’t meet his standards. He was notoriously bad-tempered, and showed little or no regard to other people’s feelings. His practical jokes include almost blowing up the stage at California Jam in 1974 and causing damage worth $10,000 to a camera. (This was just to upstage rival band Emerson, Lake and Palmer.) One day, Rainbow singer Graham Bonnet once appeared on stage with short-cropped hair (instead of the customary flowing locks for metal band members). Blackmore admits to having been sorely tempted to “put his guitar across [Bonnet’s] head”.
Top scores in the asshole stakes. But perhaps it was precisely by being an asshole that he could make sure the people in his band were there because they were good, not because they were nice guys. Maybe he was able to entertain his fans better than if he had been a nice, even-tempered dude like Cliff Richard. He was in a band not for the girls, for the money, or for fame, but for the music. And the music was very probably a lot better because he was an asshole. Is that worth the trade-off?
Seeing Ritchie Blackmore as a creative asshole also made me think of Steve Jobs. He was the visionary behind superb products, but was widely regarded as an asshole. Would Apple have been able to produce the MacBook Air, the iPhone or the iPad had he been a regular, friendly guy?

Assholes are unavoidable

The ‘No Asshole’ rule is an excellent aspirational guideline, but often it cannot be applied categorically. The real world is a matter of trade-offs, and assholes are generally no exception. Sometimes the benefit they bring outweighs their assholery. Sometimes their assholery is even essential for that benefit.
It looks like Bob Sutton’s new book actually reflects that recognition. The Title ‘The Asshole Survival Guide: How to Deal with People Who Treat You Like Dirt’ – implicitly concedes that we have to accept that assholes at work are an unavoidable fact of life.
But while we may need to accept assholes, that doesn’t necessarily mean we need to take assholery lying down. I’m sure Professor Sutton’s new book will help us not just survive, but thrive, even when there are assholes around. I certainly look forward to reading it.
 
*: I am using the word ‘asshole’ metaphorically – people are not literally assholes 🙂
 

The Long and the Short of Learning

Organisational learning can benefit from a long-term approach, just like children can. 

Children and Learning

Cast your mind back to your very first memories, and recall how you learned about the world around you. How do we learn, really learn, as small children? If we do something and the result is favourable, we will do more of it. If the outcome is unfavourable, we will do less of it. This immediate feedback, associating consequence and cause, is crucial in building our understanding of the physical and social world around us. It allows us to build a mental model that allows us to survive and prosper.
It is the result of what we do that teaches us which actions, which choices, which judgements and decisions are the ones that help us, and which are the ones that harm us. But this process, interestingly, is not black-and-white. One good experience doesn’t tell us to always do what led to it, and a single bad outcome doesn’t mean we will avoid the action that produced it forever more.
There is a good reason for this: learning really happens through the accumulation of experiences. Of course, really bad experiences, which cause us immediate harm or pain, will not be repeated. After putting a finger into the flame of a candle once, we are unlikely to do it again. (The scar on my index finger has long since disappeared, yet the memory remains!)
But if an action is just unpleasant and not quite near-catastrophic, we may well attempt it again. And the same applies to experiences with a positive payoff. We repeat actions, perhaps in a subtly different way, and every time we check the result. We don’t take a sample of a single experience as the final word.
It is thanks to this repetition that learning really happens. It allows us to experience that an outcome may be due to chance: we discover that perhaps we were lucky once or twice, but most of the other times the result was rather less good. Or we may learn that a choice with a short-term positive payoff, has a longer-term cumulative negative effect. If we’re cold, we could go out and collect some firewood, or we could just set fire to a chair. The former means a lot of effort, while the latter will provide you with heat without any hassle – until we run out of chairs.

