JWI 520 People Management - Week1, 7/5/12
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Personal Happiness is the ultimate goal of existence
"Happiness is the greatest good" Aristotle
Money, Power, Health, Career Success..should lead to happiness
Great people decisions can enhance Personal relationships and job satisfaction and increase happiness
Great People Decisions, One Person at a Time is a Life Skill
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A most Decisive skill that determines career success & personal happiness
I. Fernández-Aráoz, Great People Decisions, 2007
Chapter 1: A Resource for You
Chapter 2: A Resource for Your Organization
Chapter 3: Why Great People Decisions Are So Hard
Chaper1: A Resource for You
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Great people decisions will help improve competence in hiring and promoting great people for your team.
Assess people's competence and potential to grow
Nothing is more important for you or your organization.
As you progress from unit manager to running the ship to Senior Executive to CEO or Chairman,
people decisions are the highest challenge and biggest opportunity.
High performing organizations provide employment, generate returns and make society better.
A great company full of great people raises the standard of living, raises our sights, broadens horizons and gives hope for a better future.
Why do certain people succeed and others fail ?
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Egon Zehnder, Executive Search Pioneer
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#1 reason for individual success is LUCK!
Successful people are highly intelligent, hard working, prepared, relate well to others.
But most important reason is luck. Lucky to be born into certain families, countries, have unique gifts, attend good schools, get good education, work for good companies, stay healthy.
Lucky to have opportunity for promotions
Zehnder is a natural-born leader: self aware, full of integrity, a man of amazing commitment, initiative and optimism, master at encouraging the heart
HBS MBA, constant development, avid reader, astute reader of people, learns from all characters and situations
Worked 6 days a week, prepared for every single meeting, talking in front of a mirror, recording and reviewing and timing it
Career choices allowed him to jump to the next level - moved from law to business, advertising to executive-search
launched the firm with a unique vision, decided not to go public, created equal partnership, collaboration, compensation (see Zehnder, HBR, simpler way to pay)
He built a great firm by being personally involved in the hiring of every single consultant for 36 years
Candidates are interviewed by dozens of colleagues, the chairman to ensure they meet exacting global standards and have a cultural fit
Invented his own career and became a master at people decisions
Fernandez-Araoz's framework
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Ability to make Great People Decisions is te most powerful contributor to career success
(1) Genetics - important throughout life
(2) Constant Development Effort- especially critical in early stages, but important throughout life
Ability to learn formally and informally depends on career choice.
Intensely bureaucratic and unprofessional organizations stifle career progress
Good career choices multiply the fruits of your development efforts and lead to outstanding career success
Putting yourself in a hotbed of innovation is better than putting yourself in backwater for long term career success
(3) Good Career Decisions - important in early 20s
(4) Great People Choices - single most important factor in career success
Never underestimate the importance of a commanding physical presence
Center for Creative Leadership, Greensboro, North Carolina
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Successful Executives
- deliver strong organizational performance
- build good relationships with subordinates
Strong organizational performance is a necessary component of personal success
Great people are behind creation and deployment of strategy, great products & services, money in the bank
First Break All the Rules (Marcus Buckingham, Curt Coffman)
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None of us has unlimited potential
Become a master at hiring and promoting the best people
Two key People Decisons:
- First Select Good People.
- Second, assign the right person to the right job ie. Identify what is unique about each person and capitalize on it
Discover what you don't like doing and stop doing it
Delegate
Develop good successors
Wrong people do get into wrong jobs
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1/3rd of CEOs are fired or forced to resign
1/3rd of executives are in lower part of competence curve compared to peers
People puzzle - finding, recruiting, hiring, promoting, retaining the very best people for the job.
Jack Welch spent more than 50% of his time in GE getting the right people in right positions.
Disciplined Approach in Hiring a Person
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Hiring of an Assistant
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Determine what you really need in the person (skills & complementarities job calls for, valued professional partner, improves productivity & quality of life, friend)
Discuss with colleagues and modify
Approach this as the most important assignment
Dont limit yourself to just people looking for a job
Identify target companies and individuals with potential (even if they may not be looking for a change)
Interview them, check in-depth and secure references from people you trust
Agonize over the final decision as it could disrupt people's lives
Optimism Bias
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65% of drivers in US rate themselves above average
37% of engineers rate their performance in top 5%
We are not good at Assessing performance & people eg. lying is not easily detected
It is not necessarily just Instinctive
You have to work at it
Human nature is to to make "snap judgements" & indulge in "unconscious biases" about people; we are not humble about what we do not know
"Having the right people in the right place is the job no leader should delegate" Larry Bossidy & Ram Charan
Must have the knowledge as well as the power to make people decisions
John Gottman's Predictors for Marriage Success
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Four Horsemen Emotions
(i) Defensiveness
(ii) Stonewalling
(iii) Criticism
(iv) Contempt - most important factor
Cook County Hospital's Dept of Medicine, Brendan Reilly Case, by Malcolm Gladwell
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Problem: Only 10% of people suspected of having heart attack actually have a heart attack
Solution: Identify and check key indicators, assign weightage, discuss for collective decision
Isolate few useful indicators and focus analysis more on those
Analyze less info - focus on relevant things to watch
Boiled down to using ECG + 3 risk factors (pain felt, fluid in lungs, systolic BP)
Same thing can be done with people decisions
Analyze challenges at hand
Identify key competencies required in candidate
Measure them accurately
Predict Performance
Discuss and decide on hiring & promotion
If you make a hiring mistake, have the emotional strength to admit it
Act Decisively to deal with consequences
Becoming a Manager, Linda Hill
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Developing interpersonal judgment is an essential task of self-transformation
Chapter2: A Resource for your organizations
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Right people choices are a key driver of organizational performance
Most important single factor for top performance
Stanford GSB first year MBA's 3A's : Anxiety, Anger, Apathy
Exposed to brilliant minds broadens horizon: outstanding profs, exceptional students,
Good to Great, Built to Last, Jim Collins
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Greatness is not a function of circumstance
It is a matter of choice and discipline
In a volatile world, best hedge against uncertainty
- create the best most adaptable team in the industry
- adapt to whatever changes the world might throw at you
Essential Foundational Prerequisites for remarkable corporate performance
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Outstanding leadership
Ability to build superior executive teams
"First Who" principle : Get the right people on the bus, wrong people off the bus,
right people into the right seats, figure out where to drive the bus
What Really Works (Joyce, Nohria, Roberson)
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Choice of CEO matters
- determines profitability
- decides whether the company will remain in the industry or not
4+2 Formula of successful companies:
Four primary practices: Strategy, Execution, Culture & Organization
Secondary practices: Talent of employees, Leadership & Governance, Innovation, Mergers & partnerships
The War for Talent, McKinsey
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Best companies demonstrate more discipline and skill at making the right people choices
Wrong people at the Top could miss diagnosing the cause of problems
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Layout, Product-mix, Service-level
Profitability by product, client, channel
All are symptoms - removal of CEO is the solution in such instances
People on Front lines of business: Do they consider people decisions as first priority, key determinant of success or failure?
