Unorthodox concepts in HR : Part 8 - ‘Type N’ and ‘Type O’ organizations!

In this post, we will continue our exploration of Unorthodox concepts in Human Resources/People Management. Here we are exploring concepts that are unlikely to be found in ‘respectable’ text books (and also not taught in ‘premier’ business schools) but are very much real in the paradoxical world of people management (See ‘The attrition principle’,  'In the valley of attrition' , 'Sublimation of vision statements' , 'Computer-controlled Manager Empowerment', ‘Training the Victim’ ,‘Two plus Two personality profiling’ and 'Herophobia' for the previous posts in this series).

Based on my experience as an employee and as a management consultant, I have noticed an interesting pattern. Some organizations are optimized for newly hired employees (‘Type N’ organizations) whereas some organizations are optimized for tenured/'old' employees(‘Type O’ organizations). Of course, there are organizations that are equally good (or equally bad!) for all the employees! However, ‘Type N’ and ‘Type O’ organizations are quite common!

One easy way to determine the type of the organization is to see how employee engagement scores vary with tenure. Yes, the dividing line between ‘new’ and ‘old’ varies across organizations  I have seen organizations where you become an ‘old employee’ as soon as you complete one year and I have seen organizations where you will be considered to be a ‘new employee’ till you complete about five years. While the median tenure of employees in the organization has some impact on this ‘new-old dividing line’, it is usually a matter of organization psychology and is not directly derived statistically!

In ‘Type N’ organizations, 'not being burdened by the past' is a great advantage. So, the new hires, especially new leaders, have the advantage. These tend to be organizations that believe that new employees are hired to solve particular problems or to seize particular opportunities that the existing employees have failed to do. In these organizations, ‘tenure’ seems to have psychological association with ‘inability to drive change’. They might even consider many of the existing employees to be part of the problem! Hence, new hire has an advantage, so long as he/she is considered ‘new’. The difficulty is that the ‘new’ employee can move to the ‘old’ category quite quickly (and even get fired fairly quickly). If this happens mainly because of an underlying/unstated assumption that ‘new is good’, this ‘new-old-out-new’ cycle can repeat!  

'Type O' organizations tend to believe that one needs to understand the organization context deeply before one can really contribute, especially at senior levels. So, tenure is valued. These also tend to be organizations where it takes quite a bit of time for a newcomer to figure out how the organization really works. In these organizations, often the effective style of influencing tends to be ‘indirect’ (almost like billiards- you hit something so that it goes and hits the target as compared to hitting the target directly)! This doesn’t mean that ‘Type O’ organizations don’t value performance. It is more matter of a newcomer taking time to figure out how to perform better. Things get progressively easier as you spend more time in the organization. In a way, it is like batting on a difficult wicket. It takes time to ‘get your eye in’ but things become much easier after that. It becomes so wasteful to 'throw your wicket away' (leave the organization) after having done all the hard work to 'get your eye in'.  

Now, let’s look at an interesting question :  “Can the organization type change?” The answer is ‘Yes’. This happens mostly when there is a leadership change at the CEO level and sometimes at CXO level. A new leader, hired with a transformation agenda, can view most of the tenured employees as ‘part of the problem to be solved’ and hence might replace them with external hires. If a critical mass of ‘new people’ are brought in (and ‘old people are vilified), the organization can move from Type O to Type N. Now, two scenarios can happen. The first one is that newly hired people and the CEO/CXO stays on for a long time and the organization starts drifting towards Type O. The second scenario is that the new CEO/CXO keeps on replacing may of the people (including many of the newly hired people) as soon as they become ‘old’ (e.g. after 1-2 years) and hence the organization continues to be Type N.

In 'Type O' organizations, the leadership (especially at CEO/CXO levels) tend to remain remarkably stable  and that increases the probability that the organization continues to be 'Type O'. It is when a 'Type O' organization under-performs for a long time that a 'Type N' CEO is brought in, and the possible shift to being a 'Type N' begins. If the new 'Type N' CEO doesn’t have sufficient powers, he/she can easily get lost in the system or the system might even reject him/her. This ‘reaction’ of the system can be one of the reasons why the new CEO might be tempted to make a lot of people changes. Of course, there are indeed wise 'Type N' CEOs who are very selective and fact-based about the people changes!

