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Getting E-Learning Right – Building Adaptive E-Learning Programs

11/12/2014

LinkedIne-learningconceptHuman beings, unless they engage in the careful, systematic work and thinking that is the backbone of modern psychology, basically understand others by thinking others are like themselves. We project our inner experience on those around us. Our internal experience is what is most readily available to us. It makes most sense to us. Believing that others experience things the same way we do follows straight forwardly.

Modern psychology has shown that this “others are like me” approach is in many ways successful at letting us get on with the business of daily life. The only time this approach gets us into trouble is when we interact extensively with another person. During such complex, lengthy interactions, the other person will communicate and behave in ways that may or may not line up with how we think they will. When the person does not, we learn that this person experiences things internally in ways that are different from our own.

So how is this relevant to learning? Well, educators do the same thing. They project their learning styles onto their students. If I want to know an educator’s learning style, I look at the way they teach. Educators teach the way they personally learn. Unfortunately, not all of their students learn share their personal learning style.

E-learning most do better than this. An e-learning program can potentially reach thousands of individuals. So how we, as e-learning designers and creators, get around this normal human tendency?

The best way is to use a model of learning that provides you with an explicit design framework that keeps you from doing this. I use one of the following two models in my own work.

David Kolb’s learning style model [1]

LinkedInDavidKolbLearningStyles

I use Kolb’s model as my guiding framework whenever I am designing e-learning programs that will be used by individuals. I explicitly include elements in the program that cover all 4 kinds of learning. I started to do this years ago, when building conventional learning programs. My practice simply migrated to my e-learning design work.

In some ways, this is a “shotgun” approach. But since I have been doing this, my learning material received far higher ratings it did in the days when I simply projected my personal learning style onto people. I used to design learning material in a way that stressed my personal “concluding / learning from the experience learning (Abstract Conceptualization)” learning style preference. I am no longer this naïve[2].

My Development Styles Model [3]

LinkedInDSmodel

I use the Development Styles framework whenever I am designing professional development programs that will involve individuals interacting in groups. I explicitly include activities that allow participants to engage in all four of the behaviors (Clarifies Verbally, Clarifies Reflectively, Validates Against Experience, Validates Through Consistency) that define these 4 Development Styles. Each person gets an opportunity to do what works best for that individual as a learner. I use this model because professional development normally includes know how to and know why elements as well as know that[4] material.

My goal in developing learning material is to maximize the “skill transfer back to the job” for each individual. Without the ability to “do what I am learning in a way that makes sense to me”, individuals may not transfer their learning successfully. If my professional development designs were limited to my personal development style – Conceptual Active, I run the risk of missing this goal for all those participants whose personal development style is different from my own

My goal in all my learning design and development work, whether or the web or for face to face programs, is first to create a great learning opportunity. But that is only a means to an end. My real goal is to get my participants to take it back to the job, even if that job is simply the day to day business of living life.

The Future of E-Learning – Dynamic Adaptive Presentation of Content

Just taking this simple step – consciously designing and including material that covers all of the learning dimensions in one of these two models will go a long way to increase the effectiveness of your e-learning programs. But this is only a first step. Whenever we have the budget, we need to do more, particularly if our learning objective is changing behavior on the job – whether that job is income oriented or just living day to day life.

We need to structure our e-learning content delivery in a way that explicitly matches each e-learner’s learning style. When we do that, we achieve the following.

  1. We maximize this person’s engagement during the time they are working on the program, which will lead to improved speed and ease of learning.
  1. We deepen retention, meaning that it will be easier for this person to take what they are learning and apply it back on the job.
  1. We increase their fun and enjoyment during the learning experience, energizing them to work through the strangeness that always accompanies learning new ways of doing things, and leaving old ones behind.

Determining a person’s learning style is not that hard to do. By using one of the models above, presenting participants with a few short scenarios based on it, and asking them to indicate which choices best describes how they like to learn, we can rapidly determine that individual’s learning style.

Once we know that, with a bit of background programming, we can present our learning material in a way that has been explicitly created to match this person’s learning style.

Of course, the cost during the development phase of our work will increase somewhat. But if we are already using a “shotgun” approach in our e-learning design and development, this increase will not be dramatic.

The day will come when this way of delivering e-learning will become the norm. It maximizes the value of the learning experience for the learning. This is learner centric, rather than educator centric learning. Educators will stop projecting their personal learning style onto their e-learning program participants, and become true learner-centric educators.

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[1] McLeod, S. A. (2010). Kolb – Learning Styles. Retrieved from http://www.simplypsychology.org/learning-kolb.html. Kolb’s model has been available since 1984. It is widely used and referred to. Google “Kolb learning styles” to find thousands of Internet references.

[2] See my voice over presentation on making E-Learning content choices or the PDF version of the supporting paper for more on this. Both are available on the Internet.

 

[3] Roelf Woldring “Development Styles: A Competency Styles Skill Development Workbook” available through contacting me or from Amazon.com.

[4] See my previous writing on the differences between knowing that, know how to and knowing why – and how they impact developing learning programs on Linked In or on my website.

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E-Learning and Knowing – Or Why the Classroom Lecturer Will Rapidly Become Extinct?

11/06/2014

Let’s really simplify a complex topic – how we as human beings know – by creating a model of knowing that says there 3 ways that we know.

We Know That – this is the world of facts and ideas. We know these things as chunks of knowledge we can repeat and share with others. This kind of knowing is tested in the academic world by asking us to respond to multiple choice questions and questions that require short essay answers.

We Know How To – this is the world of skills and techniques. It ranges from the simple (e.g. how to add 2 plus 2) – to the complex (e.g. how to lead an organization through a period of profound change).

We Know Why – this is the world of valued consequences and moral understanding. It is as important for giving us insight into why NOT to do things as it is for helping motivate us to do things. It also ranges from the simple (e.g. why not to touch the hot stove) to the complex (e.g. why not to abuse those we love and those we live with). It requires us to have as much insight into consequences as it does into facts and techniques. (1)

Can e-learning address all three kinds of knowing? The simple answer is yes. The more thoughtful one is yes, but how, and with what price and effort?

Here is what I believe.

  1. With 25 years, all Know That learning will be delivered via e-learning.

Today, we can already build e-learning programs that rapidly figure out the learning style of the person currently using the program, and dynamically adapt the delivery of learning material to best suit that person’s learning style. It is not the norm yet, but it soon will be.

Once that starts to happen, the classroom lecturer will become extinct. Unfortunately, practically all university professors are still not really clear about this. But then, the non-adaptive ones, who depend on the traditional power structure of the classroom and the punitive power of exams, deserve to become extinct. Bored students, who only pay attention because of the power of these exams, will cheer their demise.

  1. Know How To learning is a more difficult issue. The answer is yes, but ….

We are already seeing the spread of how to e-learning programs in the areas of programming and computer use. As the technology evolving in the computer gaming world becomes more readily available, we will see this technology spread to how to e-learning. Computer simulated application environments will become the norm in how to e-learning.

Real time computer simulated environments coupled with responsive programming that dynamically adapts what is presented to the learner based on the learner’s immediate performance in a simulation are not simple to create. They require combining the skills that make movies with the skills that program computers. It will take talent and money to develop such e-learning programs. They will have to be used by hundreds, even thousands and tens of thousands of users, to create reasonable per delivery unit costs. That can only begin to happen now that the Internet as a delivery tool has become socially pervasive.

Flight simulators are an already existing example of where this kind of e-learning is going. Computer games, whose users rapidly learn the in’s and out’s of the game environment, show us what is possible. All that is missing is teams of creative educators and gaming programmers with the budgets to make this promise real.

Some how to learning will never migrate to e-learning. Skills and competencies involving physical motor skills will always require real world training. Surgery is an example. The perquisite know that learning will be delivered via e-learning. That includes learning the “steps” involved in the applying the skill. But the skill of surgery will be acquired through actually doing it in a closely supervised environment. This will be also be true of other complex skills that combine cognitive knowing with physical doing. Such learning will always require a dynamic “in the moment mentoring / coaching component” that depends a great deal on the personal relationship between learner and teacher.

