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15 сентября, 16:00

The High Price of Overly Prescriptive HR Policies

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Recently, one of my colleagues left our firm to make significantly more money at another company. We wanted to keep her, but the commission-based salary offered by the other company was more than we could match. She hadn’t realized how long her new commute would be during rush hour, however, and after three days of long, round-trip commutes during rush-hour traffic, she asked to shift her schedule an hour earlier to spend less time in unproductive gridlock. Her manager denied her request, saying, “If we did it for you, we’d have to do it for others.” It was good news for us; she was back with our team the following Monday. Too many companies’ HR policies are overly restrictive. Such policies are often convoluted and overly paternal, and attempt to control the behavior of regular people through rules designed to rein in the “bad apples.” Having consulted with hundreds of company leaders on how to create high-performance workplaces over the past 30 years, I’ve seen this firsthand. Although a small percentage of employees may try to take advantage of more flexible or generous policies, designing your HR policies with such people in mind isn’t the answer. It won’t help boost the performance of the majority of employees – employees who have the organization’s best interests at heart. It will only make them feel distrusted. Most employees who work for you are intelligent adults. If your employee handbook or HR policy manual is large and prescriptive, consider the following: Don’t play “gotcha” — make positive assumptions about employees Attorneys may recommend codifying company rules in a series of “thou shalt nots” and then making employees sign a statement confirming that they’ve read the handbook. If employees violate rules and then claim ignorance, companies can then say, “Gotcha! You signed that you’d read our policy, so you did know.” This approach relays negative assumptions from day one. Creating an environment of mutual trust is much easier than trying to run an authoritarian regime free of rule breakers. And there are some situations where making something a “rule” can really backfire. In an effort to become known as a positive place, for example, Ochsner Health System made it a punishable offense for any employee to fail to smile within 10 feet of a customer. Instead of setting the expectation that politeness was part of the company’s image, it tried to make happiness a rule. Giving leaders a comprehensive book of infractions and punishments isn’t helpful — it turns them into “bad cops” in situations where nuance would work better. In high-performance environments, guidelines empower leaders to use their personal judgment to make decisions. If you believe employees require need strict rules and enforcement to be productive, hiring and retaining high-performance people will be a challenge for you. You hired these people for their tenacity and talents. Get out of the way, and let them be great. Deal with any people who choose not to meet expectations on a case-by-case basis. Carefully evaluate the messages your policies communicate. Is each policy necessary for the vast majority of adults working for you? Can you reframe punitive rules as positive goals to aim for? For example, instead of a policy that provides definitions of “tardy” or “absent,” and punishments for each, state that you expect employees to show up on time. If your organization requires a dress code, take a cue from one of our clients and simply define the policy as “Dress appropriately.” Communicate one standard of conduct that states, “Everyone is expected to act in the best interest of the organization and his/her fellow employees” as a replacement for a long list of conduct rules. Another company, for instance, replaced its employee handbook with a 17-page “leader’s guide” that set the expectation that leaders would use judgment and company values when making decisions that impacted employees. One place to draw a clear line is around telling the truth. Establish a zero-tolerance policy for dishonesty. The costs of untrustworthiness are just too high, and the only way a common-sense approach to HR policy will work is if integrity is a core organizational value. Follow common sense, not policy Strict policies are often excuses to not think. When common sense and bureaucracy clash, you see headlines like the one about a longtime Lowe’s employee who was fired for calling 911 on a shoplifter. Her action was against store policy, and the “book” called for immediate termination. Somewhere along the way, rules trumped logic and created an environment of uncertainty and fear. Involve your team in creating expectations, not rules, or you’ll only get compliance from those unwilling to go beyond basic requirements. The cost of compliance is ongoing. Commitment is an upfront one-time cost, and then it’s self-sustaining. Having a team meeting for the purpose of clarifying the team’s charter — what value the function adds to the company — is a good start. First, you should facilitate (versus present) this by asking for responses to “What is our role in the company? What do we do that provides a unique value?” Later, those responses can be distilled into a charter. After that discussion, ask, “How do we want to be perceived? How do we want the organization to view us?” Then, ask, “How do we want to view ourselves as a team?” Together, the group determines gaps and develops standards or expectations of each other that drive committed behaviors as members of a high-performing team. Prioritize leadership over technical skill Early in my career, working as an employee relations manager for a Fortune 500 company, I quickly realized that most of its endless rules stemmed from three factors: Frontline supervisors managing the majority of the workforce were promoted for loyalty and technical skills, not leadership ability. Once promoted, there was limited investment in their leadership training. To mitigate the risk of these untrained supervisors using judgment in decision-making, HR published and policed rules instead of improving the selection and development of more experienced leaders. Policies are a company’s message to its employees regarding how it values people. If your company must have policies, senior leaders should allow and expect managers to use their own discretion and judgment in administering these policies. Again, expectations and guidelines work better for thinking adults than black-and-white rules and steps. Most companies hold lots of meetings related to production, scheduling, and sales, but few dedicated to how they’re managing their workforce. One company we work with is an exception; they place equal value on how results are achieved and what the bottom-line results are. This company holds weekly meetings in which managers and front-line leaders discuss people issues. They don’t wait for others to challenge current policies; they look at the policies they’ve published and ask, “Is this a policy designed to catch one of the few bad apples (who know how to game the system, anyway)? Is the tone respectful, positive, and adult?” Do your HR policies outline specific punishments for detailed infractions? Do they focus on what employees can’t do, rather than what they should do? If so, they’re holding employees back more than they’re protecting you from a bad apple or two. When you spend time thinking up rules to stop every conceivable bad behavior, it’s easy to forget to rely on the people around you. Take your faith out of policies, and place it in the people you hired to grow your company into a thriving business.

15 сентября, 15:00

Who Empathizes with Machiavellian or Narcissistic Leaders?