So what does this mean? It definitely makes sense to figure out if you are joining a 'Type N' or 'Type O' organization. It is part of the psychological alignment required on what good looks like! Obviously, it makes sense to join a Type O organizations only if you are willing to sweat it out for a long period – significantly beyond the 'new-old dividing line' in the organization. Since they are optimized for new people, it is easier to join type N and to come up to speed faster. But the danger is that of the transition from ‘new’ to ‘old’. So, one must join for the right reasons (beyond the organization being 'Type N'). Remaining a bit of an outsider can definitely help,  especially in driving change.  Of course, being a bit of an outsider while being a full member of the organisation is a delicate balancing act!

Any comments/ideas?

Of salary negotiations and psychological contract: Part 2 (before joining)

In this series of posts, we are examining the impact of salary negotiations on the formation and evolution of the psychological contract. In the first post (see Part 1: dramatis personae) in the series, we looked at the concept of psychological contract, outlined the stages at which salary negotiations take place and also looked at some of the basic principles in the domain. In this post, we will turn the spotlight on the interaction between the employer and the employee before the employee joins the company and examine its impact on psychological contract.

Very few people will disagree with the principle of “a fair day's wage for a fair day's work”. But what exactly would be the fair salary for a particular job in a particular company at a particular time (or even what will constitute a fair day’s work in the same) is far from simple. This is especially true in the case of those jobs where the employee can influence the results (and even shape the job) to a large degree based on his/her capabilities making the ‘fair salary’ dependent on the individual.

There are different ways in which fairness can be interpreted by the employer and the employee. For example, when a company is hiring a person should the salary be decided mainly based on the previous salary the person? That is, if the company gives a ‘good’ (as agreed by the employer and the employee) increase over the previous salary of the new employee, does that indicate a fair deal? What if the salary offered to the employee is lower than that is being paid to other employees in the company (at the same capability level) doing the same job or similar jobs? Can the new employee consider this as an unfair deal? What if the salary offered to the employee is higher than that is being paid to other employees in the company (at the same capability level) doing the same job or similar jobs? Can the existing employees consider that this deal be unfair to them? Should the 'fairness' be decided purely based on the market forces of supply and demand - based on the current market value of the skillset of the employee?

The two basic ways of arriving at the salary for the new employee (entirely based on the employee’s previous salary or entirely based on internal equity) are extreme cases. Most companies will do some sort of a balancing act with different companies reaching different ‘equilibrium points’. For example, most of the companies try to arrive at the new salary based mainly on the previous salary while ensuring that the new salary is within the broad pay range or compensation band for the job (which is market benchmarked). However, these compensation bands are usually quite broad and there is significant room for ‘discretion’. Again, it is usually difficult to compare the capability level of the candidate with that of the existing employees and hence both the company and the candidate can make widely differing estimates regarding the relative capability level of the candidate.

Also, there is a basic conflict of interest involved in salary negotiations in most situations – the company wants to pay as a low a salary as possible (while ensuring that the candidate accepts the offer) and the candidate wants to earn as a high a salary as he/she can (while ensuring that he/she gets the job offer).

It is this basic conflict of interest coupled with the different ways of interpreting what constitutes the fair salary for the particular employee that make the interactions between the employer and the employee highly potent from the point of view of the formation of the psychological contract.

During the selection process, the employer and the employee will highlight what each can offer in the prospective employment relationship. This essentially a selling process for both sides and there is always the temptation to oversell and to get a closure as quickly as possible. However, this is key ‘moment of truth’ (a critical or decisive time on which much depends) in the employment relationship and any statements made during this process (even if it was just a passing mention) is likely to be interpreted by the other party as a promise and give raise to expectations (that form part of the psychological contract). This is especially true for informal and generic statements that don’t find their way into the formal employment contract. For example, if the employer (or any of the agents involved in the selection process like the hiring manager or the HR manager) makes statements like “No one has left us for salary reasons”, “In our company there are many people who received multiple salary increases in a year etc. it is highly likely to give raise to (unrealistic) expectations later! Thus one has to be very careful in making these statements as they are likely to impact the formation of the psychological contract.

However, there is one important advantage at this stage. Since there is no previous history of interactions between the employer and the candidate, there is no existing psychological contract at this stage. Hence while the parties have to be mindful of the impact of the interactions on the formation of the psychological contract, they don’t have to worry about the possibility of the interactions violating the existing psychological contract. Hence both parties can negotiate as hard as they need to do at this stage (a luxury they won’t have later). They just need to ensure that they don’t say anything that is factually incorrect or misleading.