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"You can have all the greatest stragies in the world
but they aren't worth much without the right people", Jack Welch
Fortune, 1999, CEO failure
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One of the main reasons for CEO failure is
the profound difficulty experienced when it came to making senior appointments
How do CEOs blow it?
"By failing to put the right people in right jobs
and the related failure to fix people problems in time"
Why Smart Executives Fail, Sydney Finkelstein, 2003
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Inability of the organization to put the right people in the right place
Circumstances linked to corporate failure are:
Creating new ventures,
dealing with innovation & change,
managing M&As,
addressing new competitive pressures
Causes behind executive failure are:
Flawed executive mindsets - distorted perception of reality
Delusional attitudes - keeps distorted perception of reality in place
Breakdown in communication systems - needed to convey urgent information
Personal attributes - deficiencies in leadership
What leads to organizational failure? Bad people decisions
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What leads to outstanding organizational performance? Great people decisions
CEO turn over study, Booz Allen Hamilton
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1/3rd of CEO appointments are outright failures
CEO performance in second half of career is significantly lower than in first half; destrys value in many cases
Fernandez Araoz
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1/3rd of CEOs are at bottom half of performance curve vs their peers in the industry
More complex the job, greater the difference between a superior performer and an average one - up to 6X difference
Orgs that hire or promote mediocre execs suffer greatly
Orgs that identify and appoint great people develop unique competitive advantage
Investing in search, assessment, recruitment of best managerial candidates returns 10X the investment
Ability to make the right people decisions is critical for success in any business, time, geo or acquisition:
Norberto Morita, Columbia MBA, led Quinsa beverage company through systematic managerially induced value creation
Ability to pick the right people for each critical job made all the difference
Entrepreneurial Ventures, William Sahlman, HBS
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When I receive a business plan, I always read the resume section first.
Without the right team, none of the other parts really matter.
Ending the CEO succession crisis, Ram Charan
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Many orgs lack effective succession programs
1992 Cadbury Report
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Critical importance of high-caliber board members to all aspects of good governance
What makes great boards great, Jeffrey Sonnenfeld
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It is not the rules and regulations, but it's the way people work together that makes for a boards greatness
Inside the Boardroom, Richard Leblanc, James Gillies
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Board process and Board membership are more important to board effectiveness than board structure
Ram Charan, adviser to many boards
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60% of corporate performance depends on right CEO and succession
which is one of boards main duties
Colin Carter & Jay Lorsch
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good people in boards will perform well even if structure is less than ideal
opposite is not true
Human Equation, Competitive Advantage through people, Jeffrey Pfeffer, Stanford
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It is important to choose right people at all levels of org
New Ventures & Small Business Management, Steven Brandt, Stanford
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The Bible - Ten commandments for small business survival
#1 - Limit the number of participants to people who can consciously agree upon
and contribute directly to that which the enterprise is to accomplish, for whom, by when
#5 - Employ key peoplewith proven records of success at doing what needs to be done
in a manner consistent with the desired value system of the enterprise
Find people who can work together effectively
Find winners who can accomplish key tasks consistent with the value system
Make Great People Decisions
History of Great Managers
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19th Century first Half: Alfred Sloan, GM, 40 years, Great Depression, WorldWar II
One of the key reasons for success, per his advisor Peter Drucker: He picked every GM executive
Mfg managers, controllers, engr managers, maser mechanics, at even the small accessory division
Placed right people in right jobs flawlessly
"My Years with GM", Sloan's book on discipline of management
"The job of a manager is not to like people. It is not to change people.
It is to put their strengths to work", Peter Drucker
Performance is the only thing that counts and Professional manager must attend to it
Performance means bottomline + setting the right example. And this requires integrity.
Integrity begins with right people decisions.
GE ranked as most admired company
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Outstanding breeding ground for great leaders
Jack Welch commands near universal respect among his peers
Chapter3
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4 Reasons Why Great people decisions are so hard (p 82)
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"Hiring Great People is Brutally Hard", Jack Welch
Statistical Odds
Difficult Assessments - Assessment errors, unique jobs, changing jobs, intangible traits, inaccessible candidates
Psychological Biases - Procrastination, overrating capability, Snap judgments, Branding, Evaluating people in absolute terms,
Seeking confirmatory info, Saving face, sticking with familiar, emotional anchoring, Herding
Wrong Incentives - Candidate circumstances, Political pressures
Hiring without Firing, HBR, 1999
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Getting the right people at the Top, MIT Sloan Management Review, 2005
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Avoid disasters, gross failures, embarrassments and scandals
Start winning a small number of victories
Traps in picking winners for the top positions
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(i) Statistical Odds are against you
(ii) Difficult assessments - Assessing people for complex positions is inherently difficult
(iii) Psychological biases impair quality of decision making
(iv) Misplaced incentives and conflict of interest can sabotage these decisions
(i) Odds are against you
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There are only a small number of exceptional performers
(ii) Assessing people for complex positions is inherently difficult
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- Assessment errors - can be as high as 50%
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- Unique & changing characteristics of jobs - what skills needed? what will each person deliver?
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eg. COO position could be situational: implementer, hatchet man, change agent, bad cop, heir apparent
- Difficulty in assessing intangible traits
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can rapidly shift with Macroeconomic, political, competitive, technological changes
what's needed today can be quite different from what's needed tomorrow
eg. Franco Bernabe' Telecon Italia
In hostile takeover from Olivetti, expertise at leading cultural change became irrelevant.
More important skills were - Improving financial results quickly, rapidly assess the value and synergy of core and non-core business combos,
instantly create intricate investment & business obstacles
Top leaders are differentiated in the soft areas which are harder to evaluate than qualities such as IQ or knowledge of industry
eg. Telco latin america; industry experience is not enough
Negotiation expertise & bridge-building with 3 warring bosses, Cross-cultural sensitivity in communication styles mattered more - to unify new venture under one strategy
American style - confrontational; Latin style - deferential in public; anger behind doors
CEO, different part of world, effective strategist, proven marketing expert, understood technology, products, customers - all these were inadequate in the end
Senior positions competencies
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Results orientation
Ability to collaborate
Develop people
Lead teams
Manage change
- limited accessibility to candidates
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* Many candidates have no tolerance for any kind of thorough evaluation
Little available time and concerned about confidentiality which could damage their reputation or their employer's reputation. Therefore participation is very limited
* Reaching candidates who are not looking for a job is difficult
* Problem of candidate availability grows exponentially with the seniority of the job
(iii) Biases & Traps
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lurks within hiring teams and companies
Against the gods, Peter Bernstein
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Recognize and deal with biases that affect financial decisions
10 Emotional biases & Traps that affect judgments, feelings, behaviors & Sabotage people decisions
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Higher the stakes, more senior the appointment, the stronger these forces
Guard against arbitrariness when it comes to making great people decisions
Procrastination - especially when times are good, status quo is maintained
Overrating capability - believing hired people are more capable than they actually are; assuming people can change quickly & confusing motivation for capacity (skills, experience)
Snap judgments - not calculating probabilities accurately; using first impressions, charisma, gossip, second-hand info more; long on snap, short on judgment
Branding - Branding mistake is to buy a reputation rather than an individual who embodies the reputation
Evaluating people in absolute terms - not taking into account circumstances eg. outstanding, loser; in people decisions everything is relative to a particular context
seeking confirmatory information - ignoring warning signs; not looking at evidence that conflicts conclusions; decisions, investments, negotiations could be sabotaged.
