Monday, November 9, 2015

Leadership Sensibilities and Sensitivities: A Theory of Statistical Behaviour of Organizations

A modern day leader is no longer like a monarch who commanded everything and everyone he or she saw. Monarchy had a very structured system of regular court and advisors in statecraft and governance (“rajya neethi” and “rajya dharma”). Along with monarchies (some of which misused or disregarded such systems), these systems have also disappeared. Modern day leadership emphasizes performance with accountability. It teaches us that the contemporary leader has to be both sensible in how leads his followers and sensitive to how his followers (as well as other stakeholders) respond to his leadership. This advice is well merited given the premium we place on hiring aggressive leaders who can fulfil ambitious targets and make businesses more competitive than ever. When the leader conforms to this fast-forward template, and more so when he happens to be a newly hired leader, it is quite possible that he would be racing ahead almost like an engine without the carriages!

Governments and agencies concerned with good governance in this context have come up with two ideas to facilitate responsible leadership. The first is an improvement to the longstanding mechanism of board governance, with increased focus on independent directors and criteria of good governance. The second is the definition of Key Managerial Personnel (KMPs) with accountability to the Board and the Regulators, besides of course to the Chief Executive Officer (CEO). In addition, the companies also have direct accountability to the investors through annual shareholders’ meetings as well as listing agreements with stock exchanges. The quarterly calls with analysts and the focus of stock markets on material developments add multiple extra layers of watchfulness to keep the CEOs on toes. One may, therefore, conclude that sensibility and sensitivity are both assured in the leadership governance system. The reality, however, is probably otherwise. There can be no better leadership governance than self-governance for which the need is for real time feedback.

Forums, and forums…

Leaders do realize that they need to keep track of, and on a reasonably real time basis, as to how they are doing. Unfortunately, however, a leader is perched lonely at the top of the organizational pyramid. With so much at stake in terms of perceived performance, leaders find it difficult to ease up, or let their colleagues ease up, on how they are performing. All organizational structures are hierarchy driven, more so in India. Even in developed countries, it is observed that while interactions seem to be open, the underlying agenda is often influenced by hierarchy. While an intrinsically astute and sensitive leader may manage to pick up signals from the various meetings and interactions, the odds are that such pickups are not the same as structured conversational feedbacks.

Leadership practice has evolved to put in place certain mechanisms to make leaders sensible and sensitive. From one-on-one conversations with employees to town halls, and from video chats to dipstick surveys, a range of options are available for leaders to ascertain how they are doing. As is true with most things, substance is more important than style and content is more relevant than form. If leaders do not appreciate the importance of the science of statistics and the art of organizational behaviour in structuring interactive sessions and receiving feedback, such interactions cannot be of real help. Statistical science is important to ensure quantitative representativeness of interactions while organizational behaviour is needed to facilitate qualitative integrity of responses.

Barriers to feedback

The barriers to feedback are many in a modern corporation. Each leader, however independent he may seem to be, tends to be a prisoner of his immediate team or a few confidential advisors. Only in certain situations does the leader get to savour the freedom of open interaction with the larger organization. Secondly, there is so much emphasis on execution and accountability that there is little time for bilateral or multilateral discourse. Thirdly, the broader organization does not usually have an ability to communicate appropriately in the forums provided. More importantly, the meetings with leadership tend to be so few and far between that the team prefers to listen than to speak. The challenge of open feedback is compounded exponentially when the leader is authoritarian and egoistic. At least, in such cases, the Boards have a responsibility to mentor and coach such leaders to basic levels of openness to feedback before any of the interactive sessions are planned.

Organizational structuring through conventional departments and established hierarchy is another barrier to feedback. If the feedback pertains to, say, morale, HR would quickly volunteer that they are on top of it. If someone worries about growing capex, Business Planning would say that all of the concerns have been factored in. If technology connectivity and productivity is desired, IT would express concerns of low priority. Or, in contrast, all of the sessions may end up as feel-good interactions, with little surfacing of issues and advocacy of solutions. Behavioural scientists aver that having a right organizational culture is essential for communication sessions to succeed, especially if bottom-up feedback is desired. If the barriers to feedback are to be overcome, the leaders have to meet the right people with the right processes. A combination of statistical science and organizational behaviour termed ‘Statistical Behaviour’ herein is required!

Statistical behaviour

In spite of the foundations of culture, pillars of training and canopy of leadership, the rank and file of leaders tend to behave in random manner when it comes to expressing opinions. Many times, the forums are organized without taking into account the statistical representativeness of the sample to the universe. The participants for the physical sessions, in particular, are selected without statistical rigour, and unfortunately with bias of comfort in selection, either by rank or acceptability.  Even leaders themselves do not seem to appreciate the importance of statistically scientific selection and managerially artful communication to obtain representative feedback. There are two laws which are relevant in this context. The first is the Law of Small Numbers to which most leaders fall a prey to; the law of small numbers triggers leaders to come to hasty generalizations and quick judgements just based on initial interactions and/or incomplete and incoherent data sets. Obviously, it is a logical fallacy to assume that small interactions can reflect collective viewpoints of the larger organization.