So what do all these mean? We have seen that there are different ways of interpreting what constitutes the fair salary for the particular employee. I would strongly recommend that the employer explains the process they are using for arriving at the salary in addition to explaining the salary components in detail. Also, if the salary fitment that is being offered has implications for salary progression later (e.g. if the salary offered will put the candidate at the top end of the band which would make the future salary increments lower or if the next increment of the candidate can be prorated as the candidate is joining in the middle of the year) it should be clearly explained. This will enable the candidate to make an informed decision and not to feel like a victim later. Yes, there is a possibility that candidate might not agree with the process and refuses to take up the offer. But this is a much better scenario for both the parties as compared to the scenario in which the candidate joins, feels cheated and leaves the company (or functions at a low level of effectiveness). Also, broad/vague statements that can get misinterpreted should be avoided.

The candidate should also specifically ask for the process for arriving at the salary and seek clarifications on vague/imprecise statements made by the employer. Candidates should also negotiate as hard as they can at this stage, because trying to renegotiate the salary after one joins the company is a much more complicated process and it could be interpreted as lack of commitment (or 'attitude problem')on the part of the employee and a violation of the psychological contract.

In the next post in the series, we will take a closer look at the salary negotiations that take place during the tenure of the employee in the organization and examine its impact on psychological contract (and how the psychological contract influences those negotiations).

Please let me know if you have any comments/suggestions at this stage!

Of salary negotiations and psychological contract: Part 1(dramatis personae)

“I feel cheated. If I had known this, I would not have joined this company”, said the frustrated employee. “We had given you a good hike over your previous salary. We had also explained the details of your compensation and benefits when we gave you the offer letter. Once you have signed the employment contract, it is not appropriate on your part to raise issues about it so soon. What somebody else get paid is none of your business”, replied the HR Manager.

This is a scene that gets enacted quite frequently across organizations – with unpleasant consequences for both the employer and the employee. I have often wondered what can be done about it. Based on my experience in the domain (from both sides of the fence!), I think that an exploration of the terrain from multiple perspectives is required to find a reasonable solution to this puzzle. This series of posts is an attempt in that direction. I also feel that while the ‘best solution’ is likely to be context specific, some general guidelines can be formulated.

In the first post of this series, we will begin by taking a closer look at the concept of ‘psychological contract’. We will also conceptualize salary negotiations in terms of the key stages in the ‘employee life cycle’ in which salary negotiations take place.

The psychological contract is a set of mutual expectations held by the employer and employee that might not be captured in the formal employment contract. While the psychological contract is ‘not on paper’, it is very much real and significant as it impacts how the employer-employee relationship evolves. It also influences the key decisions made by the employees like the decision on whether or not to put in discretionary effort and whether or not to leave the organization. Hence maintaining the psychological contract is critical for enabling positive employee relations. Please note that in the case of reasonably well-managed organizations (where a breach of the legal employment contract is unlikely to happen), employee exits almost always happen because of the perceived violations in the psychological contract. Repeated violations of the psychological contract can also prompt the employees to form unions to protect their interest.

Salary negotiation is not the only factor that influences the formation and evolution of the psychological contract. Psychological contract might have other dimensions like organization climate and culture, degree of empowerment, career growth, learning opportunities etc. However, salary negotiation is a very significant factor in terms of the degree of impact on the psychological contract.

For our exploration here, we will use a broad definition of the term 'salary' – to include not only the cash part of the compensation but also the benefits and perquisites. Hence our focus in this series of posts will be on those parts of the psychological contract that have something to do with expectations the employees have regarding the salary (including variable salary), benefits & perquisites and the expectations that the employer has on what the employees need to do to earn the same. They also include mutual expectations regarding how (how fast, by how much and based on what) these (salary, benefits & perquisites) will change during the employment relationship. Mutual expectations regarding if, when and how these can be (re)negotiated will also be included. We will assume that the 'employer' is represented by the managers of the employee (people in the reporting chain of the employee and also the HR managers).