Hiring decisions fail because of this. It takes enormous discipline to assess candidates in depth, sifting through both positive and negative impressions to arrive at true qualifications (p73)
saving face - Lying
sticking with familiar - Good fit with comfortable & familiar rather than competence & complementarity
emotional anchoring - failing to see individuals in their own terms; comparing with past ideals; first & last in interviews get more attention than middlers
herding - hide in the middle of the herd rather than stick neck out; follow majority rather than acting independently; hesitating to express a different view. attend to whistleblowers
International tech company service line - Debacle
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CEO stuck with the familiar managmeent consultancy, made snap judgments and did not conduct a competency analysis
looked rather at education backgrounds, employment history, appearance, speaking skills
true accomplishments and behaviors not checked rigorously
Job at hand require both an outstanding level of technological know-how as well as remarkable leadership, operational, collaboration skills (pg 66)
9 motives for lying
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Avoid being punished
Obtain a reward not otherwise obtainable
protect another person from being punished
protect oneself fro threat of physical harm
win admiration of others
get out of an awkward social situation
avoid embarrassment
maintain privacy
exercise power over others
Correct action
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Instead of lying, correct action is to acknowledge mistake and act on it quickly to speed up recovery
Sticking to familiar
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breeds myopia, self-absorption
dangerous when a change is needed that requires different competencies
Filtering out Biases
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Build awareness
Have right advisors inside and outside the organization
Before hiring:
Identify strategic challenges, managerial priorities, key competencies needed
eg. focused and simple management approach of a broad-guage generalist to run a large, multibusiness corp
(iv) Bad incentives & Conflict of Interest
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Candidate Circumstances
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Understand the candidate's circumstance to root out exaggerated accounts of competence (plungers, risk-takers, high rollers),
discredit overly self-critical self-assessments
values determine behavior we think - this is an absolute way of thinking
actually circumstances influence behavior - we are more of relativists, situationalists; honesty and compassion are not fundamental, absolute, reliable human traits
behavior is a function of social context (gladwell, tipping point)
when put under intense pressure (economic, social), we may behave in ways socially and morally unacceptable & contrary to deeply held values
Job hunting: self-serving dishonesty; cheating is frequent
Politic Pressures: Quicksand
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Can devastate morale, company performance
No one wants to work in an organization dominated by cronyism, internal politics
Politics created by well-meaning people who have agendas
A dominating chairman hired his friend, college room mate instead of going through a search and evaluation process
Lacking flexibility and strategic vision, the new CEO got fired
Joint Ventures: backstage politicking goes on to get their candidates elected, desiring to have an ally in charge regardless of skill set
Weak candidates advocated for fear of becoming redundant, enhance own chances of getting ahead
Get jobs in return for favors rendered - quid pro quo; hire friends of supporters & use services of companies
Single most important mistake in top leaders' decisions
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Looking for a dramatic big decision that will catapult the company to greatness in one fell swoop
"Greatness gets built by a series of good decisions, executed superbly well, added one upon another over a long period of time", Jim Collins
Summary
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Carefully analyze and implement every important decision including people decisions
Avoid traps
Master every step in the people decision process - know when a change is needed, help integrate those great people you've hired
IV. Welch, Chapter 3: Differentiation: Cruel and Darwinian? Try Fair and Effective
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Differentiation rewards those members of the team who deserve more
Link it to candid performance appraise
Face up to Differentiation with transparency, fairness, speed. It clarifies business and makes it run better
While being in middle 70 percent can be demotivating to some people, it actually revs the engine of many others
Winning leaders invest where payback in highest. They cut losses everwhere else (p 38)
Protecting underperformers backfires - it hurts the underperforming people in the long run
V. Welch Podcast, Hiring is hard work,Business week
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Biggest hiring mistakes (60 years of combined experience)
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Toughest thing you do in business
Picking somebody is a real tough decision
Made so many mistakes
(1) - Too good to be True Trap
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Terrific woman, well dressed, charming, perfect experience, looking for a long time
Too good to be true - References were not calling back
Wanted to fill the job so badly
Had 3 jobs in the last year
Hiding a problem
(2) - Has your missing piece
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Needed plastics engineers. GE has electrical engineers
All Terribly impressed by DuPont
Scoured ranks of DuPont; head hunters, ads in newspapers
Hired some duds; DuPont prestigious brand but still had turkeys
missing piece could be MBA, better with words etc
(3) - Familiarity Trap
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Speaks similar language; but don't have the stuff
You are not hiring a language major; you are looking for a skill base
eg. Chinese manager does a better job in China vs an English speaking guy
(4) - Dead end job
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Solved a problem in a year or two and hits a dead end. It is like getting a virus.
Fill a need but but get run way with it. Runway is a wonderful characteristic you want to have
(5)- Lacks Emotional Intelligence even if they are bright
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Maturity, Resilience, Poise, Empathy but does not have EQ
Great experiences, internships but had a I'm too good for you
fine line between arrogance and self-confidence
Wierd arrogance - crossed over the line of self-confidence
I have never made a mistake; I don't intend to make a mistake here
You are always on the razor edge of screwing this one up.
Time pressure is high. You want to get it over with to get to real work.
But Real work is hiring the right person.
Hiring is hard hard work. Take your time. Think it through.
It is about the most important decision you will make
https://blackboard.strayer.edu/bbcswebdav/institution/JWMI/520/podcasts/hiring_is_hard_work.mp3
VI. Week1 Lecture1
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VIa. Why People Decisions are So Important
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People are the primary drivers of success
Not Brilliant Strategy, Flawless operations, Unforgettable marketing, dumb luck
VIb. Secret to Company Performance & Success
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(i) Great people decisions are key to organizational success
Remarkable Results come from (a) outstanding leadership and (b) ability to build superior executive teams (Jim Collins).
(ii) For an executive intent on building a great company, the most important decisions are people decisions.
Transitions from Good to Great require the discipline of "First Who"
- First get the right people on the bus and wrong people off the bus
- Put Right people into the right seats
- Figure out where to drive the bus
Until 90%-100% of the key seats are filled with right people, there is no more important priority (Collins, 2006).