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Have you ever worked with a leader who manipulates others to get their own way? Or is there someone in your team who is so completely self-obsessed that they disregard other’s opinions and contributions? Hostile personality characteristics such as these might help people climb the career ladder, but it could be a very lonely journey to the top — unless their colleagues also share these personality characteristics. In our research, we replicated previous findings that leaders with negative personality traits were perceived by their subordinates as displaying poorer leadership behavior. However, we also found that if followers shared those same traits, they were more likely to get along with their nasty manager. We set out to explore when and why a leader’s negative personality traits might hurt perceptions of their leadership, even though we know from other research that those same traits actually help leaders get ahead. Specifically, a study conducted in Germany found that “narcissism was positively related to salary, Machiavellianism was positively related to leadership position and career satisfaction, and psychopathy was negatively related to all analyzed outcomes.” If these traits — often called “the dark triad” by researchers — are so disliked by many people, why would they correlate with positive career outcomes? To explore this question, we focused specifically on the quality of the relationship between leader and follower, and how similarity or difference in their personalities influenced this and leadership performance. We evaluated these concerns for each of the three “dark triad” traits. Narcissists are characterized by excessive vanity, feelings of superiority and arrogance, as well as a strong need for admiration and entitlement. Think about the type of person who loves to be recognized for an achievement even if they didn’t contribute to making it happen. Machiavellians, on the other hand, use manipulative strategies to achieve their goals without considering morality. They are often described as immoral, cynical, and highly calculative; the type of person who thinks that the ends justify the means. Lastly, psychopaths are primarily characterized by high impulsivity, low empathy or interpersonal coldness, as well as by exploitative and antisocial behavior. This type of person is likely to be emotionally charged and unpredictable. All three traits share the common core that individuals scoring high on any of them operate in a socially aversive way, and this includes behavior in the workplace. Not surprisingly, therefore, the majority of previous research describes that dark personality characteristics have a negative impact on others at work. Colleagues of leaders who have a “dark” personality report issues of destructive leadership behavior, distrust, lower job satisfaction, poorer psychological wellbeing, higher job turnover and neglect. Our study consisted of 349 participants (51% female) who held leadership positions in middle management (83% were department managers). Because they reported to leaders from upper management, they also held a follower position. Participants rated their own dark triad traits, the quality of their relationship with their direct leader, and their leader’s dark triad traits and leadership performance. Data were collected using an online questionnaire, which included psychometrically validated scales to measure personality, relationship quality, and leadership performance. Overall, we found that a leader’s dark traits of narcissism and Machiavellianism had a negative impact on the quality of the relationship they formed with their followers, and consequently, the quality of this relationship hurt leadership performance measured by derailment in task and contextual performance and working relationships. For example, leaders with higher levels of narcissism and/or Machiavellianism formed poorer quality relationships with their followers, which then resulted in them being rated as poorer leaders. In practice, then, if leaders form good quality relationship with their followers, the negative impact of their “dark” personality characteristics could be reduced. So the question is, what helps leaders form good quality relationships despite having “dark triad” personality traits? Our research found that it is not only a leader’s personality characteristics that influences relationship quality; a follower’s personality also has a significant influence. We found that similarity, rather than difference, in leaders’ and followers’ dark personality characteristics resulted in better quality relationships. This was applicable for the two out of the three dark traits: narcissism and Machiavellianism. If a leader scores highly on either of those traits, they tend to form stronger relationships with followers who also score highly on the same trait. We did not find the same result for psychopathy; we suspect that is because that trait is associated with a lack of empathy and antisocial behavior. In short, people high in psychopathy aren’t likely to form relationships with anyone, even other people high in psychopathy. So why might a leader-follower personality match help to buffer the negative impact of a leader’s dark traits on the quality of their work relationship? This might simply be because followers with personality traits similar to their leader can empathize and better understand their leader’s behavior. Instead of the arrogance, self-absorption, and self-loving of a narcissist being perceived negatively, followers who are similarly narcissistic might better relate to these characteristics and be more accepting of them, therefore having less of an impact on relationship quality and perceived leadership effectiveness. Likewise, the cunning and manipulating ways of a leader with a Machiavellian personality might be appreciated by their follower counterparts. This might result in collaborative efforts to succeed at their own joint goals. Extreme levels of narcissism and Machiavellianism are relatively rare in the general population but each one of us will have a degree of darkness in our personality. So what should leaders take away from these findings? The short answer echoes what we know about personal relationships. Similar personalities — even negative ones — attract each other, and can facilitate effective working relationships. We encourage leaders to acknowledge and accept that they may have these traits. Get to know them. What do they look like to you? Be aware that not every follower might be able to easily handle personal interaction with you. How do other employees perceive and experience these aspects of your personality? What triggers you to behave in these ways? Learned behavioral routines might be one approach that helps to keep these traits in check, and help you perform better as a leader. Of course, not all followers have the psychological makeup to be able to handle personal interactions with a Machiavellian or narcissistic leader. For employees being managed by a leader who appears to score highly on one of the “dark triad” traits, our findings might appear especially grim. We hope our findings help those employees realize that their boss’s behavior is likely not about them at all; it’s about the boss’s personality. Our research brings to the fore the often-neglected darker side of personality. It adds to empirical evidence and offers insight about why a leader’s dark triad traits hurt their leadership performance. Our research suggests that it takes two to tango — Machiavellian or narcissistic leaders and followers form stronger working relationships with each other. Future research should consider the longer-term implications of what a business world full of narcissistic and Machiavellian leaders and followers might look like.

15 сентября, 14:00

The Case for Stock Buybacks

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Laura Schneider for HBR If paying excessive CEO salaries is the most maligned use of corporate funds, stock buybacks may well take second place. Conventional wisdom is that CEOs buy back stock to manipulate the short-term stock price. They fund the buyback by cutting investment, and so firm value suffers in the long-term. As Senator Elizabeth Warren argued, “stock buybacks create a sugar high for the corporations. It boosts prices in the short run, but the real way to boost the value of a corporation is to invest in the future, and they are not doing that.” The UK Government is launching an inquiry into buybacks, due to concerns that they “may be crowding out the allocation of surplus capital to productive investment.” And in 2014, HBR published a lengthy feature critical of the practice. Such a nefarious use of corporate funds makes for great headlines. But these claims are very rarely backed up by large-scale evidence, and often driven by a misunderstanding of how buybacks actually operate. The claim that the need to buy back stock forces firms to cut investment puts the cart before the horse. A more plausible view goes like this: First, firms allocate funds to investment based on the opportunities that are available. If they have spare cash left over after taking all value-creating investment opportunities then they may use it for buybacks. This highlights a logical error in the UK Government’s quote above: “surplus capital” is, by definition, capital left over after all productive investments have been made. The evidence suggests this view is more accurate. A comprehensive survey of financial executives concluded that “repurchases are made out of the residual cash flow after investment spending.” Other studies find that CEOs repurchase more stock when growth opportunities are poor, and when they have excess capital. It is the exhaustion of a firm’s investment opportunities that lead to buybacks, rather than buybacks causing investment cuts. Moreover, the claim that buybacks weaken companies long-term isn’t borne out by the data. Firms that buy back stock subsequently beat their peers by 12.1% over the next four years. Rather than eroding long-term firm value, buybacks create value by ensuring that surplus capital is not wasted. For several years, Yahoo was valued at below the sum of its parts, partially due to concerns that it would waste its cash on poor acquisitions; more broadly, a large-scale study found that, in poorly governed firms, $1 of cash is valued at only $0.42 to $0.88. This highlights the value that can be unlocked simply by not frittering away corporate resources. In addition, buybacks offer firms the flexibility to vary how much they return to shareholders year to year. Even if a company repurchased lots of stock last year, it can buy back zero this year. Even after announcing a repurchase program this year, it can decide not to follow through with it with few negative consequences. Repurchases are much more flexible than dividends, the alternative way in which companies return cash to their investors, which attract less ire. While a company can chop and change its repurchase policy depending on its investment requirements, it needs to maintain historic dividend levels since dividend cuts lead to a significant stock price fall. This means that it is better to return surplus capital in the form of repurchases (or through a special dividend) because increasing the ordinary dividend implicitly commits the firm to maintaining the higher dividend level in the future. The flexibility of repurchases is attractive for other reasons. Consumers with credit cards, and companies with revolving credit lines, value the option to pay back their debt at any time.  They particularly overpay when the interest rate – the rate of return required by the bank – is high, just as firms particularly repurchase when the stock price is low and thus the rate of return required by shareholders is high. If a credit card only allowed consumers to make the minimum payment every month, few would take out the card. Similarly, if firms were restricted from buying back shares, they may not issue equity to begin with.  Fewer companies would go public, instead financing themselves by taking on more debt. Debt is a useful analogy for a second reason.  A borrower who pays back debt is making an investment that pays off in the future, by reducing her future interest obligations. Similarly, a company that buys back stock has to pay fewer dividends in the future. The idea that buybacks (or, for that matter, dividends) stifle investment is “partial thinking.” It considers investment only in the company in question and ignores the fact that shareholders can reinvest the cash returned elsewhere. And this represents a second advantage of buybacks over dividends. In a buyback, investors choose whether to sell their shares back. They will likely only do so if they have alternative investment opportunities; no rational investor would sell their stock and just horde the cash. Dividends are paid out to all investors, even those who have no good alternative investment opportunities and who may indeed allow the cash to sit idle. In this way, repurchases are targeted: they return cash to shareholders with the best other uses for it. Indeed, the fundamental premise implicit in many buyback critiques — that more investment is good and less investment is bad — violates a basic idea in Finance 101. Investment only creates value if its returns are higher than the other projects shareholders could invest in. It takes no skill to simply spend money. Responsible companies don’t invest willy-nilly; they invest when opportunities are good, and show restraint when opportunities are bad. A restriction on repurchases could take us back to the 1970s, where CEOs simply wasted free cash on building empires – RJR Nabisco being a prime example – rather than paying it out to be allocated elsewhere. Repurchases allow shareholders to reallocate funds to young, high-growth firms that are screaming out for a cash injection. Relatedly, few argue that equity issuance is a definitively value-creating action; indeed, selling shares significantly reduces the stock price if done without shareholder approval – as such issuances are most likely to be motivated by empire building.  Yet, repurchases are simply the opposite of equity issues. Yet another advantage of repurchases over dividends is that they lead to more concentrated ownership. If a company buys back stock, the CEO now has a greater share in the remaining equity, and so now has stronger incentives to improve firm value. Higher CEO ownership stakes typically improve long-term stock returns. And buybacks concentrate the ownership of not only the CEO, but also of continuing shareholders. A common concern about the public corporation is that it is owned by millions of dispersed shareholders, whose stakes are too small to motivate them to look beyond short-term earnings. By concentrating the ownership of continuing investors, they create blockholders – large shareholders.  Since these shareholders have “skin in the game”, they have the incentive to look beyond earnings and instead look to a company’s long-term growth opportunities and intangible assets. But, while the evidence suggests that buybacks in general add value, I am open to the idea that some buybacks indeed might be short-termist. A careful recent study shows that buybacks that allow a company to just beat analyst earnings forecasts, when it would have missed, it otherwise are associated with future reductions in employment and investment. While we don’t know whether it’s bad or good investments that are being cut, this evidence certainly doesn’t rule out short-termism.  But, the problem here is not so much the buyback, but giving CEOs pay schemes that incentivize them to hit earnings targets. These contracts lead to investment cuts because such cuts help the CEO meet the target, regardless of whether the saved cash is used for repurchases or not. Buybacks are a red herring. It is the investment cut that hits the earnings target that hurts long-run value. In addition to target-based contracts, the imminent vesting of CEO equity also leads to investment cuts. Thus, the solution is not to restrict buybacks – which would throw the baby out with the bathwater and constrain the many buybacks that do create value – but to remove earnings targets and require the CEO to hold stock for several years. This would solve the myopic incentives that are the root cause of any problem, deterring not only the few buybacks that are value-destructive, but short-term behavior much more generally.