Salary negotiations happen at multiple points during the tenure of an employee. However, for the purpose of our discussion here, we will conceptualize the same in terms of the salary negotiations at the following stages

1. Before the employee joins the company (when the ‘employee’ is still an outsider)

2. During the tenure of the employee (from the time the employee joins the organization till he/she submits the resignation)

3. After the employee submits the resignation (when the company is trying to keep the employee back by making a counter offer)

Of course, this is a simplified picture. For example, if stage 3 is successful, the game goes back to stage 2. After that, stage 2 & 3 can (and often do) get repeated later. Also, an employee can indicate his/her intention to quit without formally submitting the resignation.

We will explore each of the stages in detail in the subsequent posts in this series. We will also look at some interesting phenomena observed in this land like 'batch parity' and 'entitlement mentality'. In addition to this, we will look at some other dimensions of psychological contract not related to salary and their implications. For the time being, let us look at a few basic principles.

a. When it comes to forming expectations (psychological contract), what was left unsaid is often more important than what was said during the interactions between the employer and the employee. Psychological contract is unwritten, broad and implicit as compared to the employment contract which is written down, specific and explicit. Hence there is much more room for misunderstanding and misinterpretation.

b. Employees often carry assumptions from their previous employment experiences. Hence they might assume (without any input on the part of the new employer) that something will exist or will not exist in the new organization. Similarly employers (based on the behaviors of existing employees) might assume (without any input on the part of the employee) that the new employees will do or will not do something (See ‘Appropriate metaphors for organizational commitment’ and ‘Passion for work and anasakti’ for more).

c. Keeping in mind (a) and (b) above, it makes a lot of sense on the part of both the employee and the employer to surface and validate as many of the possible expectations and assumptions as possible (See ‘On what good looks like’ for details). However, this might conflict with the need to strike a deal quickly (e.g. to get the employee to accept the offer or to get the employer to make a job offer). It has to be noted that any shortcuts employed here can lead to long term pain even if they provide some short term gain.

d. The self image of the employee (and the self image of the manager) can have significant impact on the creation and evolution of the psychological contract. Interactions with the colleagues and team members also impact the psychological contract.  
e. When it comes to psychological contract, ‘perception is reality’. Breach of psychological contract may occur if employees perceive that the company (or any of its agents like the managers), have failed to deliver on what they perceive was promised. It can also happen when the employer (manager) perceives that the employee hasn’t kept his/her end of the bargain. Since psychological contract was ‘not on paper’, often the parties don’t initiate a discussion immediately to check whether the perceived breach of the contract really took place. Usually the issue remains ‘underground’ for quite a while and by the time it surfaces it would have gained a lot of negative momentum.

f. Once the breach of the psychological contract occurs, it is often very difficult to repair. Hence prevention is much better than cure in this case!
g. On the positive side, psychological contract provides an excellent opportunity for the organization to engage with (and retain) the employees on multiple dimensions - transactional and relational. It can create a deep alignment between the employee and the employer and provide a sense of meaning a purpose to the employees. Hence it makes sense (for both the employers and the employees) to do whatever they can to actively shape and manage the psychological contract!


In the next post in the series, we will turn the spotlight on the interaction between the employer and the employee before the employee joins the company.

Please let me know if you have any comments/suggestions at this stage!

On what ‘good’ looks like…

“I am leaving this organization because my manager and I have very different ideas on what ‘good’ looks like in my domain, and we have agreed to disagree. It was not a matter of lack of clarity on the performance objectives and targets. The issue was a fundamental disconnect on what those objectives and targets should be and how they should be achieved – on what ‘excellence’ means in my role and in my domain”, said the Function Leader during his exit interview.

In my career so far, I have had the good fortune of experiencing many organization contexts – either as an external consultant or as an employee. Based on these experiences, I have come to realize that organizations often have different definitions of the ‘picture of success at an individual level’ (i.e. what good individual performance looks like). While the tasks/deliverable will vary from one job to the other within the organization, there are common patterns that hold good across jobs in an organization on what good performance (or ‘excellence’ or ‘quality’) looks like. But, these patterns can vary a lot from one organization to the other. When people move from one organization to the other this can create ‘rude shocks’ – for both the employee and the organization – especially when an employee who has been successful in one  organization joins another organization that has a different definition of excellence('what good looks like').

Let us take a closer look at these underlying(tacit) definitions of quality (or excellence). While each organization has its own underlying definition (assumption), it can be useful to conceptualize these underlying assumptions as points in a continuum between two polar opposites : 'absence of variation' and 'presence of value'. 