The Law of Large Numbers is a statistically supported principle that states that the larger the sample the greater is its representativeness in reflecting the opinion of the universe. Given the randomness that is inherent in organizations, larger numbers are essential to balance extremes and enable inclusivity. As data points from a large sample become available, convergence towards a representative collective viewpoint emerges. Selection of participants by the law of large numbers alone is not sufficient. Leaders must have the discipline to interact in consonance with the composition of the large sample (ie., touch each participant of the sample). In the absence of that, the leaders would be introducing the travesty of small numbers in a sample of large numbers. Statistical behaviour requires a behavioural skill on the part of the leader to bring out the multiple reactions to the leadership style and corporate course of action. Sensibility and sensitivity on the part of the leader as important as statistical behaviour of his broader organization. 

Sensibility, sensitivity 

Often, sensibility and sensitivity are seen to be the same. While there is considerable overlap, there are subtle differences too. Sensibility refers to the quality of having an acute perception or responsiveness as to what an event or statement would mean to the stakeholders, especially in terms of emotions. It is the ability to experience and understand deep feelings. Although sensibility is used in the realms of art and literature, it is quite applicable to business and commercial activities too. A sensible leader makes good judgements based on reason and experience rather than emotion. Sensitivity is the expression of one’s sensibility levels. It is an ability to fathom the depth of emotions and feelings of others. It also is the capability to calibrate one’s statements and actions keeping in view the impact they would have on others. A sensitive leader would be conscious of how his judgements, even if they are sensible, would be perceived and experienced by others.

The interplay of sensibility and sensitivity may be illustrated by a right-sizing decision in an organization. A company may withhold organizational expansion in the context of business downturn, and it may take the decision as the only sensible option, fully cognizant of the emotional impact. The way the decision is communicated, however, requires considerable sensitivity to the emotions it actually stokes when announced and the responses that could arise. The reality is also that it is impossible for a leader to make decisions that are sensible to all. A major investment decision may evoke positive sensibility and sensitivity internally within the organization but external investors, who tend to be perpetually concerned about the return on their investment, could well be uncertain and would, therefore, need to be handled with sensitivity. Being sensible and sensitive need not cramp a leader’s style; it would actually enhance his or her effectiveness. A leader who is seen as sensible and sensitive would have greater acceptance and hence greater effectiveness. The theory of statistical behaviour of organizations, proposed in this blog post, helps leaders in the process of leadership acceptance and effectiveness.

Posted by Dr CB Rao on November 10, 2015      

Sunday, November 8, 2015

Job Fulfilment: Highway Cruise or Oil Exploration?

Job fulfilment is the precursor for job satisfaction. Given that more than 50 percent of a 24 hour day and more than 80 percent of the wakeful part is spent on the job or job related activities, job satisfaction is a must for peace in life. Deriving fulfilment on the job is essential for pace in life, therefore. Job fulfilment cannot be defined in terms of either title or compensation. It is more in terms of doing what one enjoys and what one’s natural aptitudes and talents play for, and finally the impact one makes through one’s job on the people and organization. In some cases, job fulfilment occurs immediately while in some case, it takes years to happen. In most cases, what was fulfilment at the start gets overwhelmed by greater accomplishments later in life but in some cases, the later day’s greater successes trigger greater satisfaction from the initial fulfilments too.    

For a teacher, for example, job fulfilment occurs when he or she is able to coach his class to high scores in examinations. The real job fulfilment, however, comes when the teacher sees his students occupying high positions and becoming successful in life. The teacher, in the process, starts getting more fulfilled from the teaching process, the long term implications of students getting high scores, and their bringing credit to the teacher and the alma mater in the years to come. Today’s competitive landscape pressures executives for immediate performance, much like examination results, and ingrains a mind-set of seeking immediate fulfilment through rewards and recognitions. While there is nothing wrong in this (except for the accumulation of stress), the flip side is that executives, no longer, are able to await and relish the long term results from the seeds they sow.

Jobs make careers

Most advertisements for recruitment no longer emphasize the job; they speak of careers. Most recruiters emphasize how careers can be built up through the position in question. A company that lays attention on talent mapping and succession planning can, indeed, assure a fulfilling career through a series of fulfilling jobs. Such companies are characterized by their frontline executives growing to occupy CXO positions eventually. It is, therefore, unnecessary and even misplaced to distinguish between jobs and careers. If jobs make careers for individuals, and both mean fulfilment for them, it is important to realize that companies also have their own jobs and careers to fulfil for the society. In fact, it is only within the aegis of a company that individuals can find fulfilment.  While individuals can find jobs in any company, successful or not so successful, they can find careers only in successful companies or making not so successful companies successful with their jobs.