Instead, once perquisite know that and know how to learning is delivered by e-learning, the role of mentor / coach in such learning will become more dynamic. Guiding learners who already know a great deal is a different job from guiding learners who are acquiring know that and basic know how to learning at the same time as they are developing physical doing skills. The power dynamics between learner and mentor / coach will shift dramatically. Instead of being role based, successful mentor-coaches in this new learning world will be individuals who have great self and other insight. They will also have the personal confidence that comes having “done it” in a large variety of situations. The importance of role based dynamics, buffered by the traditional structure of universities and the like, will fade.

  1. Know why learning is not straight forward. The answer is yes, but involves sorting out complex issues about who ….

Know why learning requires that the “learner” respect the “teacher” in a very unique way. People are motivated to do things, and even more importantly, motivated NOT TO DO things, because they respect the person who is providing them guidance. Respect is a complex interpersonal dynamic. It involves personal component originating in the learner, not the teacher. It is not created based on a power dynamic that derives from stratified organizational roles.

Know Why learning involves morality and ethics. There is no doubt that people often learn why they should or should not do thing from being exposed to stories with a moral component. But this only works when the learner extends respect to the story teller. E-learning can be used to deliver stories. But the story teller must still be someone to whom the learner extends respect in order for know why learning to occur.

Some individuals already extend respect to “automated teaching tools”. Such people may acquire “know why” learning from e-learning programs. Perhaps this will become the norm some where in the future. But I do not believe it will be. I believe that the real value of the Internet in know why learning comes from its ability to expose people to the individuals whom they respect in a way that transcends the limits of space and time.

When I design e-learning programs with a know why component, my first question is always – “Who will these learners extend respect to – who can motivate them to do or not do?” Then I find ways to incorporate these people into the e-learning program though quotes, pictures, short video clips and so on. I also look to provide follow up connections to these people that allow the learners to interact with them through their writings, through their Internet presence, or even face to face.

Let’s sum it up.

E-Learning takes over Know that learning and makes the classroom lecture model of learning extinct.

E-learning delivers Know how to learning by incorporating more and more gaming and simulation techniques. It supplements and supports complex Know how to learning that involves the whole body by ensuring that the only people who succeed as coaches and mentors are great doers who also have superb interpersonal skills.

E-learning facilitates Know why learning by providing more direct connections between learners and the people who they respect to motivate them to do and not do.

That’s my vision of the future of e-learning.

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  1. You can see much more about this model of knowing in two publications of mine available at the following places on the Internet “The Know That / Know How To / Know Why Model of Knowledge” and “Making Effective Decisions About E-Learning Content”.

6 Seconds to Rejection – Can Hiring Managers Afford It?

10/31/2014

Some time ahead I created a voice over Internet presentation for managers on the difference between recruiting for well established roles and recruiting for roles that will make change, perform at peak levels and introduce innovation. (See “How Do I Find the Talent I Need?”). I explore the two kinds of recruiting and ask managers to think about which one fits their hiring needs.

This morning I saw a short Internet video from Business Insider that presented the results of research that was done on how recruiter read resumes. The researchers found that recruiters spend less than 6 seconds on a resume. They look at the person’s name, the person’s current employment – title and dates, the person’s last place of employment – again title and dates, and then the person’s education. They do that in 6 seconds. If the resume does not fit the pattern that they are looking for, it is rejected and the recruiter moves onto the next resume.

What a powerful way to illustrate the difference between recruiting for well established roles and recruiting for innovation. 6 seconds to rejection only works when a recruiter is looking for an exact fit to a preconceived notion of what the job is all about.

If you are manager, and you need innovative or high performing people working for you, you cannot accept the results of the 6 seconds to rejection recruiting. You must find recruiters who do more.

Such recruiters take the time to understand your requirements. They want to know what defines effective future performance on the job. They will ask you how you will measure this – what will you see and hear that defines such a level of high performance. They will create candidate filtering processes that move beyond resumes. They know they are searching for talent, not conventional fit.

Such recruiters will not be working for most of the recruiting departments in organizations or for most of the recruiting and search firms that exist. These groups are full of 6 second to rejection recruiters.

6 seconds to rejection recruiters don’t have to live with the consequences of their actions. You, the hiring manager, do. You and the person who fills your job will be working together for months, perhaps years. A 6 second to rejection recruiters has no stake in your long term.

Of course, if you as a hiring manager are looking for a conventional candidate who will fit into a well established job and perform at a normal level, then by all means use 6 seconds to rejection recruiters. They are likely to be cheapest. Even if they are not, they are not likely to ask much of you. That will save you time.

But if you need anything more than conventional performance in the people who work for you, you run the serious risk that exactly the candidate you need will be in the pile of rejected resumes resulting from your recruiter’s 6 seconds to rejection process.

How can you tell the difference between 6 second to rejection recruiters and the one you need? In exactly the same way you separate an exceptional candidate from an average one – by watching how the recruiter behaves. A 6 second to rejection recruiter will be satisfied with a traditional job description. He or she will post the job on whatever Internet recruiting platform is normally used in your organization. Then the recruiter will read incoming resumes to find a number of conventional fit candidates. The recruiter will pass these onto you.

In contrast, a future performance oriented recruiter will ask you for time at the beginning of the recruiting process. She or he will want to know a lot about how you will define successful future performance on the job. This recruiter will use this information to create filtering mindsets and techniques that are designed to look for the candidate innovativeness and future high performance you need.

This recruiter will also read resumes. The future performance oriented recruiter will be looking for clear signs that this candidate has taken the time to signal innovativeness and demonstrate exceptional performance. That may take the recruiter 30 seconds to determine, but those 24 seconds are the key to spotting a potential high performer for you.

When future performance oriented recruiters find such a resume, they use the specific filtering techniques they created for your search to quickly determine – is this person real or is this just a well crafted resume? The recruiter will focus on what the person can do in the future, not just what the individual as done in the past.

Once the candidate has gotten beyond this first filter, the recruiter will dive into the future with the individual, finding out how the person will respond to your performance challenges. Only those candidates who show signs of understanding and rising to these performance challenges will be passed onto you as the hiring manager

So choose. As a hiring manager, your choice is really quite simple. Live with the results of 6 second to rejection conventional recruiting, or invest more. Find an atypical recruiter, one who does not practice 6 second to rejection recruiting.

Ask e-learning clients 3 questions or pay the price!

10/27/2014
E-Learning

E-Learning

 

Great, you got an opportunity to propose developing an e-learning program for a new client. They like the examples of e-learning that you have up on your website. They know that you have up to date skills in the major e-learning software development platforms. They are thrilled about the possibility of working with you.

You are getting ready for the project scoping meeting with the senior client representatives. What should you ask them? Here are the three critical core questions you must ask at this stage, and the reasons you need to ask them.

  1. How long do you expect this e-learning content to remain current?

Some clients know the answer to this question. Others may not. But the expected useful life of the program is one of the key things that you need to know. Some things, like a technical skill, may only have a useful lifetime of months. Other skills, like soft or people skills, might have a lifetime of years.

Content with shorter lifetimes must be addressed with smaller program development budgets. What was true in one client’s circumstances may not be the same as in this new client’s. Don’t assume or guess, know. Ask so that you can properly scope your development proposal.

If your new client representatives does not have an immediate answer, take the time to explore the issue with them and develop it together.

  1. How many people will potential use this e-learning program?

The economics of e-learning are very different from the economics of traditional learning or professional development. The single most important element in e-learning economics is the “unit cost of delivery” – how much will it cost to deliver a single instance of this program to a single learner.

An e-learning program, especially when delivered over the Internet or an learning management system, can potentially reach thousands of people. This means that the cost of developing the program will be spread over many, many people. When this is the case, you can make a business case for more room in the development budget.

More room in the development budget means money to pay for things like video components, interactive menus, and even – adaptive content delivery that takes different paths depending on each learner’s personal ability, learning style and background.