Short-term vs Long-term

If we take a short-term view, looking only at the immediate result of a course of action, we may well be burning a lot of our furniture. Yet that is often what happens in organizations where being results-oriented our outcome-focused is the name of the game. Most attention goes to achievements, and a lot less to the judgement that was applied and the decisions that were made.
This distorts the learning process. It also creates the temptation to deliver the desired results, no matter what. If the only thing that matters is producing heat, then burning the furniture actually is an attractive option. (It becomes even more appealing if there’s a chance that we won’t even be around when the last chair is incinerated.)
Long-term success and learning go together. As individuals, we survive and prosper thanks to the intelligent decision-making we learned through repetition over time. We don’t rely on the immediate consequences of a choice. And organizations could do better still. They can learn over time in the same way, and by evaluating the decision-making process of multiple people at the same time. Organizational activity can serve as a huge natural experiment.
But that means reducing the focus on distorting short-term performance measurements. A robust decision can lead to a lousy outcome, and a timely dose of good luck can turn around the result of a poor decision. It is easy to try and assess the quality of a decision by the consequence. It is also easy to burn up the chairs to be warm.
For our long-term success, we sometimes need to go out and collect firewood, or spend a bit more effort to evaluate and improve people’s judgement and the decision-making processes of the organization. That is not easy, but didn’t we learn as a child that the easy way out is rarely the best?
 
See also: Craftsmanship through Repetition

Simplicity vs Evidence

This blog is about the danger of simplicity. Koen Smets pleads for an evidence-based approach in HR that avoids the simple recipes.

The Quest for Simplicity

Albert Einstein’s equation, e = mc2 is arguably the most widely known formula in the world. It encapsulates the equivalence between mass and energy. It is a brilliant example of how a fundamental truth can be expressed with a few simple symbols. Einstein is also credited with having said, “Everything should be made as simple as possible, but no simpler.”
Simplicity
There is no hard evidence he actually did say these words. But they do capture the fact that simple rules and formulas have great appeal. Why is this? They act as shortcuts so that we don’t need to do too much work or think too hard when we are pursuing a goal. Just think of the way new diets and fitness hypes pop up with great regularity. They offer us an uncomplicated way to the perfect weight or a healthy life.
Such fads are not just found on the covers of lifestyle magazines. They are also common in management. Employee engagement or mindfulness, anyone? Concepts like these are too often applied without much thought. Why? Because they look like an obvious and simple route to better business results.
And that quest for simplicity is quite widespread. A recent article in HR Magazine carried the introduction, “HR can’t seem to decide whether outsourcing or keeping things in-house is the best way to go.” The article itself offers considerable depth and nuance. However, the intro implies that there is an option that is ‘the way to go’. It’s independent of the context, or indeed irrespective of what ‘things’ are. This is of course nonsense.
A simple, generic instruction is not enough to determine which of the options is appropriate for what elements of HR (or any other business function, for that matter). That requires relevant and specific evidence. And this is precisely the problem with many methods used in management. This is not just about the passing fads. There are also longer standing ones, from MBTI personality profiling to forced ranking and NLP. They lack evidence.

Evidence-based Management

Rob Briner, a professor of Organizational Psychology at Bath University, questions the evidence of much common wisdom in HR with almost heroic relentlessness. And more often than not he exposes the lack of it. It is thanks to efforts like this that there is increasing attention for evidence-based management.
This is good news. But we need to be careful that ‘evidence-based’ doesn’t become yet another superficial and hollow fashion label. We should be sceptical towards anything that comes with the evidence-based stamp. Not all evidence is created equal.
Yet even if the evidence for a method or technique looks solid, there is something even more important to bear in mind. To what extent did the context play a role in that evidence? What has been shown to work with the staff of a high-tech company in Eastern Germany is not necessarily so for the employees of a food manufacturing company in the Northeast of England, or for a countrywide retailer in the USA.
It is very simple to slavishly copy policies and methods that others have applied with apparent success. But that violates the maxim attributed to Einstein. It’s too simple. Evidence obtained elsewhere is at best a good first indicator of efficacy. The only way to really find out whether something works in an organization is to actually try it out.
Sure, gathering your own evidence may require a bit more work and a bit more thinking. But that is precisely where Human Resources Management can (and should) add value to an organization. Be sceptical, and experiment. Show that an approach works, how it works, where it works, and under what conditions.
Avoid simplicity, also in evidence-based management.
 