At one end we have organizations where the underlying definition of quality is very much similar to the ‘six sigma definition’ – ‘absence of variation’. In these organizations, the performance of an employee considered to the excellent, if he/she thinks through the goals before agreeing to the same, creates a detailed plan to work towards the goals in a systematic manner, archives goals even if there were changes in the environment (through scenario planning, risk analysis & mitigation and sheer focus). These organizations also tend to value and invest in building capability/expertise – at both people and process level. Hence the premium is on good design, deep expertise, meticulous planning, reliability, consistency, coherence and congruence. In extreme cases this can lead to rigidity.  

At the other end of the continuum we have organizations where the definition is more like 'presence of value' or ‘fitness for purpose’ (with the ‘purpose’ changing quite often). Here the focus is on ‘trial and error’. Simply put, this means do whatever makes most sense in a particular situation. In these organizations, muddling through things is acceptable and even preferred (over thinking through things and seeking clarity before starting work). People who insist on planning and consistency are considered to be ‘risk-averse’ (or even to be 'lacking in courage'). Operating with contradictions (and lack of coherence & consistency) is considered to be ‘heroic’. A lot of emphasis is placed on pragmatism (as opposed to expertise) and on workarounds.  Hence the premium is on ‘flexibility’ and ‘crisis handling’. In extreme cases it can lead to an organization that jumps from one idea (goal or fad) to another on a frequent basis.

Of course, there are many other dimensions (for the variation in the underlying definitions on what good performance looks like) in addition to dimension represented by the continuum between the two end points mentioned above. There is nothing inherently 'good' or 'bad' about these underlying definitions - they are just different (equally valid) ways of looking at the world. The point is that these variations exist across organizations and it could have a significant bearing on performance, employee satisfaction, engagement and retention.

To some extent, these assumptions are related to the environment in which the organization is operating in. But it is often it is a matter of the preferred way of responding to the environment. These assumptions are also closely related to the culture of the organization- especially the deeper levels of culture – values and basic underlying assumptions. Theoretically speaking, the match between the employees’ and the organizations’ definitions of ‘what good performance looks like’, is represented by some dimensions of ‘person-organization’ fit. However, an intellectual discussion on the low scores on some dimensions of ‘person-organization’ fit might not fully bring out the reality (trauma!) of the ‘rude shocks’ for the employee and for the organization (mentioned earlier in our discussion).

This brings us to the question of adaptation. Employees can adjust. Organizations can change too – though usually it is a very slow process and require a ‘critical mass of new employees with different preferences’. The individual’s definition of ‘good’ can also change. However,  the individual’s definition of ‘good’ is shaped mainly by his/her personality and his/her ‘early career experiences’ (see 'Influence of early career experiences') and a change in the same requires lot of time and a critical mass of high impact (profound or traumatic) new (different) experiences. Hence, for the time being, let us focus on the issue of new employees attempting to align with the organization’s definition of ‘good performance’.

Yes, employees do realize that they are unlikely to find an organization that provides a 100% match to their preferences and that they need to adjust. But if an employee needs to constantly act outside his/her preferences it can lead to stress.  This can also lead to mediocrity as the individuals are not able to play to their strengths. Excellence and engagement at individual level requires the opportunity ‘to bring more of who you are into what you do’ (see 'Employee engagement and the story of the Sky Maiden'). It is critical for those employees for who looks at work as one of avenues for self-expression. Similarly, when organizations talk about connecting with employees at higher levels of the needs hierarchy, this becomes important for the organizations also.

Now let us come back to the exit case that we saw in the beginning of this post. Ideally, the employee and his manager should have been able to arrive at a higher ground that integrates their conflicting points of view (like the struggle between thesis and antithesis results in a higher more truthful synthesis of the two - in Hegelian Metaphysics).But this ideal state is often not possible within the constraints of the organization context and the individuals involved. Sometimes (as the existentialist philosopher Kierkegaard says), people will have to make ‘either/or’ decisions (and the seductive beauty of Hegelian ‘and/both’ turns out to be an illusion).

One of my all time favorite books is ‘Zen and the Art of Motorcycle Maintenance’ by Robert M. Pirsig. This book begins with the lines “And what is good, Phaedrus, And what is not good, Need we ask anyone to tell us these things?" In the context of our discussion (for a person who is trying to join a new organization or for an organization trying to hire someone), the answer should be a loud ‘YES’.  Yes, it is worthwhile to ask this explicitly, listen carefully, ‘read’ between the lines and to be very careful about what is left unsaid!!!