When the potential individual delivery numbers are large, you must discuss these alternatives with your potential client. Each of these can increase individuals’ learning engagement. Increased engagement means greater transfer of skills back to the job. A well used, larger e-learning content development budget will pay off in increased productivity for your client.

In contrast, when the number of anticipated users is small, you will rapidly want to focus on including the simplest version of the one or two techniques that maximize engagement for this client’s learners in your proposal.

  1. What is the one critical thing that you expect people to do differently back on the job when they finish this e-learning program?

Clients expect results. That is why they are paying you. You might think that the results they are paying you for is the e-learning program that you will deliver. But it is not. For most clients, your hard work is a means to an end. You need to know your client’s ultimate end in order to properly develop first your proposal, and then eventually the content you will deliver.

For most clients, the ultimate end is a change in the way that the people who take the program behave on the job. You must know precisely what change in behavior your client wants to achieve. Knowing this will drive all of your content creation and delivery process design decisions. You can’t put together a correct development proposal without insight into this client goal.

If you don’t know this, you will fall into the trap of projecting such an ultimate requirement onto your client. You may be aware that you are doing this. You may not. But all professional training, including e-learning, is about changing the way that the people who take the program behave on the job. You can’t properly develop any professional training program without having such a goal, whether it is explicit or implicit.

If you don’t ask this question, then unless you are lucky, and your projected change lines up with the client’s need, you are not going to have a satisfied client.

What do you risk if you don’t ask these three questions?

These three questions are core to e-learning project scope definition and client expectation management. Nailing the answers early in your dialog with your potential client’s representatives underlie developing an effective proposal. You will use that proposal, and your client’s belief in it, as the foundation on which you will build the e-learning program.

Not knowing the answers to these questions mean you run the risk of building great e-learning content that does not meet your client’s needs. Do that a few times, and you will pay the price – a poor reputation and a lack of future business, no matter what your skill level as an e-learning content creator.

 

A Chance to Really Make Change – The Potential of On-Line Learning

10/01/2014

E-Learning, of which on line learning is a sub set, finally offers the possibility of fully moving from faculty centric to student centric education. But this will not be an easy shift. There are two main reasons, one cultural and one managerial.

The cultural shift.

Faculty (in collaboration with educational administrators) have dominated education for centuries. Classroom based learning has large economic advantages – 1 person delivering educational material to anywhere from a few to several hundred student, even though the average is in the 20’s and 30’s. Although there have been some advances in teaching technology, by and large, the average teacher (at whether level) teaches in a way that reflects the teacher’s own learning style, assuming that students, especially the better ones, will learn in this way as well.

In the 20th century, investments in educational plant started to increase, but largely only for the specialized sciences and disciplines that required laboratories and access to specialized equipment. By and large, the fundamental unit of education investment is still a classroom, equipped with some relatively cheap television and projection equipment. This is the core of faculty centric teaching. Most classrooms are laid out in a way that makes the social power dimension of teaching extremely clear – teachers are the front are the power players in learning. Asking faculty to give up this role, and become consultants to and servants of “students” is not likely to be an easy social shift.

The managerial shift

With e-learning and on-line learning the economics shift. Course delivery is no longer limited by the physical limitation of the classroom. Well designed e-learning programs could potentially be delivered to thousands of learners, dramatically shifting the unit cost nature of the education business.

But something else will shift as well. With careful design and creative implementation, educational content could shift dynamically to make the learning style of each student. We know enough today to be able to put an on-line student through a series of short experiences which provide insight into the learning style of the student. Once that is clear, on-line educational programs could dynamically shift their delivery of content to maximize the learning possibility to “this student”. Instead of faculty centric learning, we are now in a world where we can be truly student centric.

Creating such e-learning content also means a managerial shift. The process and the steps needed will require a combination of skills – from software development and engineering, from curriculum design, from appropriate subject matter experts, and potentially, from online gaming development and simulation experts. Developing educational content suddenly requires team work among experts, not faculty member by faculty member individual endeavor. Project management skills become essential. Personal team work skills become critical.

To date, educational management has largely required leaders who could manage relatively simple plant – classrooms and individual contributors – faculty members. On-line education, if is not be simply be the replication of traditional faculty centric education on the Internet will require something much more in educational leaders – the ability to shape teams that create dynamic educational programs that dynamically change the way that their content is delivered to a student to maximize that student’s learning potential – student centric education.

Creating that on-line educational reality is the real challenge. Educational leaders in the developed world largely do not understand this in my view. But the creative ones in the third world, driven by the need to educate large numbers of students, constrained by a lack of existing classroom plant and government funding, might. If they do, they will truly evolve education to be what we now need it to be in our planet’s history – cheap (at the unit cost of each delivery level), effective, student centric learning that dramatically increases each student’s forward movement on their personal learning journey.

“Change Who Recruits, Don’t Ban Resumes”

02/28/2013

On February 21st, Lou Adler posted the following on Linked In. It generated a lot of interest, including my own comment at the end of this blog.

“On why we should ban resumes!”

see http://www.linkedin.com/today/post/article/20130221192310-15454-why-we-should-ban-resumes?trk=eml-mktg-condig-0108-p1

The idea of matching someone’s skills and experience on a resume to a job description consisting of an arbitrary list of skills and experiences seems rather archaic to me. Some people actually defend doing this faster as a major advance in modern HR practices.

In a recent post, I suggested that a better first step was a candidate being referred to a recruiter or hiring manager by someone already in the company, a vendor, a customer, or someone who can personally vouch for the job-seeker based on the person’s past performance. This is equivalent to using the company employee referral program to proactively seek out more top performers. Most companies recognize this as one of their best sources for new talent and the primary reason why referral programs are being expanded using tools like LinkedIn. Promoting people through internal mobility is also based on the tried and true concept that performance is more important than experience.

In my new book, I suggest that the process used for internal promotions represents a good model for finding and hiring people from the outside. Adopting this approach involves eliminating traditional skills-infested job descriptions, replacing them with performance profiles, and reconfiguring the box-checking first step.
Due to the “radical” nature of this proposal I asked David Goldstein a senior attorney with Littler Mendelson, a highly respected U.S. labor law firm, for his legal perspective. His white paper is now available. Here’s his opening statement:

Because the Performance-based Hiring system does differ from traditional recruiting and hiring processes, questions arise as to whether employers can adopt Performance-based Hiring and still comply with the complex array of statutes, regulations, and common law principals that regulate the workplace. The answer is yes.

In particular:
A properly prepared performance profile can identify and document the essential functions of a job better than traditional position descriptions, facilitating the reasonable accommodation of disabilities and making it easier to comply with the Americans with Disabilities Act and similar laws.

In the book, I also suggested that the standard “submit resume and box-check skills” approach should be replaced by an initial matching process that didn’t inadvertently eliminate fully-qualified people. One idea was to have candidates submit a one-page summary of two accomplishments most comparable to the real requirements of the job. Since the job postings I recommend minimize skills and emphasize opportunities and challenges (sample), this is pretty straight-forward. For example, if you’re hiring a maintenance supervisor to minimize machine downtime and upgrade the team, ask all applicants to describe something they’ve done in each area as the first step. This will minimize the pool of unqualified people from applying and broaden the pool of the most qualified who might have a different mix of skills and experiences. David gave a legal thumbs-up to both the creative advertising idea and the alternate approach for applying.
Coincidently, in the past few days two different starts-up companies approached me to consider being on their advisory boards. Both had far different and unique ideas on how to broaden the pool of potential candidates by breaking the same nonsensical skills-matching process described here. The common idea: the best people aren’t interested in lateral transfers, the best people often have a different skill-set, and these same people aren’t interested in enduring the insensitive application process. Excluding the most talented people from consideration when hiring from the outside never made sense me. It’s exciting to see some technical advances being proposed to now do this at scale.