Read also:

 

The Performance Appraisals Problem is half-solved

Getting rid of Performance Appraisals?

About a year ago, the consultancy company Deloitte was all over the headlines. How come? They had announced that they would be getting rid of their conventional, ratings-based performance appraisal process. And within a few months, high-profile companies like Accenture and GE followed suit. Since then the media may have lost interest a little, but the number of companies reconsidering how they rate their employees appears to be growing steadily.
Ratings-based performance management is attractive. It is simple to stick a number or a category label on a person according to some or other criterion, and it suggests an objective robustness. Often it also incorporates forced ranking. Comparing employees with their peers and placing them in bands is handy if you want to identify your top-20% people so you can nurture and fast-track them, and the bottom-10% so you can get trim the so-called dead wood (something in which GE is a past master).
However, we have known for some time that such systems are ineffective and unreliable. So, what is surprising is not so much that more and more prominent businesses are stopping the practice, but that it has taken so long for them to do so. How come? Last September, an article in the HBR looked into the matter.
The increased importance of collaboration at work is one such reason. Most people are members of teams, often multiple teams at the same time. An appraisal system that focuses on individual performance is counterproductive when it’s team performance that really counts.
Another challenge is that business goals of project teams, departments and people no longer neatly fit into an annual calendar. Monthly, or even weekly horizons (and performance appraisals) are often more appropriate than a rigid 12-month review cycle. Furthermore, if you want to attract and keep talent, you need to engage more often than once a year with employees who are keen on opportunities to develop new skills and to gain new experience. The same applies for the company itself. It makes no sense to restrict promotions to just one short period in the year, and a more continuous evaluation process would be a lot better.
So companies like GE and Adobe have implemented more frequent check-ins, and more short-term goals. However, even these new approaches still focus largely on outcomes: what remains central is the answer to the question whether an employee has met his or her goals.
And this is a problem. Of course it is appealing for a manager to use outcome as a proxy for ability and skill – the intrinsic capabilities of an employee. It is easy to determine with little ambiguity whether a goal was reached or an expectation was fulfilled. And it is tempting to think that, just because an employee achieved her goals, she must have performed well (and similarly, that whoever failed to meet their goals obviously is not competent or simply didn’t work hard enough).

Hindsight and Chance

But in doing so, managers are prone to hindsight bias. There are almost always multiple ways in which success or failure arises. When you only look at outcomes you don’t see the behaviour of the employee in question, nor the process by which they achieved their goals. Perhaps they were successful, oblivious of the harmful effect their actions had on others elsewhere in the organization. Maybe they were even fully aware that their success came at the expense of somebody else.
Worse still, you are also overlooking the role of chance in success or failure. A fund manager outperforming 94% of a countries investment funds has to be a really clever person, right? Except when it is a chimpanzee picking companies at random, who is simply lucky…
How to combat hindsight bias? In his book Misbehaving, Richard Thaler puts it like this: “Good leaders must create environments in which employees feel that making evidence-based decisions will always be rewarded, no matter what outcome occurs.” This is a clear plea for looking at how people make decisions, rather than just to what the result of those decisions is.
Another behavioural economist, Dan Ariely, thinks along the same lines. In an answer to a reader’s question whether it is wise to fire people who fail, he writes:

Organizations reward and punish people based on the outcome of decisions, not on the quality of decisions. In general, you’d hope that good decisions would lead to good outcomes, but that causal link rests on probabilities, not certainties—so reward and punishment are often misapplied.