Placebos, Paradoxes and Parables for Culture Change

These days, I find myself thinking a lot about ‘culture change’. In my previous post (The Culture Lizard), I mentioned that just by changing the way people address one another in office (e.g. calling people by their first names instead of ‘Sir’, ‘Boss’ etc.) the underlying (hierarchical) culture is unlikely to change. I also said that in general such attempts might do more harm than good (e.g. by creating cognitive dissonance – especially for new entrants). But there are exceptions to this and let us begin this post by looking at one such scenario.

From my experience across organizations, I have found that new entrants often make incorrect judgments about the ‘culture of the organization’ and ‘what is required to be successful in that culture’. Sometimes, they also ‘project’ their ‘assumptions’, ‘preferences’ and ‘fears’ into these conclusions. Going back to our discussion above, there could be situations where new entrants (because of their assumptions about culture) misjudge the culture to be ‘hierarchical’ (where it is not actually so). They might also start addressing people as ‘Sir’ or ‘Boss’ (where it is not really required).

That is where the ‘placebo effect’ comes in. Placebo effect is the beneficial effect in a patient following a particular treatment that arises from the patient's expectations concerning the treatment rather than from the treatment itself. In a situation where the new entrants have misjudged the culture to be hierarchical and hence started addressing people as ‘Sir’ or ‘Boss’, the above intervention (of stipulating that everyone is addressed by their first names in the office) might do the trick. Of course, here the problem was essentially in the minds of the new entrants and that was the primary reason why the placebo (intervention) worked.

In reality, a particular culture is not really ‘black’ or ‘white’ (i.e. hierarchical or non-hierarchical) – it is more like ‘shades of gray’ (i.e. ranging from ‘very hierarchical’ to ‘very non-hierarchical’). Since placebos often have useful physiological effects, I would speculate that our placebo (i.e. our intervention) might even cure mild cases of ‘hierarchical culture’. This happens when the new entrants feel ‘empowered’ by the intervention and if there are a ‘critical mass’ of new entrants they might actually end up changing (‘curing’) mild cases of hierarchical culture!*

This brings in another important issue. One of the methods advocated for culture change is to hire the right people who would help in creating the desired culture. However, as I have mentioned in my post ‘Paradox of hiring good people and letting them decide’ that implementation of such an approach might be more difficult that what it appears to be (as definition of ‘good’ might get colored by the limitations of the current organization in figuring out ‘what good looks like’). It is also possible that if an organization hires someone who is aligned to the desired culture and if the desired culture is very different from the current culture the ‘system’ (the current organization) might ‘reject’ the new entrant just like the human body tries to reject a newly transplanted organ. May be, the solution is to hire someone who does not disrespect current way of doing things (and hence someone who would not evoke too strong an ‘immune response’/rejection from the existing organization) – but who is committed to the new way of doing things (the desired culture) – and changes the culture in subtle ways – say by introducing subtle modifications to the stories (parables) and the meanings derived/messages conveyed by the stories – by changing the daily conversations among the members of the organization through which they derive/agree on/make sense of the events in the organization (see ‘Architects of meaning’ for more details)!

*Note: Another scenario where such an intervention might be useful occurs when these words ('Boss', 'Sir' etc.) have strong associations (especially negative ones - say with 'autocratic behavior', with 'highly formal relationships' or with 'distant authority figures') in the minds of the new entrants. These associations (formed based on their previous work/life experiences) might trigger corresponding emotional responses in the new entrants and this might cause them to feel/think and act differently when interacting with their managers. For example, it might make it difficult for the new entrants to interact in a natural/creative/uninhibited manner with their managers. It is possible that such associations exist (at least to some extent) in the minds of managers also and this in turn might affect their feelings/thoughts and hence their behavior towards their team members. In such scenarios, this kind of an intervention (calling people by their first names instead of ‘Sir’, ‘Boss’ etc.) is useful as it prevents these unwanted emotional responses from getting triggered.