15 сентября, 13:00

The Tragic Crash of Flight AF447 Shows the Unlikely but Catastrophic Consequences of Automation

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The tragic crash of Air France 447 (AF447) in 2009 sent shock waves around the world. The loss was difficult to understand given the remarkable safety record of commercial aviation. How could a well-trained crew flying a modern airliner so abruptly lose control of their aircraft during a routine flight? AF447 precipitated the aviation industry’s growing concern about such “loss of control” incidents, and whether they’re linked to greater automation in the cockpit. As technology has become more sophisticated, it has taken over more and more functions previously performed by pilots, bringing huge improvements in aviation safety. In 2016 the accident rate for major jets was just one major accident for every 2.56 million flights. But while overall air safety is improving, loss of control incidents are not. In fact, they are the most prevalent cause of fatalities in commercial aviation today, accounting for 43% of fatalities in 37 separate incidents between 2010 and 2014. Loss of control typically occurs when pilots fail to recognize and correct a potentially dangerous situation, causing an aircraft to enter an unstable condition. Such incidents are typically triggered by unexpected, unusual events – often comprising multiple conditions that rarely occur together – that fall outside of the normal repertoire of pilot experience. For example, this might be a combination of unusual meteorological conditions, ambiguous readings or behavior from the technology, and pilot inexperience – any one or two of which might be okay, but altogether they can overwhelm a crew. Safety scientists describe this as the “Swiss cheese” model of failure, when the holes in organizational defenses line up in ways that had not been foreseen. These incidents require rapid interpretation and responses, and it is here that things can go wrong. Our research, recently published in Organization Science, examines how automation can limit pilots’ abilities to respond to such incidents, as becoming more dependent on technology can erode basic cognitive skills. By reviewing expert analyses of the disaster and analyzing data from AF447’s cockpit and flight data recorders, we found that AF447, and commercial aviation more generally, reveal how automation may have unanticipated, catastrophic consequences that, while unlikely, can emerge in extreme conditions. Automation on the Flight Deck Commercial aircraft fly on autopilot for much of the time. For most pilots, automation usually ensures that operations stay well within safe, predictable limits. Pilots spend much of their time managing and monitoring, rather than actively flying, their aircraft. Cockpit automation, sometimes called the “glass cockpit”, comprises an ensemble of technologies that perform multiple functions. They gather information, process it, integrate it, and present it to pilots, often in simplified, stylized, and intuitive ways. Through “fly-by-wire,” in which pilot actions serve as inputs to a flight control system that in turn determines the movements of the aircraft’s control surfaces, technology mediates the relationship between pilot action and aircraft response. This reduces the risk of human errors due to overload, fatigue, and fallibility, and prevents manoeuvers that might stress the airframe and endanger the aircraft. Automation provides massive data-processing capacity and consistency of response. However, it can also interfere with pilots’ basic cycle of planning, doing, checking, and acting, which is fundamental to control and learning. If it results in less active monitoring and hands-on engagement, pilots’ situational awareness and capacity to improvise when faced with unexpected, unfamiliar events may decrease. This erosion may lie hidden until human intervention is required, for example when technology malfunctions or encounters conditions it doesn’t recognize and can’t process. Imagine having to do some moderately complex arithmetic. Most of us could do this in our heads if we had to, but because we typically rely on technology like calculators and spreadsheets to do this, it might take us a while to call up the relevant mental processes and do it on our own. What if you were asked, without warning, to do this under stressful and time-critical conditions? The risk of error would be considerable. This was the challenge that the crew of AF447 faced. But they also had to deal with certain “automation surprises,” such as technology behaving in ways that they did not understand or expect. Loss of AF447 AF447 was three and a half hours into a night flight over the Atlantic. Transient icing of the speed sensors on the Airbus A330 caused inconsistent airspeed readings, which in turn led the flight computer to disconnect the autopilot and withdraw flight envelope protection, as it was programmed to do when faced with unreliable data. The startled pilots now had to fly the plane manually. A string of messages appeared on a screen in front of the pilots, giving crucial information on the status of the aircraft. All that was required was for one pilot (Pierre-Cédric Bonin) to maintain the flight path manually while the other (David Robert) diagnosed the problem. But Bonin’s attempts to stabilize the aircraft had precisely the opposite effect. This was probably due to a combination of being startled and inexperienced at manually flying at altitude, and having reduced automatic protection. At higher altitudes, the safe flight envelope is much more restricted than at lower altitudes, which is why pilots rarely hand-fly there. He attempted to correct a slight roll that occurred as the autopilot disconnected but over-corrected, causing the plane to roll sharply left and right several times as he moved his side stick from side to side. He also pulled back on the stick, causing the plane to climb steeply until it stalled and began to descend rapidly, almost in free-fall. Neither Bonin nor Robert, nor the third crew member (Marc Dubois, the captain) who entered the cockpit 90 seconds into the episode, recognized that the aircraft had stalled despite multiple cues. In the confusion, Bonin misinterpreted the situation as meaning that the plane was flying too fast and actually reduced the thrust and moved to apply the speedbrakes – the opposite of what was required to recover from the stall. Robert overruled him and attempted to take control, but Bonin continued to try and fly the plane. He and Robert made simultaneous and contradictory inputs, without realizing that they were doing so. By the time the crew worked out what was going on, there was insufficient altitude left to recover, and AF447 crashed into the ocean, with the loss of all 228 passengers and crew. The AF447 tragedy starkly reveals the interplay between sophisticated technology and its human counterparts. This began with the abrupt and unexpected handover of control to the pilots, one of whom, unused to hand flying at altitude, made a challenging situation much worse. A simulation exercise after the accident demonstrated that with no pilot inputs, AF447 would have remained at its cruise altitude following the autopilot disconnection. With the onset of the stall, there were many cues about what was happening available to the pilots. But they were unable to assemble these cues into a valid interpretation, perhaps because they believed that a stall was impossible (since fly-by-wire technology would normally prevent pilots from causing a stall), or perhaps because the technology usually did most of the “assembling” of cues on their behalf. The possibility that an aircraft could be in a stall without the crew realizing it was also apparently beyond what the aircraft system designers imagined. Features designed to help the pilots under normal circumstances now added to their problems. For example, to avoid the distractions of false alarms, the stall warning was designed to shut off when the forward airspeed fell below a certain speed, which it did as AF447 made its rapid descent. However, when the pilots twice made the correct recovery actions (putting the nose-down), the forward airspeed increased, causing the stall alarm to reactivate. All of this contributed to the pilots’ difficulty in grasping the nature of their plight. Seconds before impact, Bonin can be heard saying, “This can’t be true.” Implications for Organizations This idea – that the same technology that allows systems to be efficient and largely error-free also creates systemic vulnerabilities that result in occasional catastrophes – is termed “the paradox of almost totally safe systems.” This paradox has implications for technology deployment in many organizations, not only safety-critical ones. One is the importance of managing handovers from machines to humans, something which went so wrong in AF447. As automation has increased in complexity and sophistication, so have the conditions under which such handovers are likely to occur. Is it reasonable to expect startled and possibly out-of-practice humans to be able to instantaneously diagnose and respond to problems that are complex enough to fool the technology? This issue will only become more pertinent as automation further pervades our lives, for example as autonomous vehicles are introduced to our roads. Second, how can we capitalize on the benefits offered by technology while maintaining the cognitive capabilities necessary to handle exceptional situations? Pilots undergo intense training, with regular assessments, drills, and simulations, yet loss of control remains a source of concern. Following the AF447 disaster, the FAA urged airlines to encourage more hand-flying to prevent the erosion of basic piloting skills and this points to one avenue that others might follow. Regular, hands-on engagement and control builds and maintains system knowledge, enabling operators, managers, and others who oversee complex systems, to identify anomalies, diagnose unfamiliar situations, and respond quickly and appropriately. Structured problem-solving and improvement routines that prompt one to constantly interrogate our environment can also help with this. Commercial aviation offers a fascinating window into automation, because the benefits, as well as the occasional risks, are so visible and dramatic. But everyone has their equivalent of autopilot, and the main idea extends to other environments: when automation keeps people completely safe almost all of the time, they are more likely to struggle to reengage when it abruptly withdraws its services. Organizations must now consider the interplay of different types of risk. More automation reduces the risk of human errors, most of the time, as shown by aviation’s excellent and improving safety record. But automation also leads to the subtle erosion of cognitive abilities that may only manifest themselves in extreme and unusual situations. However, it would be short-sighted to simply roll back automation, say by insisting on more hand-flying, as that would increase the risk of human error again. Rather, organizations need to be aware of the vulnerabilities that automation can create and think more creatively about ways to patch them.