The Way of Working

We’d be better off evaluating people on the basis of their ways of working. Look at how employees make decisions, but also at how they coöperate with their colleagues, how they provide leadership to their team members, and so on.
Of course, it is not because someone shows great diligence, observes, consults and collects data before making a decision that they are guaranteed to deliver the best outcome, or even a good outcome. But wouldn’t it be crazy to reward people who ‘failed’ and to punish those who were ‘successful’? Well, no.
Just think what kind of employee would, in the long run, add more value to your organization. Would it be someone who, like the investment chimpanzee, takes decisions without any intelligence or skill, and who ends up just being lucky? Or someone who makes choices after systematically evaluating risks and benefits, and weighing off the pros and cons – and who may be unlucky?

More changes needed to solve the Problem of Performance Appraisals

Talent management should not rely on luck and on hindsight bias. That means that more changes are needed in performance management. What Deloitte, GE, Adobe and others have done is at best only half of the solution.
As Dan Ariely says:

We should reward and retain people who know how to make good decisions, but most of the time, we just reward good outcomes. As long as organizations behave this way, we will be stuck with conservative, risk-avoiding behaviour, and we will keep firing some of the wrong people.

Ambition or Happiness – do we need to choose?

Ambition

Ambition

Ambition tends to get a bad press. We often link it with greed and selfishness with a ruthless drive towards achieving a goal at any cost. And when that goal is attained, a new one will always emerge. The ambitious person will never be able to get satisfaction, as Mick Jagger still sings. Unsurprisingly, ambition seems to be irreconcilable with happiness.
This idea is not new. As early as the third century BC, the Greek philosopher Epicurus laid the foundation for a way of thinking that extols the virtues of living simply and avoiding fame and (political) ambition. Zen Buddhism is also generally associated with contentment and happiness, not least because it seeks to limit cravings like ambition. The American writer Thomas Merton, who studied Buddhism, didn’t mince his words: “Where ambition ends, happiness begins.”

snale - ambition
Where ambition ends, happiness begins.

Dilemma

If this is true, the world of work faces a serious dilemma. On the one hand, enlightened employers are well aware of the positive effect that having engaged, happy employees has on customer satisfaction, staff turnover and productivity. But on the other hand, organizations need people to want to strive for improvement. An organization in which people don’t look for ways to do things more efficiently, or to offer customers a better deal, is likely to stagnate and to wither away.
Is the only solution to go for a weak unsatisfactory compromise, in which employees are a little happy, and a little ambitious?
I don’t think so. Excessive ambition (like excessive chocolate eating, excessive exercise, or anything in excess really) is unlikely to contribute much to happiness. It’s quite the contrary. If the ultimate goal is never reached, all that results is persistent frustration. And if all that significant but futile, effort comes at the cost of sacrificing one’s social and family life to pursue constantly moving goals. It is not difficult to see how such levels of ambition lead to unhappiness.

Self-actualization or Depression

But to vilify ambition per se is to deny the profound need for self-actualization that pretty much every human being possesses. Not having a sense of aspiration means that we have no interest in progress, in achievement, in improvement, or indeed in the future itself. That way depression lies ahead. It is precisely experiencing progress, realizing a goal, and getting better at something that make important contributions to how happy we feel.
If our ambitions are within reach, then we have a good chance of fulfilling them. And when we do (or even just get close) we reap the emotional rewards. This applies in our work and in our leisure time. We can derive happiness just as much from successfully completing a DIY project, cooking a delicious Bolognese sauce or finally playing a Bach prelude without hesitation, as from delivering a development project on time and on spec, leading our team towards a successful bid, or getting positive feedback after training a bunch of colleagues.

Choose your aspiration

As an employee, choosing your aspirations wisely will give you the kind of job satisfaction that is depicted so vividly in the wonderful little book Fish! for example. But managers in an organization also have a crucial responsibility here. Staff development and staff engagement go hand in hand. Good managers not only understand the ambitions of their team members, but also help them shape and pace these aspirations so that they are realistic, but challenging – or challenging, but realistic (either way works!).
This means that there is no dilemma. There is no choice to be made between either happiness, or ambition. Happiness and ambition can and do coexist in a joyful, mutually reinforcing symbiosis.