Paradox of 'hiring good people and letting them decide'

How do we build a high performance organization? There are many 'answers' to this question. There has to be many answers (or at least 'attempted answers'), because, this is the core issue in 'management'. Hence, most of the management literature should be dealing with some aspect of this this question ('quest' !) in some way. So we have many approaches/answers. There is one particular approach that I find to be particularly interesting. It is something like this : "Hire good people and empower them to decide what is to be done and how it is to be done". The basic idea here is that in a complex and rapidly changing environment, it the traditional approach of specifying (to each employee) what exactly has to be done is unlikely to work. So it is better to hire good people and let them figure out what needs to be done.

I am not saying that this approach is 'wrong'. My point is that there is a paradox here. In order to hire 'good' people the organization has to use a definition of 'good' (a 'working definition' of what 'good' means in their context - so that it can be used in the hiring process/ as the selection criteria). After all one can't do hiring without some sort of criteria (implicit or explicit). This leads to an interesting situation. This definition of 'good' (implicit or explicit) is colored by the current thinking in the organization. To put it in another way, the criteria for a good hire gets influenced by the organization's (often implicit) understanding of what is to be done, how it is to be done and hence what sort of a person can do it. So the existing limitations (and prescriptions of what is to be done/how it is to be done) gets built into the hiring criteria at least to some extent.

Let us look at the most common example of this situation. Organization 'A' is in trouble. The organization does not have a clear understanding of what is to be done to get out of this situation. So it decides to hire a 'good' CEO and let him/her figure out what needs to be done. However, when the organization chooses a 'good CEO' that choice is colored by the explicit/implicit definition of 'a good CEO' which in turn is limited by the current thinking/consciousness in the organization. This can be addressed to some extent by looking at 'best practices' (what has worked in CEO selection elsewhere in similar situations) and by using external advisers. But this might not always work as the the uniqueness of that particular organization context might get missed out and also because the external advice/best practice information often goes through one level of processing within the organization (when decision making is done by existing people) which in turn brings in the limitations in the current processing/thinking in the organization.

Hence the approach of 'hiring good people and letting them figure out what needs to be done' might not be as simple as it appears to be. Actually, it can not be simple. Otherwise it would have been very easy to build and sustain high performing organizations.

Any comments?

See a related link here

Choosing a leader - the 'battle scars' way

There is a huge amount of literature on the characteristics of a good leader. What is not so certain is whether this extensive body of knowledge is leveraged when organizations actually choose leaders. In this context, I remember a story that I had heard a long time ago. It is about an 'ancient method' for choosing leaders. I am not sure if this story is a real one/based on facts. But, as I have mentioned earlier, there can be some things that are too true to be real.

The story says that in some ancient societies, there was an interesting method for choosing the leaders. The procedure was rather simple - count the number of battle scars on the bodies of the candidates. The candidate with the highest number of battle scars gets selected as the leader.

Though this method appears to be rather 'weird', there is an interesting logic behind it. If one has too few battle scars, it means that one hasn't taken enough risks in one's life. Of course, if one took too many risks, he/she would have got killed already, and hence he/she won't even land up for the leader selection process! Hence the candidate with the highest number of battle scars qualifies as the leader.

This makes me wonder if this 'weird' selection principle has any relevance in today's organizations. If we look at the story carefully, we can see that the underlying assumption of the selection process (described in the story) is that 'the ability to take an optimum amount of risk (or the ability to pick and choose one's 'battles')is the key success factor for a leader'. This is true to a large extent even today, though there are many other factors that make an effective leader.

Since the battles in corporate world are no longer 'physical battles' (leaving aside the studies on 'workplace violence' - for the time being !) , 'battle scars on the body' is no longer a valid indicator (even if we assume that there won't be any fudging - say by 'manufacturing' battle scars through cosmetic surgery!). But 'less physical equivalents' of battle scars (say ambitious projects that have failed) can still be found. It can also be argued that if someone takes too many risks and/or 'wild' risks it is likely that it would lead to 'too many too bad failures' in his/her career, which in turn would mean that he/she is unlikely to 'survive long enough'/reach a senior enough position in an organization to be a leadership candidate. So this principle could still have some relevance - at least on the dimension of risk taking!

Actually, if this principle gets widely adopted, it can lead to many interesting situations. For example, job candidates will include a section in their CVs titled 'My key failures' (that list the ambitious moves/projects that have failed, learnings from them & how they have helped in becoming a better leader) in addition to the usual section titled 'my key achievements ' !!!

What do you think?