(iii) Misguided people decisions are a recipe to failure.
"How to Make People Decisions", Peter Drucker, HBR 1985
Executives spend more time managing people and making people decisions than on anything else
But the track record of managers is poor with miserable results.
1/3rd of promotion and staffing decisions have a positive impact on the company
1/3rd have little effect
1/3 are disasters
(iv) Skill of people management may not be improving
Therefore mastering the skill to make great people decisions is an excellent and outstanding opportunity.
Once you become skilled at making great people decisions, your value to your organization will increase continuously.
You will get hired to hire others for more complex jobs.
Selecting right leaders could translate to 40% of a company's performance or value.
VIc. Mastering People Management
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3 general areas of people management are
- Assess your existing lineup of strategic talent
- practice the concept of differentiation
- put right players in right places
Additionally, once the winning team is assembled
Evaluate, Reward, Promote, Develop, Motivate people
Go beyond your business unit or organization to find the talent you need.
Hire the right players for your organizational needs.
Success rate for Jack Welch in early career 50%, 30 years later it rose to 80% ie not 100%
Because it is hard and there are common pitfalls and obstacles.
Professional success in early career depends on innate talents, how you develop those talents, initial career decisions.
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As a manager, your ability to select, develop, promote, manage
the right people will be the most important determinant of success
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People decisions have even greater impact in the case of complex jobs (Fernandex-Araoz, 2007).
More complex the job, larger the difference between a superior performer and an average one.
Simple task of flipping burgers - 1 sigma means 20% more productive than average worker
Selling life insurance - 1 sigma means 120% more productive than average worker
Managing consulting firm client relationships - 1 sigma means 600% above average
VId. The Power of People
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Any strategy, no matter how smart, is dead on arrival unless a company brings it to life with people - the right people (Welch, 2005).
Develop a Passion for selecting and developing the best leaders.
Acquire, Invest, Develop, Promote the best people.
Most important "products" of a company are not lightbulbs or transformers but managerial talent (Colvin, 2006)
Charles Coffin, CEO of GE 1892-1912, set principles of organization design - good model for large companies.
GE is a visionary company as it developed Welch caliber CEOs for a century from inside (Collins & Porras, 1997).
VIe. 3 Reasons why Great people decisions are particularly important
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for organizational & individual professional success
(1) Knowledge economy is people intensive
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Fastest growing companies in knowledge economy are all human asset intensive
- Biotech, life sciences, software, professional services, entertainment, services
Success in these companies depend less on physical assets and more on talents of people and their ability to work together
(2) Rapid Pace of Technological Change & Volatile Economic Environment
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Regulatory changes can also quickly change the rules of the game
When new skills must be put in place quickly and effectively
great people decisions become imperative not just for success but for survival
(3) Globalization
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Making people decisions becomes urgent and challenging.
Largest and fastest-growing markets, China & India, have the largest imbalance in enormous demand for talent and limited supply.
Countries like these will become the main battlefield in the war for talent over next two decades.
Best tools for waging this war will be developed here.
Before jumping in and learning skills of effective management
Learn also what not to do
Other reasons
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(4) Second career "self re-starters"
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Will need to make right people decisions
(5) Cross functional initiatives
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Require a constant assembly of different teams
Wisdom of Teams, Katzenbach: team basics, people choices that go into composition of teams is overlooked
(6) Traditional processes breaking down, Outside partners coming in
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Innovation is no longer within a closed organization
right people decisions in choosing outside partners is key (Henry Chesbrough)
(7) Service sector
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Makes up 80% of all economic activity in advanced economies
Picking the winners will be key
(8) Decentralization of people decisions
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managers will be called upon to build great teams
expected to be skilled at finding and hiring great talent
summary
Great people decisions lead to success
Great people decisions need active management
They are less like physical infrastructure, more like money
They will achieve full potential only if you deploy them effectively
Mastering great people decisions - build, maintain, reshape - single most decisive skill in determining your career success
It is also the secret behind great organizational performance
VII. Week1 Lecture2
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Why People Decisions are so difficult
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People management skills are critical to you and your organization's success.
There are Barriers to making good people decisions which is why managers so often get people decisions wrong.
Overcome these biases to put the right people in the right jobs and become an effective leader.
(i) The Odds are against you - just a small number of candidates are actually exceptional; evaluation process only has 50%-80% success rate
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(ii) Logistical challenges of assessing people
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Target not clear as Some jobs are truly situation specific (especially for top jobs): competencies hard to quantify, assessment not easy
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Moving Target as Some jobs are in flux: Requirements and priorities can rapidly shift from macroeconomic, political, competitive and technological changes
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Soft stuff Difficult to know eg. ability to collaborate, develop other people, lead, navigate change; talk may be good but prolonged observation key to know how they really play
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Evaluation Time is short: Always in a rush as candidates also have limited time, there is not always enough time to make a thoughtful and informed decision
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Confidentiality: candidates unavailable for a thorough evaluation; candidates perfectly happy in present job will not allow you to talk to references
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Assessment becomes a leap of faith
(iii) Psychological Biases of Assessing People
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(a) Overrating: Most people rate themselves above average and may motivate unqualified people to apply for positions - confusing motivation for capacity & competence.
Without necessary skills, attributes and experiences candidates can fail.
(b) Unreliable internal info: using Snap judgments Relying on First impressions: candidate's charisma is unreliable indicator to predict future performance
(c) Unreliable external info: gossip, bad information can lead to removal of good candidates and inclusion of bad candidates
(d) Reliance on Brand: where the candidate went to school or used to work
(e) Sticking to Familiar & Safe: Instead of evaluating a candidate on own merits, judging relative to someone you know and like; hiring someone they can get along with
Desire for a good fit can blind you to desirability of competence, complementary skills and diversity
(vi) Herding: Imitating other people's conclusions; following the majority rather than acting independently. Due to fear of making a mistake or laziness or wanting to
be a team player.They may feel a pressure to endorse a wrong candidate who favorably impressed everyone else
(vii) Conflicts of interest:
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Between candidate's interests and those of your company: laid off candidate may apply for a job well beyond his experience or capability
Politics: most pervasive of challenges, people want to hire and promote friends. Quid Pro Quo - offer a job in return for past favors or future promises.
Jockey in joint ventures to get their candidates elected for important roles, regardless of skills or track records. Job security - people may advocate for
weak candidates so they will look good in comparison
Dr DP
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Personal Happiness is the ultimate goal of existence
"Happiness is the greatest good" Aristotle
Money, Power, Health, Career Success..should lead to happiness
Great people decisions can enhance Personal relationships and job satisfaction and increase happiness
Great People Decisions, One Person at a Time is a Life Skill
************************************************************
A most Decisive skill that determines career success & personal happiness
I. Fernández-Aráoz, Great People Decisions, 2007
Chapter 1: A Resource for You
Chapter 2: A Resource for Your Organization
Chapter 3: Why Great People Decisions Are So Hard
Chaper1: A Resource for You
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Great people decisions will help improve competence in hiring and promoting great people for your team.