If you follow my posts, you know I’m on a quest to change the focus on finding and hiring people to one based on their actual performance – they’re ability to deliver comparable results. It’s what people have accomplished with their skills and experiences that matters, not their accumulation. This opens up the door to a whole new pool of more diverse, younger, older, military veterans, displaced workers and the physically challenged. We don’t have as big a skills gap as the national media contends, we have a bigger thinking gap.
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Lou Adler (@LouA) is the Amazon best-selling author of Hire With Your Head (Wiley, 2007) and the award-winning Nightingale-Conant audio program, Talent Rules! His latest book, The Essential Guide for Hiring & Getting Hired, is now available as an Amazon Kindle eBook.

 

My Response:

Change Who Recruits, Don’t Ban Resumes

Well, how intriguing, I am about to both somewhat agree and profoundly disagree with Lou Adler, a man whose writings I deeply respect.

I think that he probably used the word ban to provoke dialogue. He certainly succeeded – 411 comments at my last count. A quick scan of the comments – they seem to break into two camps – folks who agree and folks who don’t. But both groups seems to me to miss one of the key points.

Resumes are tools. Tools serve a purpose. But if you have only one tool in your took kit, then you then to see everything in terms of that tool. I don’t. I use a bunch of tools as a recruiter.. A resume is just one.

When I use a resume, I treat as a tool to make a crucial decision – will I choose to invest more time in getting to know this person well enough to make sound decisions about their status as a potential candidate. How I use the resume is all about me and my decision making process, not about the quality of the match between the candidate and the job.

I can make a first scan “no –I will not invest more time in this person – decision” in about 10 seconds. I have probably read 10,000 plus resumes during my career as a recruiter and as a hiring manager. Of these two, reading them as a hiring manager is of far more importance. A people manager, I have had to deal with the consequences of the hiring decisions that I made (hundreds plus) – including the bad hires that I made. Doing performance reviews at 3 months and 12 months point has shown me that I made more than 1 bad hire decision over the years – maybe about 10% of my total hires were “not the best” looking back. A few were outright disasters, for me, the person that I hired, and the organization for which I was working. That means that I read resumes with a very different set of eyes that 95% of the professional recruiters with whom I have, and do, work.

Here are some thoughts about how I use a resume as a tool in my recruiting – hiring decision making process.

1. If we could count on resumes as being written by the people whom they profile – i.e. as personal expressions – they would be a kind of performance piece. I still read them this way – how well does this person do at the job of presenting oneself in a world where it is tough to use this limited tool to stand out – to differentiate yourself?

Unfortunately, in the last 5 years, more and more (almost all now) of the resumes that I read are written by “resume writing professionals” or based on a “format” that is available in a book. I always ask the folks I invest more time in “Did you write this? Did you follow a format that something else recommended?” The answer is almost always yes. Given this fact, in my opinion, resume still work as a “first scan tool”, but that is about all.

2. Everyone practices resume inflation. A resume is a marketing document. You write it (or have it written) to make yourself look good. I read them now (in about 30 seconds) to answer ONLY three initial questions for myself.

• Has this person invested enough time into this resume (or cover letter) to indicate that the individual is motivated to want this job – to adapt the first way they present themselves to me in a way that reflects what I have communicated about the job, or is this a “one size fits all piece”?

• Are there enough facts in this resume here that indicate that this person has a hope of having some past experience that indicates that they either have relevant skills or RELEVANT POTENTIAL to be a person I want to invest more time in getting to know on this recruitment?

• If I should decide to invest more time in this person as a possible candidate, what “past accomplishment or performance” looks likely to be a good one that I could use to explore in depth through dialogue with the person to get a better sense of who this person was when she or her was doing this accomplishment?

That is what I use a resume for. I don’t use “key word matching” algorithms. The information they generate is about words on paper, not about people who can potentially do a job.

I don’t make hiring / candidate recommendation decisions on the basis of resumes. I make “explore deeper decisions”. I believe that resumes, even given the way they are generated today still serve a “good enough purpose” to do that, provided the recruiter AND hiring decision maker also has some or all the tools that Lou recommends in his performance based hiring writings (or similar tools) in his or her tool kit.

If I were to make one change in the recruiting process (and I do so in my own firm), it would have to do with recruiters, not resumes. I would never assign a person to a recruiting role until they have had experience with managing people on-the-job, high performers, average performers and poor performers.

You can teach people recruiting techniques, including skills which help them understand the performance requirements of the job, and deep interview skills in a reasonable period of time. But you can’t generate the mature people judgment capability you need in a high quality recruiter in a reasonable period. You can only search for, select and deploy it. I believe that this will make far more difference to the quality of recruiting that banning resumes.

Four Core Things I Believe About Life in Organizations

04/04/2012

I learned something important about myself on the weekend. I am less patient with myself now and much less accepting of some of the things others in my society believe about life in organizations. I don’t expect to be seen as being any more “right” in my views now than in my earlier years. I don’t expect folks in general to agree with me any more than they did in the past – that is up to them. But I do find that I am not prepared to engage in as much dialogue about these beliefs with those who see things differently, unless that dialogue leads to real constructive action that benefits both of us.

I have worked for a long time. Over the course of my career, I have kept up a constant involvement in academic life – as a night student, graduate student, part time lecturer and distance education participant. I have and still read widely in management and workplace psychology. I have thought hard about what I was doing at work and how I was leading the folks who worked for me.

I have come to these four conclusions by reflecting on both the reading and the experience. I have quietly held them for years. They underlie all my consulting work and business related writing.

1. Performance appraisal is a waste of time if you are looking for business results.

Our evolved instinctive approaches to living in tribes makes power based interpersonal relationships vey much part of the way that we work together. We like tribally defined hierarchies. We need leaders and followers. We need to know where we stand in these tribal power structures. Performance appraisal does a fine job of addressing these needs. But it does nothing at all to increase an organization’s ability to generate results.

I have personally appraised dozens of direct reports. I have directed the building of innovative computer based performance appraisal systems. I have led the implementation of such performance appraisal systems in large large IT organizations (> 1500 professionals).

But I now accept very little of my work around performance appraisal contributed to improving the results we delivered in the organizations for which I worked. I now know that backward looking performance appraisal simply does not justify the energy it takes to do and the anxiety and mistrust that it creates in the people who were appraised.

Forward looking performance contracting is different. Performance contracting means looking ahead, not looking back. It consists of:

  1. negotiating what an individual will do in the coming months and year,
  2. clarifying how this relates to what others, including the person whom the individual is dependent on, are doing,
  3. agreeing on how the to be delivered by the individual are going to be measured  by both the person and the boss (i.e. they each need independent access to the data that makes up the measures);
  4. and then getting together regularly to review delivered personal results against the agreed upon performance objectives.

Managers who do performance contract in this way lead at work. They inspire. They shape the future through the actions of the people who work for them.

It worked for me. I have twice created IT organizations that outside auditors independently judged to be “world class excellent”. In both organizations, I did performance contracting with my direct reports, and encouraged them to do so with the people who worked for them. Together, we supported the cascade of this approach down our organization.

Performance contracting is not easy. The boss must make a personal commitment to simultaneously treating the people who work for the boss as problem solving peers and as results-responsible direct reports. Doing so involves accepting and working with the dynamic contradictions between these two roles. As power solving peers, the two people share power and a kind of equality. As direct report and boss, they are in a clearly defined power hierarchy. Recognizing and respecting these differences, and dealing with the conflict they create, takes self awareness and self containment on the part of the boss.

Bosses must discipline themselves to continuously clarify when they are behaving as a problem solving peer and when they are behaving as a results evaluating superior.

At times, bosses must negate the “power surge” that comes from being a results evaluating superior so they can effectively coach as a problem solving peer They must resist the temptation to use the power component of the relationship to simply dictate the solutions to problems when the two of them engage as problem solving peers. They must accept that simply telling does not always lead to understanding on the part of the direct report. They must act as if this is the boss’s failure, not the direct report’s, when this occurs.

At other times, particularly at the end of the performance period, bosses must take on the tough challenge of carrying though on negative consequences when the direct report’s performance has been lacking. This is not easy if the boss has developed a “liking” for the person through working with the individual as a problem solving peer. It will be even harder if the boss has failed to coach effectively in the regular review meetings between the two.

