The Royal Commission into Misconduct in the Financial Services Sector in Australia has highlighted and indeed helped drive the need for cultural change in the financial sector. This short discussion identifies just five impediments to deep cultural change in the industry.
The five impediments identified are not intended to be comprehensive , however they do serve to illustrate some of the challenges. What can be done from a culture change perspective will also be specific to organisations and can be the topic of another discussion. Before launching into the five impediments let’s set the scene.
Do you think people are getting smarter? Do you think we know more about the risks inherent in running economies and businesses? Do you think we will look to others to work out what we should do? Do these sound like loaded questions? Of course they are, however there is a point to be made. Knowing more doesn’t stop us being human and making the same errors people have in the past. The context and details may differ however the errors are the same.
History Repeats Itself
In early 18th century France an investment bubble developed around shares in the Mississippi Company. Trading over a period became frantic. Normally sober people found themselves investing and those who recognised what was happening were sometimes mocked and just as often developed significant doubt about their attitudes to the trade. At dinner parties, being the only person who seems not to be making great profits can be a deflating experience. Even the person responsible for the float of the company could not dissuade people from being overzealous. Of course the company went bust. It is all beautifully chronicled in Charles Mackey’s entertaining “Extraordinarily Popular Delusions And The Madness of Crowds” published in 1841. It’s a great read as an introduction to what would now be referred to as behavioural economics. And more importantly to draw parallels to the boom phase that led up to the crash in 2007/8. There is the possibility it could be applied to the inflated Australian markets as well.
When change is the norm then it goes largely unnoticed (and mostly unrewarded). Often with unintended consequences.
Anyone who has a school-age child will have asked, “What did you do at school today?”. The typical answer is, “Nothing”. As adults are we all that different or are some things just part of the human condition? Following up on planning or change-oriented workshops it is not unusual to hear the lament, ” it was a waste of time, nothing has changed!”. And they could be right … however, it’s worth taking a closer look and providing some feedback.
Dust off your archives and check out where you’ve been. There can be lost gold.
Over years it’s easy to forget even the really useful things. Then one day you rediscover them and wonder why they disappeared in the first place. Nowhere is this truer than in the corporate world.
New business trends and ideas easily swamp us, seemingly rendering older ideas obsolete. ‘Employee Engagement’ has been a big thing for businesses over the last 10 years. To go with that has been a head-spinning number of ‘models’. Just search ’employee engagement models’ and then click on images. There are hundreds of illustrations of employee engagement models and a quick scan can give a good idea of how diverse the models and language can be. That all points to an idea with some theoretical underpinnings. Some models will be well researched while others will be relying a lot on surface validity (it seems to make sense). However, for this post, it is about what gets forgotten and displaced in this emphasis. For me looking at the engagement literature reminded me of great work done in the 1970’s and 80’s on job design which gets very little or no explicit mention in any of the models. Even the term ‘job design’ sounds so last century … mechanistic, old-fashioned and too slow for this agile, divergent, disruptive, digital age. That is rubbish of course, every job has certain characteristics or a design if you prefer. Regardless, the topic of job design was swamped by four ideas that were believed to mediate motivated performance. 1. The belief that the nature of work was changing; 2. The opportunity for social contact; 3. The person’s actual skill levels and 4. Ambition. If you’re interested then read this 2010 article by Greg R. Oldham and J. Richard Hackman. )
Our brains are well conditioned to see what they expect. Image from: Illusions.org
We all make the mistake, even when we know better. If something is good then more must be better. A nice, straight, linear relationship … except it’s not … and very rarely is! At some point exercise will just injure and fatigue us, the extra serve of ice cream stops being a treat, working longer doesn’t improve your work performance and trimming more costs can make matters worse, etcetera. In these cases, there’s an inverted U relationship. Recognising when something else is going on can make you a better consultant, manager, and person.
Our day to day lives makes us familiar with other relationships in specific situations such as recognizing some diminishing returns relationships. That is, doing more will lead to improvements but less improvement for the same increase in effort. Weight loss could be an example. Another familiar relationship is in consumer pricing where the addition of more benefits and features leads to big increases in price (a logarithmic relationship). Mostly we’ve learned to expect these relationships and they influence how we think in a variety of situations however there is any number of things where we don’t know what to expect. We can’t be so certain what the relationship is. When that happens then logical errors are much easier to make e.g. if the threat of jail stops some crime then increasing the harshness of sentences will stop more crime. Perhaps, I don’t know exactly, however, the US has the death penalty and a very high murder rate for a western country, so maybe not. Perhaps you have to do other things if you want the murder rate to come down.
Very few social relationships will be as simple as those above and yet often we act as if even these are too difficult to consider.