Assess people's competence and potential to grow
Nothing is more important for you or your organization.
As you progress from unit manager to running the ship to Senior Executive to CEO or Chairman,
people decisions are the highest challenge and biggest opportunity.
High performing organizations provide employment, generate returns and make society better.
A great company full of great people raises the standard of living, raises our sights, broadens horizons and gives hope for a better future.
Why do certain people succeed and others fail ?
***********************************************
Egon Zehnder, Executive Search Pioneer
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#1 reason for individual success is LUCK!
Successful people are highly intelligent, hard working, prepared, relate well to others.
But most important reason is luck. Lucky to be born into certain families, countries, have unique gifts, attend good schools, get good education, work for good companies, stay healthy.
Lucky to have opportunity for promotions
Zehnder is a natural-born leader: self aware, full of integrity, a man of amazing commitment, initiative and optimism, master at encouraging the heart
HBS MBA, constant development, avid reader, astute reader of people, learns from all characters and situations
Worked 6 days a week, prepared for every single meeting, talking in front of a mirror, recording and reviewing and timing it
Career choices allowed him to jump to the next level - moved from law to business, advertising to executive-search
launched the firm with a unique vision, decided not to go public, created equal partnership, collaboration, compensation (see Zehnder, HBR, simpler way to pay)
He built a great firm by being personally involved in the hiring of every single consultant for 36 years
Candidates are interviewed by dozens of colleagues, the chairman to ensure they meet exacting global standards and have a cultural fit
Invented his own career and became a master at people decisions
Fernandez-Araoz's framework
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Ability to make Great People Decisions is te most powerful contributor to career success
(1) Genetics - important throughout life
(2) Constant Development Effort- especially critical in early stages, but important throughout life
Ability to learn formally and informally depends on career choice.
Intensely bureaucratic and unprofessional organizations stifle career progress
Good career choices multiply the fruits of your development efforts and lead to outstanding career success
Putting yourself in a hotbed of innovation is better than putting yourself in backwater for long term career success
(3) Good Career Decisions - important in early 20s
(4) Great People Choices - single most important factor in career success
Never underestimate the importance of a commanding physical presence
Center for Creative Leadership, Greensboro, North Carolina
***********************************************************
Successful Executives
- deliver strong organizational performance
- build good relationships with subordinates
Strong organizational performance is a necessary component of personal success
Great people are behind creation and deployment of strategy, great products & services, money in the bank
First Break All the Rules (Marcus Buckingham, Curt Coffman)
***********************************************************
None of us has unlimited potential
Become a master at hiring and promoting the best people
Two key People Decisons:
- First Select Good People.
- Second, assign the right person to the right job ie. Identify what is unique about each person and capitalize on it
Discover what you don't like doing and stop doing it
Delegate
Develop good successors
Wrong people do get into wrong jobs
***********************************
1/3rd of CEOs are fired or forced to resign
1/3rd of executives are in lower part of competence curve compared to peers
People puzzle - finding, recruiting, hiring, promoting, retaining the very best people for the job.
Jack Welch spent more than 50% of his time in GE getting the right people in right positions.
Disciplined Approach in Hiring a Person
***************************************
Hiring of an Assistant
***********************
Determine what you really need in the person (skills & complementarities job calls for, valued professional partner, improves productivity & quality of life, friend)
Discuss with colleagues and modify
Approach this as the most important assignment
Dont limit yourself to just people looking for a job
Identify target companies and individuals with potential (even if they may not be looking for a change)
Interview them, check in-depth and secure references from people you trust
Agonize over the final decision as it could disrupt people's lives
Optimism Bias
*************
65% of drivers in US rate themselves above average
37% of engineers rate their performance in top 5%
We are not good at Assessing performance & people eg. lying is not easily detected
It is not necessarily just Instinctive
You have to work at it
Human nature is to to make "snap judgements" & indulge in "unconscious biases" about people; we are not humble about what we do not know
"Having the right people in the right place is the job no leader should delegate" Larry Bossidy & Ram Charan
Must have the knowledge as well as the power to make people decisions
John Gottman's Predictors for Marriage Success
***********************************************
Four Horsemen Emotions
(i) Defensiveness
(ii) Stonewalling
(iii) Criticism
(iv) Contempt - most important factor
Cook County Hospital's Dept of Medicine, Brendan Reilly Case, by Malcolm Gladwell
**********************************************************************************
Problem: Only 10% of people suspected of having heart attack actually have a heart attack
Solution: Identify and check key indicators, assign weightage, discuss for collective decision
Isolate few useful indicators and focus analysis more on those
Analyze less info - focus on relevant things to watch
Boiled down to using ECG + 3 risk factors (pain felt, fluid in lungs, systolic BP)
Same thing can be done with people decisions
Analyze challenges at hand
Identify key competencies required in candidate
Measure them accurately
Predict Performance
Discuss and decide on hiring & promotion
If you make a hiring mistake, have the emotional strength to admit it
Act Decisively to deal with consequences
Becoming a Manager, Linda Hill
*******************************
Developing interpersonal judgment is an essential task of self-transformation
Chapter2: A Resource for your organizations
*********
Right people choices are a key driver of organizational performance
Most important single factor for top performance
Stanford GSB first year MBA's 3A's : Anxiety, Anger, Apathy
Exposed to brilliant minds broadens horizon: outstanding profs, exceptional students,
Good to Great, Built to Last, Jim Collins
******************************************
Greatness is not a function of circumstance
It is a matter of choice and discipline
In a volatile world, best hedge against uncertainty
- create the best most adaptable team in the industry
- adapt to whatever changes the world might throw at you
Essential Foundational Prerequisites for remarkable corporate performance
*************************************************************************
Outstanding leadership
Ability to build superior executive teams
"First Who" principle : Get the right people on the bus, wrong people off the bus,
right people into the right seats, figure out where to drive the bus
What Really Works (Joyce, Nohria, Roberson)
********************************************
Choice of CEO matters
- determines profitability
- decides whether the company will remain in the industry or not
4+2 Formula of successful companies:
Four primary practices: Strategy, Execution, Culture & Organization
Secondary practices: Talent of employees, Leadership & Governance, Innovation, Mergers & partnerships
The War for Talent, McKinsey
****************************
Best companies demonstrate more discipline and skill at making the right people choices
Wrong people at the Top could miss diagnosing the cause of problems
*******************************************************************
Layout, Product-mix, Service-level
Profitability by product, client, channel
All are symptoms - removal of CEO is the solution in such instances
People on Front lines of business: Do they consider people decisions as first priority, key determinant of success or failure?