Human beings’ instinctive approach to managing performance in organizations – power based performance appraisal – is much easier, especially on bosses. It just does not motivate the folks who are appraised to produce “above every day” or excellent results.

2. Organizations waste the dollars they spend on interpersonal skill training (e.g. programs on leading others, resolving conflict …).

If behavior on the job does not change as a result of training, the money spent on it is wasted.

Very little interpersonal behavior training leads changes on the job, despite the millions of dollars spent on managerial, supervisory and interpersonal skills training. Every one “kind of” knows this. That is why there is so few systematic follow up programs to measure actual “on the job” behavior after such training programs. As long as we don’t have to face the facts, we can continue to believe.

There are two reasons why behavior change back on the job after participating in interpersonal skill type of training program is so hard.

1. Unless individuals are personally motivated, they are not going to change their behavior back at work (or in their personal lives), even it they learn the underlying ideas and concepts.

Self selection and self initiation of participation in such training is a good indicator of the needed motivation. Personally enrolling oneself in this type of course is a good predictor that the individual might have the needed motivation needed to actually change behavior back on the job. Expending personal resources to pay for the training is an even better one.

Being “sent” on such program by your organization has very little to do with having the level of personal motivation needed to actually change behavior on the job. Yet many organizations ask people to attend such training programs because the “boss” thinks it is a good thing, or because it is the norm for all people who first enter a certain job level, or because some executive has come to believe that this type of training has pay back.

2. Individuals behave in interlocked patterns at work. If one person changes his or her interpersonal behavior, the others the person interacts with have to change theirs as well. These other people are often not motivated to do so. Instead, they put group peer pressure on the person who changes his or her behavior after attending a training program to revert back to the old behaviors the person had before they went on the training program – the social extinction effect. Most individuals who try to implement new behaviors do revert back to the old behaviors in the face of this implicit social pressure. The training investment is lost.

The individuals who persist in wanting to change their behavior after such training often respond to the peer pressure by finding new people to work with. Usually, this means moving to a new job. Often, that new job is with another employer. The training investment is lost.

Organizations who want to really change interpersonal behavior patterns need to engage in systematic culture change programs. As well as training, such programs involve visible recognition and compensation programs that reward the “new behavior”. These programs also involve specific activities that counter “resistance” to change on the part of current members of the culture.

Such programs are difficult to plan and to execute. They must work from the top down and the bottom up in a coordinated way. They are intensely resource demanding. They require persistence over extended periods of time. Few organizations succeed at such culture change programs at the level of “walk”.  Most organizations though engage in “talk” as if they are doing such things, even if they don’t really do them.

There are a couple of simple things to consider as a result of these dynamics.

If you invest in an individual’s interpersonal behavior change, you need to move them into a new job to have a reasonable chance of recouping on your investment.

When individuals are motivated to spend personal resources on changing their interpersonal behavior at work, they are also at high risk for leaving your organization in order to find another job where they can practice those new skills.

3. Interview based recruiting is all about “good enough” hiring, not future performance excellence on the job.

The academic research is clear – talk during recruiting interviews is not correlated with eventual final candidate performance on the job. But everybody continues to do to use talk based interviewing as their primary recruiting tool. Why?

Talk based interviewing finds “good enough” candidates – both on the technical skill level and culture fit level. Talk based interviewing does not systematically succeed in finding the “best candidates”. It does not need to. Good enough is good enough for most organizations. Few organizations are really excellent. Most organizations talk ‘excellence”, even when they don’t “walk” it.

It is possible to recruit for excellence. It takes “show us how you will perform with the people that you will be working with” recruiting techniques. This means crafting work based role plays and work based simulations. They are more difficult to set up and to facilitate than interviews. Creating them, and then facilitating them, is far beyond the skill of most recruiting professionals.

The best way to see how a person will behave in the future – on the job, is to get them to behave currently.  Get candidates to do, not talk about what they have done. Even “behavior based interviewing” does not do that.

Job based role plays and work simulations go some way to allowing the assessment of performance fit. Involving future peers in interacting with candidates and then systematically collecting their impression of fit allows some level of assessment of cultural fit.

The best hires – excellent performance fit to a particular job and superb emotional fit to a specific organization’s culture – are often temporary folks who have already “demonstrated” how they will perform on the job. You see what they can do and how they will interact with their fellow co-workers during their temporary assignment. The best predictor of future behavior is always past behavior.

Bringing the person in on a temporary basis is the best way to assess both performance fit and culture fit. It remains the best hiring tactic if you are hiring for excellence. If you are not, and most organizations do hire for good enough, then the talk that happens in recruiting interviews will do.

4. Many human abilities are as much instinctive as thoughtful. Excellence at work requires thought rather than just responding instinctively.

More and more, modern research is showing how much of our human capability to do and to interact with others utilizes ability systems that located in the pre-conscious parts of our brains. These evolved ability systems let us become the dominant species on the planet hundreds of thousands of years ago.

Somewhere in the past 40,000 years or so, we began to move from being tribal creatures to being societal ones. We started to live in conglomerations of individuals which were bigger than one tribe. Previously, as simple tribal members, we might have had occasional interactions with members of a number of other geographically local tribes. But as societal creatures, we developed (i.e. added) the ability to be concurrent members of a number of tribe-like social collections that exist within our societies.

As societal creatures, we developed organizations that specialized in achieving at least some of the objectives of each of their members. We shaped these organizations in which that reflected our evolution as tribal beings. Our organizations have hierarchies and insider/outsider dynamics that we developed as tribal creatures. At the same time, as societal creatures, we developed shared mechanisms and processes for collaborating within and across these organizations.

Organizations traded with other organizations for the resources needed to achieve those objectives of each organization’s members. Thoughtful, structured, planned ways of interacting with individuals in these other organizations became as important a part of our human abilities as our instinctive ways of interacting with other individuals in families and in tribes.

Today, we have all these types of ability. Our gene based evolutionary history adds new abilities to our competency repertoires. It does replace the ones we already have with new ones. Neither does evolution act to integrate new abilities with old ones in balanced way. As a species, we have simply added the new more thought based organizational abilities to our older instinctive interpersonal familial and tribal ones.

Stress is a large of our organizational and societal life. Under stress, we tend to fall back on our instinctive abilities, even when they might not be as effective for dealing with a given situation as our thoughtful abilities. Our instinctive abilities often define our business and societal interactions. Much confusion and turbulence occurs in organizations and in societies as a result.

Understanding and mitigating the results of these dynamics requires that managers in organizations consciously override their instinctive first responses with careful, thoughtful, analytically-based responses. The next generation of organizational behavior writing and business professional development curriculum needs to be much more clearly explicit about the evolutionary nature of human abilities. We need to move from theories of “emotional intelligence” to ones that more clearly reflect the additive evolution of our abilities. We need to make sure that managers understand that they concurrently have instinctive interpersonal and thoughtful organizational abilities. We need to help them recognize that our instinctive abilities, the ones we all move to under most levels of stress, are not the best ones to use to respond to the demands of organizational and societal life.

Conclusion

There is tremendous hope for us as human beings. Our evolution has given us the ability to shape our collection future through collaborative, thoughtful organizational action. But we often do not. Our evolution has also given us the capacity to interact in ways that are firmly embedded in the pre-conscious instinctive abilities that evolved when we were members of families living in tribes. We need to move beyond the familial and tribal in organizational and societal life in order to have a future of hope, not one of self defeating strife.

Why Did The Canadian Election Leave Me Feeling So Disgruntled?

05/03/2011

Politics is a Moral Enterprise

I strongly believe that politics in a democracy is about morality. I think that political leadership, both during times of elections and in between elections, requires a personal commitment to an openly-stated moral creed. I believe that individuals who make the choice to run for political office but do not openly tell electors what their personal values are, engage in a form of manipulative contempt of the electorate. They treat electors as a means to an end – the power to impose their personal values upon the rest of society. In essence, they are a political version of Michael Maccoby’s business Gamesman.

That does not mean I believe that a politician can never make personal mistakes. Nor does it mean that I believe a politician must always behave according to that person’s moral code. It does mean that I believe that politicians’ behavior should not be judged by some version of “the public believes in this moral creed”, as created by the media.