All of us lie and cheat … at least a bit (The Honest Truth About Dishonesty, Dan Ariely) and more than we care to admit. And it seems the things people learn about lying and cheating prepares them well for business and government. A part of the trick is determining just how far we will go. Regardless, it should be no surprise then that the reflex position of business is, ‘Ethics cost money and are therefore optional’. And despite the rhetoric, leadership training, policy and values statements and a few optional ethics classes in business schools, it would be reasonable to suggest that the business status quo is not about to change soon. That doesn’t mean we should give up but we do need to understand it better and explore new ways to deal with it.
You don’t have to look far to find high flying, hyper-successful, mega remunerated executives doing things they were warned not to do in Business School 101 – that is, acting stupidly. The VW or Glencore case studies come to mind immediately. A less public (not always) and less obvious act of stupidity occurs when it comes to sharing a businesses strategy. Despite years of experience senior executives very often miss opportunities to generate, communicate and implement strategy effectively (another way of saying they make rookie errors). Instead, they come off looking disengaged to the other employees of the enterprise, less intellectually competent than their resumé might suggest and less in control than they would like. Here are 4 reasons why: Continue reading →
Ask people what is wrong in their workplace and you can get an avalanche of woes and with just a little push, as many ideas for fixing them. At least that’s what it sounds like when nobody up the management hierarchy is present. Professor Chris Argyris of Harvard wrote about this a long time ago and frankly the cleaner could have told us that (An Interview with Chris Argyris). What he added were his observations of behaviours that seemed to maintain this situation – behaviours that undermined the ability of the organisation to learn and make appropriate changes. Behaviours that reinforced the social, power structure (hierarchy) and just as often the beliefs and attitudes people held about others. He called these behaviours ‘Organisational Defensive Routines’. Argyris identified that it took a lot of skill to use and maintain these routines. (They can be used to resist change.)
It has struck me that Argyris’s observations has similarities to the observations of Dr. Eric Berne who developed Transactional Analysis (TA) – an approach management trainers flirted with about three to four decades ago. Berne documented interactions in people’s lives that he referred to as ‘Games’. See ‘Games People Play’. Some of the games are relevant to work life and I’m sure we could identify a few that Dr. Berne has missed. One of the fun and obvious games is ‘Harassed’. Here people spend time complaining about workloads and how stressed the situation is. Importantly the participants never take positive steps to rationalise the work and will even take on new tasks. There can be auxiliary games like ‘Lunchbox’ which revolves around eating at your desk, avoiding structured breaks and appearing very committed. The games have a number of benefits including ready-made explanations for any failures/delays/poor standards and evidence of irrational managerial indifference to staff and workloads etcetera. At some point everybody is unhappy with the situation, however in the way that they are supposed to be, leading to the paradoxical conclusion that everybody is happily unhappy. Continue reading →
Innovation (Innovative): The successful application of a new and or improved method or technology to meet a requirement, articulated or not. What leaders want more of, while rationing the permission to do it. Also, a term that will appear, and be used somewhere within a job description, job application, and an interview – probably more than once. The scale of innovation will not defined. It may be incrementally small or transformationally large. A ‘large‘ innovation is likely to lead to a waterfall of smaller innovations. Mimicry is a common form of innovation – applying a known idea but in a new setting. Mimicry is almost hard-wired into us and is one of our earliest learning strategies.
Failed innovation will optionally be referred to as a lesson or just as likely, reckless experimentation, incompetence, unnecessary risk-taking or some other term that can be career limiting. Risk taking is inherent to most innovations.
It is not unusual for innovations to be occurring in an organisation or even a society without people paying too much attention. Continue reading →
(I’m hoping you heard the irony in the title. There is a lot more to follow. There is also a combination of doubt mixed with some cycnicism. )
I can’t help but notice that the centralization (a merger of the Department of Social Services and the Department of Human Services) and efficiency charge is on with the new Australian Federal Governments agenda. Corporates and Governments of all political persuasions love this option and it is the easiest (to argue) of the ‘restructuring’ initiatives to take when putting a stamp on something. In fact it has been popular since prehistory when some alpha male (note the gender bias here) discovered the benefits of ‘power’. And big consultancy houses love to advise it.
Get The Consultants: It all goes something like this! Let’s join two big departments (businesses) to create a more efficient (profitable) super Department (business) and then implement a single Information Technology system for one big place. That’s got to work! When has designing and implementing one big computer system ever been harder than doing two smaller but still very big systems? One bigger system just has to be easier to control, require less staff, reduce duplication, and reduce development costs for a computer system. It’s just so ‘rational’ I could virtually write the proposal myself however I’m a small independent consultant when what is required is a reputable, expensive, brand name, preferably international consulting group (because that has to mean they are independent) to tell you this. And in no time at all, armed with late 20-year-old MBAs from good universities, they will interview a lot of people, get a huge portfolio of metrics and find a bag full of efficiencies to be realized. And they can help you define the system requirements, architecture, and development strategy (+) for a not inconsiderable fee. Sensibly they will choose to exit before everything gets too close to delivery. Any mess should be somebody else’s fault. If you ignore the consulting fees and the redundancy packages the early signs will no doubt be good if you report them correctly.