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"You can have all the greatest stragies in the world
but they aren't worth much without the right people", Jack Welch
Fortune, 1999, CEO failure
**************************
One of the main reasons for CEO failure is
the profound difficulty experienced when it came to making senior appointments
How do CEOs blow it?
"By failing to put the right people in right jobs
and the related failure to fix people problems in time"
Why Smart Executives Fail, Sydney Finkelstein, 2003
****************************************************
Inability of the organization to put the right people in the right place
Circumstances linked to corporate failure are:
Creating new ventures,
dealing with innovation & change,
managing M&As,
addressing new competitive pressures
Causes behind executive failure are:
Flawed executive mindsets - distorted perception of reality
Delusional attitudes - keeps distorted perception of reality in place
Breakdown in communication systems - needed to convey urgent information
Personal attributes - deficiencies in leadership
What leads to organizational failure? Bad people decisions
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What leads to outstanding organizational performance? Great people decisions
CEO turn over study, Booz Allen Hamilton
*****************************************
1/3rd of CEO appointments are outright failures
CEO performance in second half of career is significantly lower than in first half; destrys value in many cases
Fernandez Araoz
***************
1/3rd of CEOs are at bottom half of performance curve vs their peers in the industry
More complex the job, greater the difference between a superior performer and an average one - up to 6X difference
Orgs that hire or promote mediocre execs suffer greatly
Orgs that identify and appoint great people develop unique competitive advantage
Investing in search, assessment, recruitment of best managerial candidates returns 10X the investment
Ability to make the right people decisions is critical for success in any business, time, geo or acquisition:
Norberto Morita, Columbia MBA, led Quinsa beverage company through systematic managerially induced value creation
Ability to pick the right people for each critical job made all the difference
Entrepreneurial Ventures, William Sahlman, HBS
***********************************************
When I receive a business plan, I always read the resume section first.
Without the right team, none of the other parts really matter.
Ending the CEO succession crisis, Ram Charan
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Many orgs lack effective succession programs
1992 Cadbury Report
*******************
Critical importance of high-caliber board members to all aspects of good governance
What makes great boards great, Jeffrey Sonnenfeld
*************************************************
It is not the rules and regulations, but it's the way people work together that makes for a boards greatness
Inside the Boardroom, Richard Leblanc, James Gillies
*****************************************************
Board process and Board membership are more important to board effectiveness than board structure
Ram Charan, adviser to many boards
**********************************
60% of corporate performance depends on right CEO and succession
which is one of boards main duties
Colin Carter & Jay Lorsch
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good people in boards will perform well even if structure is less than ideal
opposite is not true
Human Equation, Competitive Advantage through people, Jeffrey Pfeffer, Stanford
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It is important to choose right people at all levels of org
New Ventures & Small Business Management, Steven Brandt, Stanford
********************************************************
The Bible - Ten commandments for small business survival
#1 - Limit the number of participants to people who can consciously agree upon
and contribute directly to that which the enterprise is to accomplish, for whom, by when
#5 - Employ key peoplewith proven records of success at doing what needs to be done
in a manner consistent with the desired value system of the enterprise
Find people who can work together effectively
Find winners who can accomplish key tasks consistent with the value system
Make Great People Decisions
History of Great Managers
*************************
19th Century first Half: Alfred Sloan, GM, 40 years, Great Depression, WorldWar II
One of the key reasons for success, per his advisor Peter Drucker: He picked every GM executive
Mfg managers, controllers, engr managers, maser mechanics, at even the small accessory division
Placed right people in right jobs flawlessly
"My Years with GM", Sloan's book on discipline of management
"The job of a manager is not to like people. It is not to change people.
It is to put their strengths to work", Peter Drucker
Performance is the only thing that counts and Professional manager must attend to it
Performance means bottomline + setting the right example. And this requires integrity.
Integrity begins with right people decisions.
GE ranked as most admired company
*********************************
Outstanding breeding ground for great leaders
Jack Welch commands near universal respect among his peers
Chapter3
*********
4 Reasons Why Great people decisions are so hard (p 82)
*******************************************************
"Hiring Great People is Brutally Hard", Jack Welch
Statistical Odds
Difficult Assessments - Assessment errors, unique jobs, changing jobs, intangible traits, inaccessible candidates
Psychological Biases - Procrastination, overrating capability, Snap judgments, Branding, Evaluating people in absolute terms,
Seeking confirmatory info, Saving face, sticking with familiar, emotional anchoring, Herding
Wrong Incentives - Candidate circumstances, Political pressures
Hiring without Firing, HBR, 1999
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Getting the right people at the Top, MIT Sloan Management Review, 2005
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Avoid disasters, gross failures, embarrassments and scandals
Start winning a small number of victories
Traps in picking winners for the top positions
*****
(i) Statistical Odds are against you
(ii) Difficult assessments - Assessing people for complex positions is inherently difficult
(iii) Psychological biases impair quality of decision making
(iv) Misplaced incentives and conflict of interest can sabotage these decisions
(i) Odds are against you
************************
There are only a small number of exceptional performers
(ii) Assessing people for complex positions is inherently difficult
*******************************************************************
- Assessment errors - can be as high as 50%
********************
- Unique & changing characteristics of jobs - what skills needed? what will each person deliver?
********************************************
eg. COO position could be situational: implementer, hatchet man, change agent, bad cop, heir apparent
- Difficulty in assessing intangible traits
*******************************************
can rapidly shift with Macroeconomic, political, competitive, technological changes
what's needed today can be quite different from what's needed tomorrow
eg. Franco Bernabe' Telecon Italia
In hostile takeover from Olivetti, expertise at leading cultural change became irrelevant.
More important skills were - Improving financial results quickly, rapidly assess the value and synergy of core and non-core business combos,
instantly create intricate investment & business obstacles
Top leaders are differentiated in the soft areas which are harder to evaluate than qualities such as IQ or knowledge of industry
eg. Telco latin america; industry experience is not enough
Negotiation expertise & bridge-building with 3 warring bosses, Cross-cultural sensitivity in communication styles mattered more - to unify new venture under one strategy
American style - confrontational; Latin style - deferential in public; anger behind doors
CEO, different part of world, effective strategist, proven marketing expert, understood technology, products, customers - all these were inadequate in the end
Senior positions competencies
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Results orientation
Ability to collaborate
Develop people
Lead teams
Manage change
- limited accessibility to candidates
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* Many candidates have no tolerance for any kind of thorough evaluation
Little available time and concerned about confidentiality which could damage their reputation or their employer's reputation. Therefore participation is very limited
* Reaching candidates who are not looking for a job is difficult
* Problem of candidate availability grows exponentially with the seniority of the job
(iii) Biases & Traps
*********************
lurks within hiring teams and companies
Against the gods, Peter Bernstein
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Recognize and deal with biases that affect financial decisions
10 Emotional biases & Traps that affect judgments, feelings, behaviors & Sabotage people decisions
***************************************************************************************************
Higher the stakes, more senior the appointment, the stronger these forces
Guard against arbitrariness when it comes to making great people decisions
Procrastination - especially when times are good, status quo is maintained
Overrating capability - believing hired people are more capable than they actually are; assuming people can change quickly & confusing motivation for capacity (skills, experience)
Snap judgments - not calculating probabilities accurately; using first impressions, charisma, gossip, second-hand info more; long on snap, short on judgment
Branding - Branding mistake is to buy a reputation rather than an individual who embodies the reputation
Evaluating people in absolute terms - not taking into account circumstances eg. outstanding, loser; in people decisions everything is relative to a particular context
seeking confirmatory information - ignoring warning signs; not looking at evidence that conflicts conclusions; decisions, investments, negotiations could be sabotaged.