I believe that individuals making the choice to live a political life are also making the choice to be open with people about the beliefs, which guide their political decisions,

◦         both their public decisions, the ones available to electors and the media,

◦         and the private ones made within the party apparatus in which they work.

The reason that I’m left with a sense of disgruntlement after yesterday’s election is that I believe that the behavior of the majority of politicians in Canada does not align with these beliefs. Let me demonstrate why I think that this is so through considering the behavior of the three main party leaders in the recent election..

The Conservative Approach

My view of Mr. Stephen Harper is that he is an excellent political tactician. The way in which the Conservative campaign was conducted:

◦         the focus on local important issues in certain ridings (e.g. long gun registry in rural ridings),

◦         the appeal to the local ethnic vote in ridings with significant ethnic populations,

◦         and the focus on the “evils of the supposed coalition between the main opposing parties” are all examples of such political tactics,

demonstrated this.

The Problem with a “Tactics”-Based Approach to Elections

However, the constant dialogue about Mr. Harper’s “supposed hidden agenda” that characterized the last two elections in Canada reflects the fact that we don’t have open statements from him which give us insight into his moral creed.

◦         Tactical approaches to gaining democratic power as a means to personal moral end

◦         and the language of mandate as a means to put aside the different moral points of view held by substantial portions of the population

do not fit with my sense of a healthy democracy. In his acceptance speech last night, Mr. Harper stated that his party would govern in a way that reflected the “views” of all Canadians in the next four years. But the history of his leadership behavior in his past minority governments leads many people, including me, to believe that he will not behave in this way. I sincerely hope that he does not use his “mandate” to pass legislation that reflects a minority moral view. I am worried that he will.

The reason I’m worried is because this style of democratic “politicking” leads to deeply polarized differences within a society. The belief that it is “OK” to use political tactics to “get power” and then impose a “more superior view” of the needs of society upon the electorate is one that has gained a lot of currency among right-oriented politicians in North America in the last decades. It is leading to deep societal polarization in the United States. It has not yet in Canada. But it easily could.

Instead of an election which is based on principles, an election campaign run on the basis of successful political election tactics runs this deep risk. As the elected politicians put in play legislative action based on their “less than open public moral principles and values”, they create dramatically opposed responses in their society. The following table summarizes this response dynamic.

 

Voted For

  Yes No
Share Moral Values Feel morally vindicated Feel like they “missed” an opportunity  
Do Not Share Moral Values Feel betrayed by the politicians they voted for Feel politicians are morally wrong  

◦         For those people who share moral principles and values, there is a sense of vindication. They feel “you see we are morally right”.

◦         Those who share the moral values but did not vote for the elected politicians in power, feel “you are doing the right thing, even though you were not clever enough to make it clear to me that you were going to do this, implying that you may be less than trustworthy”.

◦         Those who do not share the moral values but voted for the politicians in power, feel a sense of being morally betrayed. “Politicians are untrustworthy morally.”

◦         Those who do not share the moral values and did not vote for the politicians, feel “you politicians and those who support you are morally wrong”.

Elected Majorities When the Party in Power Does Not Get a Majority of the Popular Vote

When the electoral mechanism in a society is such that it is possible to get a political majority without substantially more than 50% of the popular vote, these dynamics can be very real. When more than 50% of the electors fall in the three cells of this table with bold text, distrust of politicians is high and undermines democracy. I believe that to be the case in Canada today.

This is a serious long-term problem in a society. The only solution to it is to create an electoral system that moves beyond simple “first past” the post majority. Whatever this system may be, it must ensure that the majority party in power also gets a clear majority (something more than 60% – the higher the better) of the popular vote. When this is not the case, minority governments and coalitions between parties should be the norm since they clearly require “collaboration” and “comprise” to be effective.

The Problem Faced By the Liberals

My view of Mr. Michael Ignatieff is deeply tainted by the way he became leader of the Liberal party. In his publications and his statements, he tried to communicate his moral creed. But his effort was deeply undermined by the way he came into the leadership of the Liberal Party in the first place.

Rather than being elected inside the party, or having earned his political stripes through previous participation in Canadian politics and then rising to the leadership, he was the personally-selected leader of the Liberal party inner circle. I believe that this signifies a significant degree of contempt for the everyday elector by this party elite. Mr. Ignatieff’s willingness to accept party leadership without insisting upon a leadership convention was the beginning of the crushing defeat suffered by his party.

His party was soundly and deeply punished by the Electorate for presenting Canadians with this “against the democratic spirit” fait accompli. Although I believe the Liberal’s public campaign attempted to reach the level of principle, electors judged this effort to be based on tactical political foundations, which were the result of “inside the Liberal maneuverings between groups having loyalty to previous Liberal leaders”.

When at its best, election campaign dialogue between the parties congruently focuses on the difference in principles that will guide future legislative decision-making by the elected party. In the Liberal case, the failure to fundamentally respect the principles of democracy within their own party undermined the ability of Liberal party to appeal to Canadian voters on any level.

Is a “Vote Against” the Same Thing as a “Vote For”?

My view of Mr. Jack Layton is mixed. Although he personally ran a campaign which attempted to appeal to principals, I believe his election results are more the result of a “vote against” than a “vote for”. The fact that the NDP party ran relatively unknown individuals in a large number of Canadian ridings reflects their tactical approach to taking advantage of this “vote against” dynamic. These nominations were relatively last minute. They did not reflect a substantial effort to build support for these individuals in these ridings over the previous years. They were not the result of a long-term attempt to build a party vote based on an appeal to principles.

Whether or not the NDP repeats its performance in future elections will depend on two things.

◦         Can it move from being a party of “leader personality” to a party of “known principles”, through the work done by many credible local current (and future in ridings where they were not elected) members of the House of Commons?

◦         Second, if they succeed at this, will these principles appeal to an electorate when the “vote against” dynamic is much less intense.

Last night, the House of Common die was cast, at least for the next four years. We have a majority Conservative government, led by a deeply “my way is best” oriented leader. Many Canadians are gratified that we have moved beyond what they see as “the indecisiveness” of a minority government.

Minority Governments are Not Always a Bad Thing

I personally believe that minority governments are not a bad thing, particularly when elections are fought on tactics rather than principles. Minority governments limit the legislative ability of a political party that does not encourage its local candidates to be open about their personal moral and ethical codes. They limit the ability of such a party to impose their view of “what is right” on society. They are the perfect solution to the problem of tactically-run election campaigns.

The reason I’m disgruntled is because I believe this was largely an election of tactics, not principles. The limits that come with minority government are gone. I truly hope that we do not see four years of “mandate talk” justifying the imposition of a set of moral values that do not appeal to the majority of Canadians. If we do, I believe we will be living in a much more polarized, less collaborative, less cooperative society. I do not believe such polarization leads to the kind of difficult collaborative dialogue necessary to solve our long-term economic, ecological, and health care problems. That’s why I’m disgruntled with the results delivered by Canadian voters to their politicians last night.

My Disgruntlement Will Go Away If …

We fix the electoral mechanism. Engage in a process, which has the following steps.

◦         Start a dialogue of “electoral experts” drawn from a number of democracies which leads to a number (no more than 3) of “possible fixes” to the electoral system in Canada. Do some computer modeling which “simulates” what happens in each possibility under a few scenarios. Write a report which summarizes the results. Broadly distribute the report – schools, ‘think tanks”, political parties, public media, the Internet, business oriented and other interest groups, and so on.

◦         Start a broad societal dialogue on the results. Engage the members of the House of Commons to take it back to their ridings and the groups they interact with there. Use social media to engage the younger elements of our population. Ask the public media to discuss the results broadly. Ask provincial politicians to get involved in this dialogue.

Manage this process through a “Guiding Board” drawn from society at large (public figures, educators, business leaders, … ) but EXCLUDE current or former politicians, and people who have demonstrated their support for one party or another through their public actions. Summarize this dialogue in a report that receives wide distribution through the public media, political parties, and the Internet. Finalize the “two or three” fix possibilities” in this report. Computer model the candidates under several scenarios.