Like individuals, companies also have jobs to perform and careers to make. A company has a job to do in terms of delivering the products and services. However, the company also has a career to make (even if it is somewhat inappropriate to describe so) in terms of maintaining a continuity of products and services that are ever more beneficial to the customer. Just as an individual gets to change a job in search of fulfilment or career, companies also get to churn their products and services (and even employees) in their quest for a “career” in the business landscape. While these similarities are easy to appreciate, the interplay between jobs and careers as well as individuals and companies (in permutations and combinations thereof) is not understood by either the individuals or the companies. Perceptive business leaders and human resources leader not only appreciate this interplay but work in partnership to address this complex issue.

Defining fulfilment

Many people see and seek fulfilment in terms of how their talents impact the jobs that they carry out. One is apt to make statements such as “I completed my assigned project which was appreciated by my boss” or “I made a presentation that the audience liked”. Fulfilment through such feelings and perceptions is misplaced. True fulfilment occurs when the job impacts positively and meaningfully others in the organization and one feels invested in the company’s future through the job one is performing. Again, it is not a matter how many people one leads but it does matter how much interaction one is able to have with other relevant internal and external stakeholders. True fulfilment also occurs when one is able to experience, on a first hand basis, the results of one’s work.

Typically jobs (especially in mature established organizations) tend to stay static while talents (as defined by a combination of education and experience) may improve. Fulfilment becomes elusive when jobs trail competencies. There would also be cases when jobs (especially in turnaround situations or sunrise industries) require new skills while talents (as required by new requirements) remain static. In this case also, where skills trail job challenges, fulfilment becomes elusive. Fulfilment, on the whole, is a dynamic concept which can work only when jobs, as they are designed, manned and performed, lead to growth of businesses. This is not merely a human resources responsibility but the responsibility of the entire leadership team of a company at one level. It is also, more importantly, the responsibility of the individuals themselves at another level.  

Economic view

It is impossible to discuss job fulfilment without considering an economic viewpoint. Typically, companies extract consumer surplus when they market their products or services at prices higher than costs. Consumer surplus obviously varies based on the product-market segments. In a similar fashion, companies seek to derive (‘extract’ could be a negative word, here!) employee surplus by deriving higher value from their services than the salaries paid to them. The laws of growth and competition not only legitimize the relevance of consumer surplus and employee surplus but also seek to reduce consumer surplus per product or service. Companies try to counter this by maximizing employee surplus but this may not always be feasible in a skill-scarce and talent-constrained economy. The only way this riddle of economic fulfilment is solved is through sustainable and profitable growth.

The economics of fulfilment for individuals, in their twin roles as customers and employees, and for companies, in their multiple roles as producers and sellers, and as employers and optimizers are important. Growth economics, in fact, is a bubble. Population demographics is a reality. The bubble has to be sustained to meet the reality. Unless economic growth stays continuous and consistent, social fulfilment becomes elusive. When viewed in this perspective, job fulfilment can never be a matter of individual joy or disappointment, and not even of job design and talent deployment. It is a matter of finding business and economic solutions for challenges of growth. Job fulfilment occurs when the role of an individual is appreciated by the role designers and the individual is able to appreciate the role as part of a larger socio-economic paradigm.

Cruise or exploration?

When this socio-economic perspective is understood, frontline executives as well as their employers start assessing objectively whether job fulfilment is a matter of immediacy and surety as a highway cruise is, or is a matter of uncertainty with sporadic abundance as oil exploration is. The answer is rather simple. The concept of a career highway, however desirable it is, is rather a desire than reality in organizations. There are far too many variables in the process of interactions of individual-business-environment that there can never be a pre-set path. It is unclear, for example, if the conventional synthetic medicines will be dominant a decade hence or biologic medicines or genetic engineering would be dominant. Taking the example of automobile industry, the future automobile could be a digital machine. Career highways based on current business models and current skill-sets could be misleading.

On the other hand, job fulfilment is more like oil exploration. Not every field, whether on-shore or offshore, offers potential for oil, and not every field with potential for oil ends up providing an unending gush of oil. Job fulfilment for aspirant executives arises from a process of identifying the right companies and persevering with their job roles and career paths with grit. As with exploration, the operating circumstances tend to be challenging but when the right role is struck, the rewards could be plenty. Like oil exploration, exploration of job fulfilment tends to be a combination of hardware, soft skills and the entire organization working together. While the simile may seem extended, the underlying concept that job fulfilment is a larger enterprise-wide challenge is a reality. Does the individual have an easy path then?

Aligned fulfilment

The solution for job fulfilment lies in aligned fulfilment between the company and the employees. The company must have a larger purpose and mission which must have the buy-in of the employees. The company and the employee must have a clear view of how the dynamics of industrial competition would impact the economics of consumer surplus and economic surplus. Just as the company feels justified in deriving a consumer surplus based on the perceived value of its products and services to the company, the employee must feel a broader purpose in providing the employee surplus to the company. A good job for a competent person pays well. A great job which is derived from a sense of purpose for the company and covers its employees inclusively leads to fulfilment for them as well as the company.

Posted by Dr CB Rao on November 8, 2015