15 сентября, 12:05

How to Motivate Employees to Go Beyond Their Jobs

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Marion Barraud for HBR Every day, employees make decisions about whether they are willing to go the extra mile in ways that contribute to their organization’s success. These are important decisions because research shows that when employees are willing to go beyond their formal roles by helping out coworkers, volunteering to take on special assignments, introducing new ideas and work practices, attending non-mandatory meetings, putting in extra hours to complete important projects, and so forth, their companies are more efficient and effective. As a result, a critical task for successful managers is to motivate their employees to engage in these extra-role behaviors, which researchers refer to as “citizenship behaviors.” Although the benefits of citizenship behavior for organizational performance are clear, the implications for employees are more equivocal. On the one hand, many employees perform acts of citizenship because they feel committed to and connected to their peers, supervisors, and organizations. Being a good organizational citizen can also be personally and professionally rewarding because it makes work more meaningful and invigorating and contributes to better performance evaluations. On the other hand, some studies have also shown that employees sometimes feel pressured to be good organizational citizens and may only do so in order to enhance their image. Moreover, going the extra mile can deplete employees’ resources, contributing to stress, work-family conflict, and citizenship fatigue. Recent research further suggests that employees who feel pressured to engage in citizenship may start feeling entitled to act out by engaging in deviant behaviors. Further, while employee citizenship is often associated with positive feelings, it can also impede employees’ ability to get their jobs done, which can undermine their well-being. You and Your Team Series Making Work More Meaningful You’re Never Done Finding Purpose at Work Dan Pontefract The Research We’ve Ignored About Happiness at Work André Spicer and Carl Cederström What to Do When Your Heart Isn’t in Your Work Anymore Andy Molinsky As this work continues, consensus is emerging that citizenship behavior tends to have negative implications when employees go above and beyond at work not because they intrinsically want to, but because they feel that they have to, or when they are unable to carry out their regular job duties and be a good citizen at the same time. Given the importance of citizenship behavior for organizational success, it is important that managers help employees find better ways to go beyond the call of duty in order to help make work more meaningful and less depleting. One potentially effective way of doing this is something we refer to as “citizenship crafting.” The idea of citizenship crafting is based on the concept of job crafting, in which people redesign their work by altering aspects of the job itself (task crafting), the people with whom they work (relationship crafting), and their mindset about their jobs (cognitive crafting) in ways that play to their strengths, motives, and passions. Whereas job crafting captures how employees redesign their formal role at work, citizenship crafting is based on the notion that employees can proactively shape the ways in which they to go beyond the call of duty such that they not only contribute to the organization, but that they are also personally meaningful, rewarding, and consistent with their strengths. While employees are the ones who will craft their citizenship behavior, ideally, they will consider not only their own needs but those of their manager and colleagues. For this reason, we encourage managers to let their employees know what types of citizenship behaviors are most important for their workgroup, while recognizing that asking employees to engage in too much citizenship can be counterproductive. Employees should also be forthright in communicating to their managers what types of citizenship behavior are most consistent with their strengths, motives, and passions. For instance, an introverted engineer who dreads socializing but does not mind pulling the occasional all-nighter might feel less obligated to take part in every social event, knowing that she can be the one to take charge when someone has to stay late to complete a critical project. Or a salesperson who cannot stand to sit through meetings, but relishes opportunities to coach others, can ask to be spared tedious committee work in exchange for making extra time to shadow and informally mentor new recruits. And employees should feel comfortable making a conscious decision to voluntarily assist their colleagues who are appreciative and generous in return, offering the type of assistance that’s not such a burden to provide. Although citizenship crafting is a new idea, prior research indicates that it should benefit employees and managers alike. First, to the extent that jobs contain tasks that align with employees’ intrinsic motives, and are absent of tasks that employees feel forced to complete, job performance tends to be significantly higher; as such, citizenship crafting should result in higher quality and more impactful acts of citizenship. Second, employees who are able to engage in citizenship behaviors that play to their strengths and passions should feel less stressed and worn out from going the extra mile. By realizing that not all good citizens look alike, and allowing employees to tailor their citizenship to fit their unique interests and talents, managers can simultaneously enhance employee well-being and workgroup productivity. Finally, citizenship crafting should reduce the need for managers to rely on extrinsic sticks and carrots to motivate employees to go the extra mile. This should not only conserve financial resources, but given evidence that extrinsic rewards can sometimes undermine intrinsic motivation, citizenship crafting should also help employees stay internally driven to go the extra mile. The bottom line is that managers and employees’ efforts to enhance the meaningfulness of work by redesigning employees’ jobs should not stop where the formal job description ends. Instead, we encourage employees to more thoughtfully and proactively craft their citizenship behavior in ways that their extra-role contributions lead to more meaning and fulfillment while, at the same time, enhancing their firm’s performance.

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14 сентября, 20:02

Find Your Happy Place at Work

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Annie McKee, a senior fellow at the University of Pennsylvania and the author of the book How to Be Happy at Work, tells the story of her journey to happiness—starting with her early job as a caregiver for an elderly couple. Even in later, higher-paying work, McKee saw that pursuing prestige and success for the wrong reasons ruined people’s personal and professional lives. She discusses how misplaced ambition, obsession with money, and fatalism are traps anyone, in any kind of job, can fall for—and how to not let that happen to you. Download this podcast