Hiring decisions fail because of this. It takes enormous discipline to assess candidates in depth, sifting through both positive and negative impressions to arrive at true qualifications (p73)
saving face - Lying
sticking with familiar - Good fit with comfortable & familiar rather than competence & complementarity
emotional anchoring - failing to see individuals in their own terms; comparing with past ideals; first & last in interviews get more attention than middlers
herding - hide in the middle of the herd rather than stick neck out; follow majority rather than acting independently; hesitating to express a different view. attend to whistleblowers
International tech company service line - Debacle
**************************************************
CEO stuck with the familiar managmeent consultancy, made snap judgments and did not conduct a competency analysis
looked rather at education backgrounds, employment history, appearance, speaking skills
true accomplishments and behaviors not checked rigorously
Job at hand require both an outstanding level of technological know-how as well as remarkable leadership, operational, collaboration skills (pg 66)
9 motives for lying
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Avoid being punished
Obtain a reward not otherwise obtainable
protect another person from being punished
protect oneself fro threat of physical harm
win admiration of others
get out of an awkward social situation
avoid embarrassment
maintain privacy
exercise power over others
Correct action
***************
Instead of lying, correct action is to acknowledge mistake and act on it quickly to speed up recovery
Sticking to familiar
********************
breeds myopia, self-absorption
dangerous when a change is needed that requires different competencies
Filtering out Biases
*********************
Build awareness
Have right advisors inside and outside the organization
Before hiring:
Identify strategic challenges, managerial priorities, key competencies needed
eg. focused and simple management approach of a broad-guage generalist to run a large, multibusiness corp
(iv) Bad incentives & Conflict of Interest
********************************************
Candidate Circumstances
************************
Understand the candidate's circumstance to root out exaggerated accounts of competence (plungers, risk-takers, high rollers),
discredit overly self-critical self-assessments
values determine behavior we think - this is an absolute way of thinking
actually circumstances influence behavior - we are more of relativists, situationalists; honesty and compassion are not fundamental, absolute, reliable human traits
behavior is a function of social context (gladwell, tipping point)
when put under intense pressure (economic, social), we may behave in ways socially and morally unacceptable & contrary to deeply held values
Job hunting: self-serving dishonesty; cheating is frequent
Politic Pressures: Quicksand
*******************
Can devastate morale, company performance
No one wants to work in an organization dominated by cronyism, internal politics
Politics created by well-meaning people who have agendas
A dominating chairman hired his friend, college room mate instead of going through a search and evaluation process
Lacking flexibility and strategic vision, the new CEO got fired
Joint Ventures: backstage politicking goes on to get their candidates elected, desiring to have an ally in charge regardless of skill set
Weak candidates advocated for fear of becoming redundant, enhance own chances of getting ahead
Get jobs in return for favors rendered - quid pro quo; hire friends of supporters & use services of companies
Single most important mistake in top leaders' decisions
********************************************************
Looking for a dramatic big decision that will catapult the company to greatness in one fell swoop
"Greatness gets built by a series of good decisions, executed superbly well, added one upon another over a long period of time", Jim Collins
Summary
*********
Carefully analyze and implement every important decision including people decisions
Avoid traps
Master every step in the people decision process - know when a change is needed, help integrate those great people you've hired
IV. Welch, Chapter 3: Differentiation: Cruel and Darwinian? Try Fair and Effective
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Differentiation rewards those members of the team who deserve more
Link it to candid performance appraise
Face up to Differentiation with transparency, fairness, speed. It clarifies business and makes it run better
While being in middle 70 percent can be demotivating to some people, it actually revs the engine of many others
Winning leaders invest where payback in highest. They cut losses everwhere else (p 38)
Protecting underperformers backfires - it hurts the underperforming people in the long run
V. Welch Podcast, Hiring is hard work,Business week
***************************************************
Biggest hiring mistakes (60 years of combined experience)
***********************
Toughest thing you do in business
Picking somebody is a real tough decision
Made so many mistakes
(1) - Too good to be True Trap
*******************************
Terrific woman, well dressed, charming, perfect experience, looking for a long time
Too good to be true - References were not calling back
Wanted to fill the job so badly
Had 3 jobs in the last year
Hiding a problem
(2) - Has your missing piece
*****************************
Needed plastics engineers. GE has electrical engineers
All Terribly impressed by DuPont
Scoured ranks of DuPont; head hunters, ads in newspapers
Hired some duds; DuPont prestigious brand but still had turkeys
missing piece could be MBA, better with words etc
(3) - Familiarity Trap
************************
Speaks similar language; but don't have the stuff
You are not hiring a language major; you are looking for a skill base
eg. Chinese manager does a better job in China vs an English speaking guy
(4) - Dead end job
*******************
Solved a problem in a year or two and hits a dead end. It is like getting a virus.
Fill a need but but get run way with it. Runway is a wonderful characteristic you want to have
(5)- Lacks Emotional Intelligence even if they are bright
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Maturity, Resilience, Poise, Empathy but does not have EQ
Great experiences, internships but had a I'm too good for you
fine line between arrogance and self-confidence
Wierd arrogance - crossed over the line of self-confidence
I have never made a mistake; I don't intend to make a mistake here
You are always on the razor edge of screwing this one up.
Time pressure is high. You want to get it over with to get to real work.
But Real work is hiring the right person.
Hiring is hard hard work. Take your time. Think it through.
It is about the most important decision you will make
https://blackboard.strayer.edu/bbcswebdav/institution/JWMI/520/podcasts/hiring_is_hard_work.mp3
VI. Week1 Lecture1
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VIa. Why People Decisions are So Important
*******************************************
People are the primary drivers of success
Not Brilliant Strategy, Flawless operations, Unforgettable marketing, dumb luck
VIb. Secret to Company Performance & Success
*********************************************
(i) Great people decisions are key to organizational success
Remarkable Results come from (a) outstanding leadership and (b) ability to build superior executive teams (Jim Collins).
(ii) For an executive intent on building a great company, the most important decisions are people decisions.