◦         Run a referendum election that is totally separated from a political election that implements one of the two or three final “fix” possibilities that come out of this process. Treat it like a “non-party” election. Spend the millions needed to do this. It is a sound investment in the future of our society.

◦         Implement the results (without political party tinkering) in legislation at least the national, and hopefully, the provincial level, before the next election.

This may be too much to ask for, but I think that it is time to align our election mechanism with the changing nature and needs of our society. Expecting politicians to do more than initiate the process asks them to be “more than human” in that we are asking them to do things that could impact their lives and livelihoods. So let’s just get them to initiate the process. That would be a great gift that they could leave to future Canadian generations.

The Great Pension Scandal: A Moral Fable

04/25/2011

The Great Pension Scandal: A Moral Fable

Let’s listen into the dialogue between an employer (E) and a new employee (N) somewhere in North America, sometime after the Second World War.

E: Great, you will be starting work with us on Monday.
N: Yes, I’m looking forward to it.
E: OK. We’ve got your benefits out of the way but now we have to think about your pension. Here is the deal. You put in 5% of your salary. We will match it. Because we know that people are too busy to do a very good job of managing their pension investments, we will put these funds into the company pension plan for you and we will manage it. That way you can be sure that what you need will be there for you when you retire.
N: Let me see if I understand this correctly. Instead of giving me 10% more in salary, you are going to hold it back. In effect, you’re paying me 10% less than you would have. Instead, you’ll invest this in a pension plan program for me, so that I’ll have a clearly defined set of pension benefits when I retire.
E: You’ve got it. Although we don’t think of it as deferred income. Instead, we think of it as the company putting company funds into your pension plan. We know that we are really better at managing long-term investment plans than individuals. Therefore, we just think of this as another company asset that we are managing for you in the long run.
N: OK. If that’s what it takes to get the job, I’ll go along.

Shared “Myths” and “Social Contract” Behind Pensions

This dialogue sets out the pension component of the employment contract that generations of employees have entered into since the Second World War. Broadly accepted by employers, employees, and politicians, these employment contracts really became a “social contract” that shaped the lives of millions of individuals and families. When it worked, it provided financial stability in the later years. When it didn’t, it created hardship for individuals and families.

The word “scandal” reflects the fact that this social contract is logically based on the idea of “personal income”. No matter how you try to make this situation “nice” or “legal”, the reality is that pension plan contributions are income that was paid to employees. The whole legal debate about who owes the “surplus” in pension plans that occurred in the 1990’s completely missed this fact. Pension plans contributions were and are listed as “deductions” from individual income in most organizations. The legalities of the various pension plan contracts crafted by organizations cannot escape this fundamental fact. Legal niceties have often hidden such fundamental moral realities in the endless arguments framed by careful and thoughtful lawyers who are paid to favor one side over another.

Unfortunately, these employment contracts, and the resulting social contract that evolved from them, are based on a number of commonly accepted beliefs that have not held up over time.

  1. Individuals were taking “life long” jobs. Careers progressed within the boundaries of a single-employer. People would retire from the first (or at least, an early) employer they joined in their careers. In many cases, they did. This employment pattern started to break down in the last decades of the 20th century.
  2. Organizations last a “long time” – over 50 years. Unfortunately, as research has shown, most public and private corporations simply do not have life spans that last this long.Many of the largest corporations in the Fortune 2000 simply disappear as visible entities. In fact, the only employer with some guarantee of this kind of life span tends to to be the government.
  3. Organizations are led by individuals who have a sense of responsibility for the welfare of their employees.This “paternalistic” mindset became less and less common as the decades since the Second Work War progressed. It was associated with a form of “male”: and “employee” chauvinism that has been undermined by the social movements of unionism, feminism, and anti-racism.
  4. Most individuals are not capable of managing their financial affairs in a way that ensures that they will save for the “later years”. The complexities of investment and the stock market require special expertise and ability. An organization’s leaders are more capable of identifying this kind of expertise than the average individual. Therefore, it made sense for the organization to “own” the pension assets, and manage investments for employees.
  5. Defined benefit plans made long-term sense. Shortfalls from investments will always be made up by the future contributions of future employees. Somehow, their numbers would always be large enough, and the investment wisdom of pension plan managers would always be great enough, to support defined benefit pension plans 10, 20, 30, 40, and 50 years into the future.

Unrealistic Beliefs

Today, we know that these beliefs were really a form of social elitism. This social elitism still exists today, even in the face of events that have shown its shortcomings. The upper cadre in organizations still believes that they were more capable than the majority of their employees to make long-term decisions. Specialized “pension managers” still believe that they are more capable of investing pension income and ensuring that adequate amounts would be available to pay out defined benefit pensions to individuals 10, 20, 30, 40, and 50 years into the future.

Throughout the second half of the 20th Century, the political elite, closely connected to the organizational elite, shared these beliefs. They created legal frameworks governing pensions that treated pension funds as assets of organizations. Deferred income belonging to employees became regarded as an asset on an organization’s balance sheet.

During the later decades of the 20th century, as government started to realize that there was a “pension” problem, and used tax-based incentives to encourage individuals to “save” additional funds through RRSPs (Canada) and 401K plans (US), these beliefs shaped the legislation which regulated private pension plan industry as well.

When organizations face financial difficulties, pension assets, just like any other asset on the balance sheet, are used to “deal” with the claims of the organization’s creditors. Pensioners are the creditors of last resort. All other creditors have a prior claim to the organization’s assets. Somehow, the fact that pension funds were really deferred income that logically belonged to the employees got lost in the social elite’s paternalistic approach to pension plan management. Corporations set up to manage “additional” savings (e.g. RRSP or 401K) savings are treated in the same way. Other creditors come first when they run into financial difficulty.

Government-based pension plans were created as a pension of “last resort” to cover these gaps. Unfortunately, the managers of these government plans also believed in their ability to predict long-term financial trends. Time has made abundantly clear that all pension managers’ – corporate and government – belief in their own abilities substantially over-estimate their actual long-term financial and investment management performance. Government pension plans, both for government employees and for other members of society, are also facing a severe underfunding crisis.

The beliefs of the social and political elite that underlie pension plan management were and are unrealistic. They reflect an “over optimistic” view of “themselves” shared by the organizational and political elite in society. Pension benefits for current and former employees / contributors have disappeared, and will continue to disappear, within a pension regulatory regime based on these beliefs.

An Impending Pension Disaster

At the end of the first decade of the 21st century, dialogue about an impending pension plan disaster fueled both political debate and pundit commentary. However, very little of this commentary looks back to the social conditions which created the crisis. Few of the reforms proposed address the underlying moral scandal that led to crisis. This scandal, and the proposed attempts to mitigate it, continues to refuse to recognize a number of simple fundamental truths.

1. Pension assets do not belong to the organizations that manage them, whether they are private corporations or specialty organizations created to manage these funds. They belong to the individuals whose deferred income or chosen contributions fund them. This deferred income and chosen contributions, and the return, good or bad on the investment of these funds, make up the assets of all pension funds. Pension fund managers are stewards of others’ assets. They have no “right” to these assets.

2. Pension assets belong to individuals as individuals, not to the the collective group who, at any point in time, might be entitled to benefits from a pension plan. Organizations which offer pension plan saving services today recognize this. Individuals can choose to place some part of their income in such plans. Logically, such individual choices are no different from the implicit choice individuals make to place some part of their income into a pension plan on accepting an offer of employment.

3. Pension plan managers, whether working for an organization that employs individuals or for an organization offering a pension plan management service to individuals, are stewards of others’ assets. As a result, they cannot claim any right of confidentiality with respect to their activities as they steward those assets. Freedom of information about their activities – all of their activities – is simply a right which goes with the fact that individuals own the assets in a pension plan. The idea that such stewardship groups or organizations are somehow like private corporations, and entitled to privacy about their internal activities, simply does not hold.