14 сентября, 16:00

Playing Office Politics Without Selling Your Soul

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Politics is a dirty word. But office politics are unavoidable; as Aristotle noted, “man is by nature a political animal.” Whether you participate in them or not, politics have a big influence on what happens to you, your projects, and your team, so it’s hard to be indifferent to them. To borrow from the political scientist, Harold Laswell, office politics can be understood as the unwritten rules that determine who gets what, when, and how — a promotion, a budget for a project, a say in the boss’s decisions — and who doesn’t. This is why we dislike politics so much: when our fate depends on unwritten rules — especially when they conflict with official, stated rules and make the system seem rigged or at least hypocritical — things are bound to seem arbitrary and unfair. Unsurprisingly, research shows that when employees perceive their workplace as more political, they are less engaged, less productive, and more likely to quit. And yet, a more effective way of dealing with office politics is to engage in them — playing the game, instead of complaining about it. Fortunately, not all politics are bad, and there’s a way to play the game without selling your soul. You and Your Team Series Office Politics Make Your Enemies Your Allies Brian Uzzi and Shannon Dunlap Why We Fight at Work Annie McKee How to Manage a Toxic Employee Amy Gallo Much of what we mean by corporate “culture” provides clues for understanding office politics. Culture is the tapestry of taken-for-granted assumptions, values, beliefs, norms, and habits that determine “the way we do things around here.” Some aspects of culture are desirable traits that organizations are proud to proclaim (“We are a high performance organization.” “We stand for diversity and inclusion.”). Others are not (“We are conflict avoidant.”). The term “politics” is used to describe certain aspects of this dark side of culture. Learning to decode, and speak, this secret language of organizations is pivotal to your career survival and to becoming a major player at work. So what is the difference between good and bad politics? Bad politics are pretty easy to identify. They include the wrangling, maneuvering, sucking up, backstabbing, and rumor mongering people use to advance themselves at the expense of other people or the organization. Bad politics are, at the heart, about promoting oneself by any means necessary. And really bad politics are about being sneaky, perhaps even Machiavellian or immoral, to intentionally harm someone else for personal gain. Good politics, on the other hand, involve advancing one’s interests but not to the neglect of other people’s rights or the organization’s legitimate interests. Good politics include acceptable ways of getting recognition for your contributions, having your ideas taken seriously, and influencing what other people think and what decisions get made. They may also involve gossip about selfish, lazy, or untrustworthy coworkers who undermine the greater good. As long as it also serves a higher purpose, there is nothing wrong with advancing your own interests, too. Common phrases for playing good politics include being savvy, well-networked, or street smart, socializing ideas, and managing stakeholders. Social science has a lot to say about practicing good politics. Research by Gerald Ferris and colleagues indicates that political skills can be broken down into four dimensions: Social astuteness: the ability to read other people and the self-awareness to understand how they see you. Most people think of self-awareness as introspection, but its essence is actually other-awareness; that is, knowing how other people see you and how your behavior impacts them. Interpersonal influence: a convincing ability to affect how and what other people think. This involves, first, understanding them and their preferences and agendas, and then personalizing your message to appeal to their cause. Networking ability: the capacity to form mutually beneficial relationships with a wide range of diverse people. Cynics might say that there is only a one-letter difference between networking and not-working, but having a significant influence often requires a coalition of support. And as the old saying goes, “contacts mean contracts.” Apparent sincerity: seeming to be honest, open, and forthright. It is not enough to just be honest; sincerity is in the eye of the beholder. How honest you think you are is far less important than how honest other people think you are. An accumulation of research shows that high standing on these dimensions enhances job performance, influence, leadership, and advancement. What’s more, these political skills affect your career independent of your personality and intelligence. On the one hand, political skill can compensate for being less outgoing or not being the smartest person in the room. On the other hand, a deficit of political skill can derail otherwise intelligent, honest, and hard-working people. These political skills also spell the difference between an overbearing boss and one who is appreciated for being clear about expectations and direct with feedback. One study found that managers who were less politically savvy had a disengaging impact on employees when they told them what to do and provided them with feedback on their performance. In contrast, employees reporting to more politically skilled managers saw these same behaviors in a much more favorable light. In short, it’s not just what you do as a manager, but how you do it — and the politically astute are better able to manage without coming across as bossy or dictatorial. The key to appearing influential rather than sly, selfish, or manipulative is the apparent sincerity component of political skill. Think Eddie Haskell from the classic TV series, Leave It to Beaver, whose smarmy attempts at ingratiation with parents fooled no one. People will have more trust and confidence in you and will be more willing to consider your ideas to the extent that they do not sense a hidden agenda. And this gets back to the main difference between good and bad politics. Whether washing your hands of politics in high-minded purity or wringing your hands in disgust, choosing not to play the political game at work is not only naïve, but also puts you at a big disadvantage. To paraphrase Plato, the risk of refusing to participate in politics is that the big decisions that affect you wind up being made by those with less experience, less insight, and fewer honorable intentions. There is a way to use the unspoken rules to contribute to the greater good, advance your interests, and maintain your honor and dignity.

14 сентября, 15:00

Research: How the Best School Leaders Create Enduring Change

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Transforming a school is a long, hard, and often lonely task. Some people want change, others don’t, and some simply aren’t prepared to wait for results to show. As a school leader sets off on this journey, how do they know what to do, when to do it, who to listen to, and how to manage critics along the way? Our study of the actions and impact of 411 leaders of UK academies found that only 62 of them managed their turnaround successfully and sustainably transformed their school. While other leaders managed to create a school that looked good while they were there, but then went backwards, these 62 leaders built a school that continued to improve long after they’d left. We call them Architects, because they systematically redesign the school and transform the community it serves. We studied them over eight years, using 64 investment and 24 performance variables to identify what they did, when they did it, and the impact they had. We visited the schools to see first-hand their actions and results. And we interviewed the leaders and their teams to understand the challenges they faced, when they occurred, and how they overcame them. We found the Architects sustainably transformed a school by challenging how it operated, engaging its community, and improving its teaching. They took nine key steps over three years, in a particular order. Each step represented a different building block in the school performance pyramid. But it was a bumpy ride, with 90% almost fired at the end of their second year. Here’s what they did, and how they did it. The school performance pyramid Building Block 1—Challenge the system: stay for at least 5 years. The first step is to develop a 10-year plan, clearly showing how you aim to transform the school and the community it serves. This shows everyone you’re committed to the long haul — like your students and their families — and are prepared to make tough decisions and manage their consequences. As one Architect said, “No one trusts you at the beginning. They’ve been let down too many times by too many people. That’s why I moved to the local area — to show I was committed to the school, the community and to making it work. I wasn’t going to walk away halfway through, like the other Heads before me.” In our study, it took at least five years to engage a school’s community, change its culture and improve its teaching. The most successful leaders stayed for the whole of this journey, and often longer, with test scores increasing by an impressive 45-50 percentage points in the first eight years after they took over. This doubled, or even tripled, the number of students graduating with five or more grade Cs, increasing their projected lifetime earnings by £140,000. Building Block 2—Teach everyone: expel less than 3% of students. Once you’ve committed to the journey, then you need to commit to the community. You can’t just kick kids out to improve test scores. You need to show parents and students you want to help them. Show you want to fix the problem, not give it to someone else. This doesn’t mean you can ignore poor behavior, be nice to everyone, and expect them to like you. But you should only expel students as a last resort — when everything else has failed. In our study, the most successful leaders suspended 10-15% students in the first three years after they arrived, but expelled less than 3%. As one Architect told us, “If you start kicking kids out as soon as you arrive, then your community wonders if you’re trying to help or get rid of them. Instead of expelling students and passing the problem to someone else, we created multiple pathways inside our school — so we could manage and improve behavior ourselves.” Building Block 3—Teach for longer: from ages 5 to 18. Of all the changes made by the leaders in our study, teaching kids for longer was the one with the most consistent impact. It took five years to see results, but test scores then suddenly jumped by nine percentage points and continued to improve by five percentage points each year after that. Teaching kids from a younger age meant the schools could embed the right behaviors earlier on, teach the kids in a consistent way for longer (for 13 years, rather than 5) and create valuable resources (as revenues increased by 30-40%). And teaching them up to age 18 gave the younger kids something to aim for. As another Architect explained, “Setting up a sixth form was one of the best things we did — even though it still loses money! Last year, 51% of our sixth formers went to university — compared with only 27% four years ago. This sends a great message to our younger students, and we use the older ones to mentor them as they progress through the school.” (In the UK, “sixth form” is a final, sometimes optional phase of secondary education in which students prepare for college entry exams.) Building block 4—Challenge the staff: change 30-50%.  Now it’s time to start changing how the school works. That usually means changing staff. “Too many Heads duck the issue of firing poor teachers,” one Architect told us. “But you have to ask yourself: who are you here to help — the students or the teachers? I believe you let down 30 students a year by protecting one incompetent teacher. Once you start thinking like that, the tough decisions become easier to take.” In our study, the most successful leaders changed 30-50% of staff in the first 3 years by clarifying teaching and marking targets, displaying real-time performance (such as attendance, behavior and test scores) on video screens in corridors and staff rooms, and managing out poor performers. Typically, a half of this change came from recruiting new staff to resource growth, a quarter from reducing the number of supply teachers and a quarter from managing out poor performers. Leaders who changed less than 30% of staff had little impact, while more than 50% created too much disruption. As another Architect told us, “The culture in the school suddenly tipped when we had 30% new staff, people who were serious about trying to transform the school and the community it serves.” Building block 5 — Engage students: keep 95% in class. It’s pretty simple really. You can’t teach your kids if they’re not there — or don’t care. However, it’s easier said than done. As one Architect explained, “Half our students live in poverty, in communities that have been let down by their schools for generations. That’s their starting point, so you can see why they’re not interested. But, after two years of hard work, things suddenly started to change. They started believing in themselves – and that we could help them. Instead of saying ‘there’s no point’ or ‘I can’t be bothered’, they’re now saying ‘I aced that test’ or ‘I’m going to be a doctor’.” The turning point in the schools we studied occurred when at least 95% students attended all their classes. And the most successful leaders achieved this in the first 3 years—by bringing in external speakers to inspire students, asking students to evaluate teachers, so they felt part of the process, and getting older students mentor the younger ones, so they had someone to look up to. Building Block 6 — Challenge the board: manage 30-60% of them. It doesn’t matter what your governors say, they all want test scores to improve as quickly as possible. (In the UK system, “governors” are the school’s board of directors.) They’ll give you one year’s grace, but then they want some hard evidence that the school is improving. If you can’t do this, then you’re often out of a job. But the most effective, most sustainable actions take three years to show results. So, how can you show you’re on the right track when test scores are still the same? In our study, the best early signs of sustained improvement were teaching students from ages 5 to 18, having 95% of students in class, 50% of parents at parents’ evenings and 70% of staff with no absence. Leaders who achieved all this in the first three years subsequently improved test scores by 45-50% in the following six years. However, 90% of them were almost fired at the end of the second year, as test scores hadn’t improved fast enough. They survived this challenge by moving the discussion away from this year’s test scores to the progression of students aged 11 to 13. Architect leaders can also emphasize other metrics, such as more students attending classes, more parents coming to parents’ evenings, and fewer staff member absences. As one Architect told us, “Too many boards simply fire their Heads when there’s a problem. Instead, they need to make sure the Head is around long enough to have an impact and help them make the right decisions along the way.” A strong, healthy board was critical to the success of all the schools in our study, with the best leaders challenged by 30-60% of governors on key decisions in their first three years. Poor decisions were made if the challenge was less than 30%, and the leader lost control of the school if the challenge was greater than 60%. It’s important to take time to get to know your governors, build relationships with them and understand their needs—so they trust you and understand why you’re not focusing on this year’s test scores. Their concerns are legitimate and need to be managed. Use their challenge to help improve decision making—to better explain why decisions are made and the impact they’ll have. Building Block 7 — Engage parents: have 50% at parents’ evenings. You need to start engaging your parents right from the start, but it can take a while to happen. This is particularly true in rural or coastal schools in the UK, where people are less mobile and parents and grandparents may have attended the same school. As one Architect explained, “Our parents and grandparents had very strong views about the school based on what it did for them. It took a long time to change these views. But, if we hadn’t, then all our hard work would have disappeared when our students went home.” Attendance at parents’ night was as low as 10% when many leaders first arrived — but the most successful ones increased it to more than 50% by the end of the third year. They did this by making it a social event with food, drink, and student performances, offering education and support services such as IT skills and career advice, and providing similar services at home through outreach programs. Building block 8 — Engage staff: 70% with no absence. Engaging your staff also takes time. “You walk into a very stressful environment,” one Architect explained. “Your staff have just been told they’ve failed and you’re here to sort them out. You need to convince them that you’re here to help. That their jobs will get easier and become more fulfilling if they work with you, rather than against you. In the year before I took over, we had 14 staff on long-term sick leave and only 20% of staff with no absence. Now it’s up at 90% — that’s a big shift in three years!” In our study, the most successful schools had more than 70% staff with no absence by the end of the third year. They did this by reducing the number of supply teachers, asking teachers to evaluate each other (through informal observations), team teaching, visiting other schools (to see how they worked) and simplifying processes to reduce administration and paperwork. Building Block 9 — Teach better: 100% capable staff. Anyone can fire staff. The real question is: How do you replace them? “Good teachers don’t apply to work in failing schools in deprived areas,” one Architect told us. “They want to work in good schools with engaged students. So we contacted the good schools near us who’d recently advertised jobs and had more applicants than places. We asked them who else they’d employ, if they could. We then contacted these teachers and asked them to join us! We got some of our best teachers this way. Teachers who didn’t apply to work with us, but love being part of what we’re doing.” The most successful schools in our study all had 100% capable staff by the end of the third year. They achieved this by recruiting capable teachers, increasing informal teaching observations (through mentoring programs within and across subjects), and sharing best practices within and across schools. As another Architect said, “Too many poor teachers are simply moved from one school to another. We need to develop them, rather than simply passing them on to someone else.” Building the pyramid in practice Pick six building blocks out of nine: the 90/60 principle. We found it wasn’t always possible to put all nine building blocks in place in the first three years, no matter how hard you try. Sometimes, the board won’t support you, parents won’t engage with you, or you can’t find the right teachers. The good news is our research clearly shows there’s a tipping point in each transformation when six of the building blocks are in place — not all nine. The last three blocks help to sustain the transformation, but there are diminishing returns. Leaders who put all nine blocks in place in three years increased test scores by 50 percentage points in the following five years. But leaders who put in six blocks increased results by 45 percentage points. In other words, test scores increased by seven percentage points for each of the first six blocks put in place, but only by one percentage point for the three after that. So, ask yourself: which are the six easiest, or most urgent, blocks to put in place first? And which can wait until later? If you can’t engage parents, then engage students. If you can’t engage students, then teach the ones you can, better and for longer. Find the right pattern of actions for your school; see the pyramid as a menu, rather than a recipe. Select, mix, and match the ingredients that work best for you. Take your time. School leaders are often under huge pressure to turn the school around quickly, but sustainable transformation takes time. In our study, the schools that improved the most in the long term didn’t see test score improvements until year three, and continued to get better through year five and beyond. You need to explain this to your board, so you don’t get fired along the way. Fast improvements can only be achieved by expelling poor performing students or attracting better ones from other schools. And neither solution benefits the community in the long run. Instead, try to put 6 of the 9 blocks in place in the first three years. But, don’t worry if it takes longer — the improvement won’t be as fast, but it will happen. And it will be sustainable.  No single action or combination of actions is more significant than any other. Eighty percent of the best leaders stayed at the school for more than five years – but not all of them. And all the best schools taught kids from ages 5 to 18 – but so did 40% of the poor ones. Rather than searching for a silver bullet, put as many blocks in place as you can. Remember, the number is more important than the type.