Transitions from Good to Great require the discipline of "First Who"
- First get the right people on the bus and wrong people off the bus
- Put Right people into the right seats
- Figure out where to drive the bus
Until 90%-100% of the key seats are filled with right people, there is no more important priority (Collins, 2006).
(iii) Misguided people decisions are a recipe to failure.
"How to Make People Decisions", Peter Drucker, HBR 1985
Executives spend more time managing people and making people decisions than on anything else
But the track record of managers is poor with miserable results.
1/3rd of promotion and staffing decisions have a positive impact on the company
1/3rd have little effect
1/3 are disasters
(iv) Skill of people management may not be improving
Therefore mastering the skill to make great people decisions is an excellent and outstanding opportunity.
Once you become skilled at making great people decisions, your value to your organization will increase continuously.
You will get hired to hire others for more complex jobs.
Selecting right leaders could translate to 40% of a company's performance or value.
VIc. Mastering People Management
*********************************
3 general areas of people management are
- Assess your existing lineup of strategic talent
- practice the concept of differentiation
- put right players in right places
Additionally, once the winning team is assembled
Evaluate, Reward, Promote, Develop, Motivate people
Go beyond your business unit or organization to find the talent you need.
Hire the right players for your organizational needs.
Success rate for Jack Welch in early career 50%, 30 years later it rose to 80% ie not 100%
Because it is hard and there are common pitfalls and obstacles.
Professional success in early career depends on innate talents, how you develop those talents, initial career decisions.
***********************************************************************
As a manager, your ability to select, develop, promote, manage
the right people will be the most important determinant of success
***********************************************************************
People decisions have even greater impact in the case of complex jobs (Fernandex-Araoz, 2007).
More complex the job, larger the difference between a superior performer and an average one.
Simple task of flipping burgers - 1 sigma means 20% more productive than average worker
Selling life insurance - 1 sigma means 120% more productive than average worker
Managing consulting firm client relationships - 1 sigma means 600% above average
VId. The Power of People
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Any strategy, no matter how smart, is dead on arrival unless a company brings it to life with people - the right people (Welch, 2005).
Develop a Passion for selecting and developing the best leaders.
Acquire, Invest, Develop, Promote the best people.
Most important "products" of a company are not lightbulbs or transformers but managerial talent (Colvin, 2006)
Charles Coffin, CEO of GE 1892-1912, set principles of organization design - good model for large companies.
GE is a visionary company as it developed Welch caliber CEOs for a century from inside (Collins & Porras, 1997).
VIe. 3 Reasons why Great people decisions are particularly important
*********************************************************************
for organizational & individual professional success
(1) Knowledge economy is people intensive
*****************************************
Fastest growing companies in knowledge economy are all human asset intensive
- Biotech, life sciences, software, professional services, entertainment, services
Success in these companies depend less on physical assets and more on talents of people and their ability to work together
(2) Rapid Pace of Technological Change & Volatile Economic Environment
***********************************************************************
Regulatory changes can also quickly change the rules of the game
When new skills must be put in place quickly and effectively
great people decisions become imperative not just for success but for survival
(3) Globalization
******************
Making people decisions becomes urgent and challenging.
Largest and fastest-growing markets, China & India, have the largest imbalance in enormous demand for talent and limited supply.
Countries like these will become the main battlefield in the war for talent over next two decades.
Best tools for waging this war will be developed here.
Before jumping in and learning skills of effective management
Learn also what not to do
Other reasons
*************
(4) Second career "self re-starters"
************************************
Will need to make right people decisions
(5) Cross functional initiatives
********************************
Require a constant assembly of different teams
Wisdom of Teams, Katzenbach: team basics, people choices that go into composition of teams is overlooked
(6) Traditional processes breaking down, Outside partners coming in
********************************************************************
Innovation is no longer within a closed organization
right people decisions in choosing outside partners is key (Henry Chesbrough)
(7) Service sector
*******************
Makes up 80% of all economic activity in advanced economies
Picking the winners will be key
(8) Decentralization of people decisions
****************************************
managers will be called upon to build great teams
expected to be skilled at finding and hiring great talent
summary
Great people decisions lead to success
Great people decisions need active management
They are less like physical infrastructure, more like money
They will achieve full potential only if you deploy them effectively
Mastering great people decisions - build, maintain, reshape - single most decisive skill in determining your career success
It is also the secret behind great organizational performance
VII. Week1 Lecture2
*******************
Why People Decisions are so difficult
**************************************
People management skills are critical to you and your organization's success.
There are Barriers to making good people decisions which is why managers so often get people decisions wrong.
Overcome these biases to put the right people in the right jobs and become an effective leader.
(i) The Odds are against you - just a small number of candidates are actually exceptional; evaluation process only has 50%-80% success rate
****************************
(ii) Logistical challenges of assessing people
***********************************************
Target not clear as Some jobs are truly situation specific (especially for top jobs): competencies hard to quantify, assessment not easy
*****************
Moving Target as Some jobs are in flux: Requirements and priorities can rapidly shift from macroeconomic, political, competitive and technological changes
*************
Soft stuff Difficult to know eg. ability to collaborate, develop other people, lead, navigate change; talk may be good but prolonged observation key to know how they really play
*****************************
Evaluation Time is short: Always in a rush as candidates also have limited time, there is not always enough time to make a thoughtful and informed decision
************************
Confidentiality: candidates unavailable for a thorough evaluation; candidates perfectly happy in present job will not allow you to talk to references
***************
Assessment becomes a leap of faith
(iii) Psychological Biases of Assessing People
****************************************
(a) Overrating: Most people rate themselves above average and may motivate unqualified people to apply for positions - confusing motivation for capacity & competence.
Without necessary skills, attributes and experiences candidates can fail.
(b) Unreliable internal info: using Snap judgments Relying on First impressions: candidate's charisma is unreliable indicator to predict future performance
(c) Unreliable external info: gossip, bad information can lead to removal of good candidates and inclusion of bad candidates
(d) Reliance on Brand: where the candidate went to school or used to work
(e) Sticking to Familiar & Safe: Instead of evaluating a candidate on own merits, judging relative to someone you know and like; hiring someone they can get along with
Desire for a good fit can blind you to desirability of competence, complementary skills and diversity
(vi) Herding: Imitating other people's conclusions; following the majority rather than acting independently. Due to fear of making a mistake or laziness or wanting to
be a team player.They may feel a pressure to endorse a wrong candidate who favorably impressed everyone else
(vii) Conflicts of interest:
****************************
Between candidate's interests and those of your company: laid off candidate may apply for a job well beyond his experience or capability
Politics: most pervasive of challenges, people want to hire and promote friends. Quid Pro Quo - offer a job in return for past favors or future promises.
Jockey in joint ventures to get their candidates elected for important roles, regardless of skills or track records. Job security - people may advocate for
weak candidates so they will look good in comparison
Dr DP
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