4. Management teams make decisions that balance between the very short and the foreseeable future. Generally, this means that they make decisions which choose between immediate benefits (this year and next) and benefits attainable in the foreseeable future (3 to 5 years).

Pension plans require that individuals look 10, 20, 30, 40, and 50 years ahead. That is almost impossible, given the nature of human ability. Very few people can accurately see what will happen in our global society 50 years ahead. Those that do tend to focus on broad trends, e.g. the environment. They do not often make judgments about specific investment choices that need to generate a return adequate to fund pension obligations 10, 20, 30, 40 and 50 years into the future. Consequently, pension managers need to be responsive to a form of governance which is very different from that applied to either profit or not-for-profit corporations.

Corrective Responsibilities and Actions

Today, we as a society have to deal with the results of our past actions. We cannot escape the fact that our shared beliefs, and the natural collusion between organizational and political elites, created a current problem. We can also not avoid moral components of our current pension dilemma. The corrective action must go back to basics. Saving for pensions is done out of the income of individuals. Consequently, they own the those savings, and the results that come about from the management of those savings, no matter who does this.

Fixing the current pension problem will not be easy. It will take careful thought and open dialogue at all levels of our society. It will will need to go beyond the ideas that follow. However, we must start. Tinkering with the existing pension plan system will not work. We must address some of the fundamental underlying beliefs that created this crisis in the first place.

1. Politicians must immediately pass legislation that recognizes that pensions belong to individuals not to organizations, whether they are employers or pension savings service management corporations offering to manage pension related savings.

Consequences:

 Pensions become “creditor” of first resort, not last resort when these organizations fail financially.

 The pension savings management industry will develop ways to facilitate the “movement” of individuals’ pensions as they compete for this service business.

 Organizations doing business with pension savings management companies, recognizing that they will be “creditors” of last resort, will rapidly “sharpen” their evaluation of these firms and only do business with the ones most likely to last and survive.

 Financial corporations (e.g. banks and insurance companies) offering “pension savings management” services will need to take steps to “isolate” this part of their business from the other “financial risks” that apply to their balance sheets.

 Employing organizations that manage “company pension plans” will take steps to “isolate” these assets from the other parts of their business.

 All of the internal information created by these pension management service firms will be “publicly” available, since the companies doing this service are “stewards”, not owners of anything. This will “speed” up the spread of best practices in the industry, and reward the “best stewards”.

 Over time, individuals will be able to migrate their pension savings to the “best performing” pension savings management organizations.

2. Politicians must create a regulatory scheme for pension savings management organizations that focuses on “adequacy” to meet future obligations, not past’s year’s return on investment.

Consequences:

 Pension management service groups, even if they exist within the framework of employing organizations, must be structured as “not-for-profit” organizations that are accountable to the individuals who ultimately own the funds which fuel them. That does not mean that pension plan managers cannot earn “individual incomes” based on their activity. It does mean that such managers cannot use the “structure” of private or public corporations, or the laws relating to them, to reduce their fundamental need to be accountable to the owners of these funds. It also means that they cannot use existing corporate law to reduce their need to be totally transparent in their activities to such owners.

 Pension savings management firms will need to develop complex predictive models that relate their funds under management to the “payouts” they expect to make to their funders 10, 20, 30, 40 and 50 years in the future. These models will need to take into account the “age distribution” of their funders, as well as their understanding of the likely investment performance of their funds under management. The year-over-year success or failure of their predictions will become the basis of their “competition” for contributors’ funds, not backward looking past investment histories. This has two profound implications. First, long-term investment strategists will be attracted to such firms. Second, over time, better and better prediction models will be developed, which will help regulate this industry in its true time frame (10, 20, 30, 40, and 50 years into the future).

 The government regulatory agency, which oversees this industry, will have to develop “extraordinary skill” at this kind of predictive modeling. It will be able to do so, based on the fact, that the internal details of these models will be publicly available.

3. Politicians must pass legislation that requires individuals who earn above a certain income level annually (say 50% of the national average) to contribute a minimum part of their income (say 10%) to a pension savings management organization.

Consequences:

 Working out the details of how to do this, and how to move the funds from employers to these organizations, will require careful thought. Surely, a society capable of the electronic banking and fund management we have today can find ways of doing this effectively.

 Individuals can always save more if they chose to do so.

4. No pension income that is less that the average annual income in a society should be subject to income tax.

People made their income-based contribution to society during their earning years. Once they are living off “pension” income, whether they receive it from the government, or a pension income management organization, a certain portion of it should be sheltered from income tax.

Consequences:

 People living on “minimum” pensions today would receive an immediate boast in “income”.

 When combined with other social support mechanisms, e.g. income supplement for the “poorest” seniors, society will deal responsibly with the problems created by the “myths” underlying pension management in the past.

Being Part of a Society is Making Moral Choices

Pension savings dynamics and schemes are part of the social framework that makes up modern society. Like all the components of such frameworks, they are not “true” or “factual” in the same way as facts about the material world. They are part of the way that we build “ways” of being together in “society”. As such, they have moral and ethical components which cannot escape logical argument and reasoned debate. They need constant review in the light of changing social dynamics. They also need open dialogue through which each person in a democratic society has the right to make themselves heard.

You Cannot Manage What You Cannot Measure

03/31/2011

The C-Level Consultants Network on Linked In led by Frank Feather has been having a very powerful discussion on “You Can’t Measure What You Cannot Measure”. (see http://linkd.in/gt57Ox if you are on Linked In and have the ability to follow this group.)

The discussion got me going on one of my core beliefs: performance contracting and appraisal, particularly at the senior level, are a waste of time without two factor metrics. So I posted this comment in this group.

This continuous debate about “You Can’s Manage What You Don’t Measure” has been around since Alfred Sloan. To some extent, we forget what the core of his message. “You cannot manage managers unless you have clear insight into the measures that you are going to use to measure their performance.”

As an individual who has managed managers and consulted to them at all levels, including the C level, I know how true Sloan’s prescription is. At the same time, as a work place psychologist, I know how counter intuitive measures are to our evolved “individual-relationship-family-tribal” internal psycho-dynamics. We did not evolve to measure. We evolved to act.

But management is not day-to-day life. Although it is strongly impacted by the evolution of the tribal component of our internal psycho-dynamics, and our need to act, we can also use the rational parts of our mind to provide structure to management action.

In my own career, I developed the following approach to managing managers through performance contracting and appraisal.

One:

Focus on metrics that are relevant to what they are expected to produce.

Two:

Use only output / measures – what I call two factors measures – something that manager are expected to produce over something they are expected to use to produce it. Revenue per employee and lines of software code / developer hours are two examples that I have used.

Three:

Never have more than 3 to 7 of these – remembering that short term memory really only holds only about 5 things in its view and with two factor measures we are already dealing with complex things.

Four:

Focus on the trend over time, not the absolute measure at any point in time.

Five:

Focus on the pattern of results in the trends over the whole set of measures, not any particular one.

Over the years, I have received lots of comment about how this too complicated – takes too much energy etc., often from very senior executives.

That always sounds like an excuse for me from people who prefer to drop back to our evolved “individual – relationship – family – tribal” ways of doing things rather than actually managing thoughtfully. Often, they invoke the “ASS” principle as their justification.

Who ever said that management was simple. Take Fukushima for instance, and many of the other things we do in our world today. They are not simple. “ASS” simply does not apply to such things.

It constantly amazes me how experienced managers and executive search professionals persist in their belief that somehow a desire to act before thinking is the sign of a “good manager”.

It constantly amazes me how many times I get a vague answer to the question – “how do you intend to measure this person’s success in this new job: in the first three months, in the first year, in the next year” – during the lead up interviews to search and recruitment at the senior level.

And finally, I have come to accept that the consistent resistance to two factor metric based performance contracting and appraisal that characterizes our executive and management culture is based in our evolutionary history. We evolved as tribal creatures whose internal psycho-dynamics lags behind the needs of management in today’s world. We like to think that acting is more important that thoughtful action. In management, thoughtful and successful, action requires at least two things:

◦ knowing what to measure,
◦ and actually measuring it over time.