14 сентября, 14:00

Severe Weather Threatens Businesses. It’s Time to Measure and Disclose the Risks

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Photo by Annie Spratt The weather affects consumers’ behavior in terms of what products they buy, where they buy them, and in what quantity. Even if a business knows how normal weather affects its earnings, unexpected abnormal weather events present their own risks. Research shows that abnormal weather disrupts the operating and financial performance of 70% of businesses worldwide.  When weather conditions are on average adverse over days, weeks, or entire seasons, shortfalls in sales cause reduced cash flows and can lead to financial distress and business failure. These disruptions add up. Every year, weather variability is estimated to cost $630 billion for the U.S. alone, or 3.5% of GDP. And yet, this aggregate number adds up positive and negative weather impacts, and masks the true extent to which abnormal weather harms individual businesses operating in utilities, retail, food processing, transportation, and construction, among other industries. In the apparel sector, for instance, the unusually warm winter temperatures across Europe and the U.S. last year triggered shortfalls in sales, store closures, and job cuts. In the UK, no less than 18 weather-related profit warnings were issued by industry leaders. Small businesses are even more vulnerable. Two-thirds of small business managers declare to have been negatively affected by weather over the last three years. Abnormal weather is the difference between observed weather and its “normal value,” which is typically calculated using the 30-year average. With climate change, the frequency and the intensity of abnormal weather patterns have dramatically increased, and the shift to warmer temperatures will only further this phenomenon. Financial losses caused by adverse weather that did not seem material enough even a decade ago now must be closely monitored and managed with weather-based financial instruments. These instruments are not new. They were introduced in 1997 in the energy sector, to automatically compensate investors for financial losses when the weather index exceeds a predefined level. They work like any other traditional hedging instruments except that the index on which they are settled is a weather index. The index can be average temperature thresholds, rainfall levels, wind speeds or any combination of variables that represent the risk to which the business is exposed. The payment is triggered by and linked to the weather index, not the actual financial loss incurred by the business. However, efficient risk management can only take place on the condition that the risks are defined. This boils down to writing a relationship between a financial variable (sales, volume, profits or margins) and a weather index (temperature, precipitation, wind speed, etc. or any combination). Existing research has been inadequate to provide managers with a clear and actionable understanding of their exposure to weather variability. One reason has been a lack of access to the sort of reliable historical weather data needed to model individual business’ exposure to weather risk. This is no longer the case. Big data and cloud computing have made it possible to store and manage the enormous amounts of weather data required to evaluate weather risks anywhere in the world, price and deliver tailor-made hedging products through internet platforms in a timeframe acceptable to customers and cover sellers. Our research has focused on how businesses can manage weather-related risks, including estimating potential losses and their probability, and potentially using financial instruments to hedge against that risk. Drawing upon the UK’s retail sectors for empirical evidence, we developed a methodology to assess and hedge the exposure of sales to weather risks. In the process, we found that weather has a greater impact on sales than previously estimated. And, perhaps unsurprisingly, the risks vary considerably between industries. Finally, our estimates suggest that hedging against weather risk could help businesses avoid the very real possibility of weather-related financial distress. Today, weather risk management is still in its early days. The majority of businesses do not hedge against weather risks, nor do they have an accurate view on how much is at risk. Accounting standards on disclosures do not help as weather is not explicitly listed in the risks for which a sensitivity analysis must be provided to investors. The Task Force on Climate related Disclosures (TFCD) chaired by Michael Bloomberg has just released recommendations to overcome this issue. Disclosing climate change risks is not just about reporting on your energy usage and carbon emissions. Climate change is making severe weather more common, and reporting to investors about how climate affects the business will require companies to estimate and report on the risks they face from the weather.

14 сентября, 13:00

How to Work from Home When You Have Kids

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Finally: You’ve got the chance to work remotely. Maybe it’s due to the structure of your new job, or organization; maybe it’s part of that new corporate work/life initiative; or maybe it’s the result of months of lobbying the higher-ups. Regardless, you’ve won the prize that many — or most — working parents dream of. No commute, no office distractions, no one looking disapprovingly at you when you duck out of the office for a pediatrician’s appointment. Just you, a comfortable home office, and the opportunity to spend more time with your kids. Now comes the hard part. For many working parents and for the organizations that employ them, remote work is a go-to move for increasing work/life balance, productivity, and retention. It’s become part of the fabric of modern professional life — and for good reason: the benefits remote work creates at both a company and personal level are many and clear. Those benefits, however, come with an equivalent number of challenges — particularly at the personal level. How do you stay on the senior leader radar screen when not physically in the office? In a 24-7, always-on work culture, how do you avoid the perception — particularly amongst more senior or traditionally-minded colleagues — that you’re taking the easy path or have chosen the “parent track”? How do you establish constructive workplace relationships with people you see infrequently? How do avoid the distractions and interruptions that can compromise your performance? Savvy working parents know that it takes more than a home office to make remote work work for their organizations, careers, and families: It takes conscious effort and some specific, effective tactics — which you can start using today. Frame it in business terms. Regardless of the actual reason, successful remote-working parents always present the arrangement in a commercial, good-for-business frame. “Eliminating my commute frees up seven more hours per week I can spend reaching out to clients,” or “my being in Chicago allows the company to cover the Midwest markets efficiently and at no additional cost” are more compelling, inarguable statements than “I wanted to spend more time at home.” Present yourself as aligned to revenues and your set-up as a corporate asset, and you’ll find even the most skeptical colleagues become supportive. You and Your Team Series Remote Work How to Convince Your Boss to Let You Work from Home Rebecca Knight What Everyone Should Know about Running Virtual Meetings Paul Axtell How to Work Remotely Without Losing Motivation Alison Bukholtz Keep a firm routine. After years of office life, working remotely can feel wonderfully flexible: Get to your desk at 9:30 AM in your pajamas! Feed the baby while on the conference call! But that same lack of traditional workplace boundaries has the potential to erode your motivation and productivity (are you really at your best getting a late start, in sweatpants?). Use your remote work setup to create flexibility that’s meaningful to you — to do school drop-off, for example, or to get to soccer games — but keep a firm schedule and habits, too. Start work at the same time each day. Wear what makes you feel sharp and confident. Limit breaks to the same length and frequency as in the office. With a solid routine and the right “guardrails” in place, you’ll maximize the feeling of being professional and in control. Demonstrate your commitment. What your colleagues can’t see, they can’t appreciate. When working remotely, take care to provide small, clear signals that your commitment and work ethic are unwavering. Key tips: Send emails first thing in the morning as a means of announcing that you’re already up and at it. Let colleagues know that you’ve read their emails and documents carefully: “Brad, Thanks for this — the data on page 6 will be helpful in our quarterly review process.” Take calls in the early morning or late at night as a favor to coworkers in other time zones. These small tactics will let you appear eager, committed, and hardworking — good attributes at any level. Control the controllables. Pay attention to your physical work environment — and set it up to help you be, and be seen as, professional, focused, and committed. Find a way to ensure privacy during critical phone calls — even if that means putting a lock on your office door so your toddler can’t burst in. Create a professional backdrop for video calls so that no one has to see your kids’ ice hockey equipment in the background when you’re discussing the quarterly marketing report. Taking charge of these small logistics enhances your working environment and your professional image. Do a technology audit. Smart use of technology can maximize your efficiency and your connection to colleagues. If your home printer isn’t as fast as those in HQ, or you’re emailing and calling while everyone else at the office is on Slack, you’re missing real opportunity. Partner with the IT team, or with one of the tech-savvy millennials in your department, to help you find and start using the best technological tools. Don’t know the best apps for staying in touch and “in the flow” with your company, industry, or function? Ask around to find out. Allocate 10% of your time to relationship-building. In a regular office environment, relationships occur organically — through conversations at the water cooler, in the hallway, at lunch. But when you’re working remotely, you will have to create those “connection opportunities” yourself. Call a colleague to check in on their weekend. Email a mentee to ask how her big presentation went. Ensuring that you have regular, informal touch points with everyone on the team — and throughout the organization — will pay big long-term dividends. Be positively unpredictable. Even if your remote-work arrangement allows for five days a week at home, get into the office every few weeks. Show up for the annual marketing review even if there’s a dial-in. Be on hand the week the new recruits start so that you can help mentor and onboard them. You don’t have to be present all the time to be present visibly — and when it matters. Sell your boss. In most organizations, remote work is seen as an employee benefit — and it’s always a good idea to share what benefits it’s bringing to your boss and the organization in return. So provide your manager with regular, positive reminders as to why your remote arrangement is working and appreciated. “Working from home has let me spend more time on client work, my sell-through rate is up 10% this year — and the fact that the company is providing this flexibility makes me want to be on this team for the long term.” Explain it to your kids. Children naturally have difficulty understanding the world of work — what it consists of, what it requires, and what it means. But even very small children can hear that “Mommy works hard all week at the office because I like it, and because it lets me earn money to take care of our family. On Fridays, I still work, but from home so that I can take you to school and we can do fun things together.” In doing so, you transmit the values of hard work and responsibility — while showing your commitment and love. Big picture: Working remotely is a distinct professional skill. As with any other professional skill — like public speaking, or negotiations, or financial analysis — it’s built over time, and through experience, personal reflection, desire for continual improvement, and a lot of hard work. And for any working parent who wants to drive organizational performance, succeed on the job, and raise terrific kids, it’s a skill well worth developing.

14 сентября, 12:05

Sales Bonuses Are Supposed to Motivate, So Don’t Waste Them on Easy Targets

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Most companies pay salespeople a combination of a salary, a commission, and a bonus for hitting a quota, putting a portion of their pay at risk.  The belief is that at-risk pay motivates salespeople to work hard and direct effort towards sales activities that encourage achievement of sales goals. In reality, however, many of the commissions and bonuses companies pay salespeople aren’t truly at risk–and as a result, the company may be spending money in ways that produce little in the way of extra effort or motivation. Pay mix – the ratio of fixed pay (base salary) to variable pay (incentive or at-risk pay) – is commonly used to gauge the extent to which a sales compensation plan motivates salespeople to drive current results. A 60:40 pay mix is the average for U.S. sales forces, but the mix varies across industries and sales roles. A very aggressive mix (say 0:100) is common in industries such as insurance that use independent contractors as sales agents. A less aggressive mix (say 75:25) is typical in industries such as pharmaceuticals that want salespeople to focus on customer education, and for technical sales jobs that have a large problem-solving component. Within an industry or company, pay mix often varies across sales roles. One technology company targeted a 50:50 pay mix for salespeople in new customer acquisition (CA) roles, but a 70:30 mix for salespeople in account management (AM) roles. This encouraged the CAs to “hunt,” while the AMs focused on cultivating relationships with existing customers. Generally, it’s believed that an aggressive pay mix (i.e. a high second number) motivates salespeople to drive short-term results. But these planned pay mixes can be a misleading indicator of the extent to which pay is at risk and tied to salespeople’s current performance. This is because frequently, a large percentage of sales are “free” to the salesperson and will be realized without current sales effort. Free sales come in two forms. Franchise sales have nothing to do with salespeople. Customers may buy from a firm because the company has superior products, great branding, effective digital marketing or favorable pricing. Franchise sales are increasing in many markets as the internet makes customers more informed, connected and socially-influenced, and therefore less dependent on salespeople when making buying decisions. Carryover sales are attributed to a salesperson’s past effort and occur without new sales activity. Examples include sales from long-term contracts and sales from customers who purchase out of loyalty, habit, or desire to avoid switching costs. Products such as chronic care medications have high carryover. Other products, such as many types of capital equipment, have very low carryover. Free sales are not free to the company; they require investment in areas such as product development, marketing and previous sales effort. In the short term, however, these sales are free to the salesperson. Consequently, incentives paid on free sales are a hidden salary. They are not at risk and therefore do little to truly motivate sales effort. To understand the extent to which a sales force pay plan motivates current performance, look at a true pay mix by treating incentives earned on free sales as fixed, not variable pay. For example, a company that sold implantable medical devices to surgeons sought to reinforce a “pay-for-performance” culture with a commission-based incentive plan and a 43:57 targeted pay mix. Analyzing the numbers, they recognized that carryover sales were significant. Once surgeons became comfortable using a particular device, they were unlikely to switch to a competitor’s product, even if the salesperson became less attentive. After accounting for the portion of commissions linked to carryover sales, the company estimated true pay mix to be 77:23. The planned pay mix greatly overstated the extent to which pay was linked to salespeople’s current performance. Companies can address this problem by adjusting incentive payout formulas. One strategy is to set a payout threshold so no incentives get paid until a certain sales level or percentage of quota is achieved. Another strategy is to accelerate the commission rate for increasing levels of sales or for sales above quota. For example, an industrial packaging company targeted a sales force pay mix of 75:25 and thought this gave salespeople strong incentive to sell. However, more than two-thirds of the company’s annual revenues were driven by multiyear contracts customers signed in prior years. Two-thirds of the 25% earned as incentive was hidden salary, making the true pay mix 92:8.  A change to the incentive payout formula could remedy the situation. If salespeople had to exceed the free sales level (say 70% of quota) before they started earning incentives, they would likely work harder to drive new sales. Further, accelerating the incentive payout rate as quota achievement grew to 100% and beyond could motivate salespeople to achieve even higher performance. The threshold and accelerators could help align the true pay mix with the planned mix. If salespeople realize they don’t have to work for a large portion of their incentive pay, hidden salary weakens the motivational power of the incentive. If salespeople believe all incentive pay is the result of their recent effort (even when it is not), hidden salary has less impact. But even in these situations, companies need to recognize hidden salary for what it is. True pay mix, not planned pay mix, best reflects the extent to which sales compensation encourages salespeople to drive current sales results.

13 сентября, 15:33

As Your Company Evolves, What Happens to Employees Who Don’t?

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When my company was young, we worked with two contractors who played key roles in client services. As we grew and defined our core values — singling out accountability as our top priority — it became clear that these contractors did not meet our newly defined standards. They were often difficult to catch on the phone, noncommittal about deadlines, and understandably had more of an individual, not team-based, approach to their work. Because they were such strong performers and clients liked working with them, I tolerated their behavior. However, when other team members pointed out the double standard in expectations, I realized that I had let the situation go on for too long, inadvertently placing our managers in a no-win situation. Ultimately, we decided to cut ties with the contractors — not because their work wasn’t strong, but because they weren’t aligned with our values. When companies evolve at a rapid pace, often people cannot keep up. Some individuals who fit our company in its infancy became a weaker fit over time. They may have had difficulty keeping up with our company’s growth rate and the requirements of their evolving roles. Often, I doubled down on an untenable position to keep an employee on because I didn’t understand how much harm the wrong fit could cause — especially when a person had been with us for so long. How We Define “Fit” Companies turn down talented people every day when the fit isn’t right. According to the Jobvite Recruiter Nation Report 2016, 60% of recruiters say culture fit is of utmost importance in hiring decisions. The wrong fit can be disastrous, but when the employee fits the role perfectly, the whole team benefits. Much of the dialogue around company fit assumes that it’s a concrete concept: Round pegs go in round holes and, once they’ve found the right spot, stay there. Unfortunately, it’s not that simple. What if a round peg develops sharp corners, or a round hole expands over time? People and the needs they fulfill evolve constantly, especially in small companies that grow very quickly. A good fit isn’t just about putting the right person in the right seat, but about putting them there at the right time. One of the things that separates good leaders from great ones is the ability to recognize when those three factors are out of alignment and to act upon that information, particularly in the case of a loyal, long-term employee. How to Take Control of Fit You don’t have to sit on the sidelines and watch your company’s culture evolve away from your best employees. With the right processes in place to hire and develop talent, you can retain your high performers without sacrificing your culture. These three strategies can help you create a positive environment and develop employees who prosper within it. Implement personality tests to discover purpose. No test reveals everything about a person, but learning about what drives someone can help you see where they would fit best in your company. One of the tests we use at Acceleration Partners is designed to find a person’s “why” — their primary purpose in business and life. When we first started giving these personality tests, we discovered one manager had hired an entire team of people with purposes identical to her own. Unintentional bias in the hiring process had created a team with overlapping strengths and weaknesses, and at the root of this was a reliance on trust over a holistic view of the person’s ability to execute in a specific role. To avoid this situation, we now exercise caution when teammates advocate for candidates who score alike on personality tests. While there are no right or wrong types, having too many people with similar personalities tends to lead to problems and groupthink. Distributing different personality types across hiring committees is a good way to glean more-accurate assessments of candidates and limit the influence of personal bias. Rethink employee development and exits. Losing an employee is rarely positive, but the exit process can be respectful and open. Rather than feeling personally slighted by a departure, recognize that the best employees are not uniquely capable individuals — just the right people in the right seats at the right time. This situation occurs frequently in professional sports. The structure of a team shifts, and a longtime player no longer fits the mold of the new organization or the system of a new coach. Both the player and the coaches recognize the change in fit, the player leaves for a new team, the organization moves in a different direction, and everyone is amicable about the changes. Instead of treating employee departures as taboo, we embrace a concept we call mindful transition. We encourage employees to discuss their goals and plans for the future openly with their managers, even if those plans don’t mesh with their current roles or don’t involve staying with the company. Most employees leave because they feel their opportunities for growth are limited, according to iCIMS. So encouraging honest conversations helps us identify areas of opportunity we would have otherwise missed and plan for the future if an employee doesn’t intend to stay over the long term. Dealing with departures using our mindful transition process also spreads our company’s influence to other industries. When a longtime employee wanted to take on a role we didn’t have at the time, we helped him transition to a different company that we knew could use his skills. If we had tried to force him to continue with us, he would have been bored and unmotivated. Facilitating his departure not only left everyone feeling positive but also set up an ambassador for our culture at another company and added to a strong pool of alumni advocating for us in the marketplace. Recognize that experience doesn’t equal fit. According to Mark Murphy, founder and CEO of Leadership IQ, 89% of new hire failures are due to attitude, while just 11% are due to a lack of skill. All candidates need a baseline of technical skills to succeed, but the best candidates are well-rounded people whose intrinsic characteristics align organically with your company’s values. One of our core values is “excel and improve,” so we seek out candidates who embrace continual improvement and have demonstrated a commitment to lifelong learning. If they are self-aware and can demonstrate that they love learning new things, we can train them tactically on the ins and outs of the job. Many companies want to hire candidates who can come in and immediately do the job. The appeal is understandable: Experienced hires come in with the relevant knowledge and experience for the position you need filled now. But although they typically start in their positions with the necessary skills, they don’t have much growth potential. Eventually, as the company and demands grow, the needs of the positions overtake them. In contrast, less-experienced but high-aptitude hires may need more training feel and may be a bit overwhelmed in the beginning, but they have the raw ability and desire to grow with your company and adapt to the needs of the position. In my experience, the people who personify our core values outperform the ones who possess more experience but lack the right raw ability or makeup. Moreover, candidates who align with our core values actually have a higher ceiling when it comes to professional growth. Although other candidates may show up with strong experience in our industry, they don’t necessarily share our values. Leaving interviews solely up to managers who may feel pressure to get positions filled fast doesn’t always produce good results. In our organization, we take this responsibility out of their hands with a cross-functional hiring committee that helps decide what’s best for the company rather than the specific department or manager. We assign people who are comfortable challenging each other’s assumptions to hiring committees, and we always include someone who doesn’t have a stake in the outcome. Interviews revolve around the specific job requirements, in addition to the candidate’s personality. Focus too heavily on one or the other, and you may end up with someone who you really like but who can’t do the job, or someone who executes tasks well but doesn’t contribute to your culture or develop as time goes on. Fit between employee and company is not a one-time check on a list of hiring criteria; it’s a constantly evolving relationship that changes to meet the needs of the time. Don’t leave your company culture and employee fit to chance. Embrace the challenge: Seek out candidates who embody your values, and learn to let go when a fit that once was good begins to create problems.