Candies or Charcoal: What is Santa rating your engagement skills as?

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You better watch out, you better not cry
Better not pout, I’m telling you why
Santa Claus is comin’ to town
He’s making a list and checking it twice
Gonna find out who’s naughty and nice
Santa Claus is comin’ to town

(Santa Claus Is Comin’ To Town, Lonestar)

Children around the world are told all year round that if they misbehave, On Christmas day Santa will skip the candies and give them charcoal instead.When companies carry out their annual employee engagement surveys, some managers too get their lumps of charcoal. Surveys and studies comes back with the clear message that ‘People leave managers, not companies

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5 predictions about Employee Engagement in 2015

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It’s the almost the end of 2014 and we have seen momentum building in the world of Employee Engagement. The approach is maturing. More people are actually talking about it as a strategic requirement. Growth is picking up in markets across the world.

Employees matter more than ever. Workforces are now a complex mix of generational cohorts in transition. Based on what I have seen – trends, surveys, feedback from our (rather large) client base, and the “buzz” we hear, I am going to take a stab at predicting the five things I expect to happen in the world of Employee Engagement in 2015.

The quick list:

  1. The Bell-Curve will still rule (and continue to disengage)
  2. SaaS adoption will increase in HR, especially in world of Employee Engagement.
  3. Gamification will make inroads into mainstream processes but diffusion will hurt impact.
  4. Health and Wellness will (finally) become an Employee Engagement topic.
  5. Employee Engagement will go beyond just handing out Rewards.

 

5_PredsEE_2015_LowRes copy 2The more colorful fun (and detailed) version is here (Use the Presentation Mode, its really awesome)

The downloadable single image version is here. (Feel free to chop into pieces and use in your own presentations etc. I only ask that you link back to this post or the kwench website)

 

Employee Alignment-Zone: “The Time Element”

The Architect – Precisely. As you are undoubtedly gathering, the anomaly is systemic, creating fluctuations in even the most simplistic equations.

 Neo – Choice. The problem is choice. (Matrix Reloaded, 2003)

On this blog and in quite a few conversations, I have pointed out the risks of overtly relying on cohorts or grouping of employees to formulate an employee engagement strategy. Using segments and cohorts to understand broad behavior and drivers of engagement is okay, but trying to engage the individual based only on those conclusions is not the best approach.

As ‘Neo’ puts it in the movie Matrix Reloaded , the ‘problem’ is Choice or to be more accurate, in this case – individuality. Every employee is an individual with her own priorities, preferences, fears and responsibilities.

ZoneOfAlignment_

Work, forms an important part of an employees life – and the emphasis I place is on ‘part’ and not on ‘important’ because that aspect is the one that often gets missed out when employee engagement strategies or initiatives are designed. As an individual with family, friends, interests, hobbies, ambitions and aspirations – responsibilities at work represent just a fraction of the things that matter to the employee.

There are a bunch of things that are important to the employee (health, financial well being, spending time with family, a social life, learning new things, new experiences) and there are things are important to the organization (employee well being, profits, playing an important role in the society, innovation).

When an employee is at work, he is operating in the intersection of these two spheres – there are things that matter to him which align with what matters to the organization. When this overlap is driven by the correct factors (alignment on the larger picture, the direction the company is taking, quality of work, the work culture etc.), there is a zone of alignment that is sustaining (and empowering).

ZoneofDisillusionment_

When what matters to the organization (as perceived by the employee) starts to drift away from what matters to the employee as an individual, this overlap reduces, the zone of alignment starts to shrink and becomes unsustainable. This is when disillusionment sets in eventually leading to Disengagement if corrective measures are not taken.

GapOfDisengagement_

Too much of something:

The logical question that follows is what when there is perfect alignment – shouldn’t that be the ideal state? To borrow (somewhat incorrectly) from that age-old adage, “Too much of anything isn’t good for you”

A situation where an individual is completely (and only) aligned with what matters for the organization makes him dysfunctional in other things that should matter to him. If the last line reminds you of the uptight, always-on-the-edge, hard driving, ranting and screaming executive, you are bang-on.

ThePuppetZone_

The other (unintended) consequence of such a situation is that individual then subsumes his discretion to what seems best for the organization. Being too focused on one aspect inevitably leads to a myopic vision of what is correct. It is the healthy balance of all aspects in ones life that helps drive a balanced approach towards challenges – both personal and at work.

A ‘super-mom’ I know uses negotiation skills learnt at work with her 1-year-old infant (works most of the time) and then takes the lessons learnt from handling the concerns of parents, her husband, siblings back to work to engage with her multi-generational team. Imagine what would happen if she tried a time-sheet driven approach with her infant or never took time out to spend time with her parents or spouse but focused only fixing “issues” at work (of which there never seems to be any dearth).

 

The Time Element:

Unlike organizations, what ‘matters’ to an individual is in a state of flux. I am not talking of value systems, or ambitions – those are (hopefully) rather fixed. I am referring to the drivers of what is a priority. Companies and Institutions have stated goals at time of creation and (usually) those drive everything they do. People on the other hand have changing preferences and changing events and these affect the overlap and consequently the alignment they have with the organization.

TheTimeElement_

If the organization stays rigid on how it interacts with the employee, then the extent of alignment is bound to change. Again an increased degree of alignment is not necessarily a good thing.

A few years ago I got chatting with a senior executive at a party. He was really good what he did, and totally disengaged. He was so efficient at what he did that the organization was reluctant to consider what his own personal aspirations were and had kept him doing the same thing for years on end. “The Gap of Disengagement” was very clear and he was looking to quit because he realized that by staying on he was damaging himself and the organization through his disengagement. I ran into him two years later in a busy airport and was surprised that he was still with the same organization in the same role. When I quizzed him, he confessed that he was still disillusioned but a personal crisis had made it impossible for him to look for other possibilities. His efficiency gave him more time at home and so he compromised his ambitions to stay on with his employer. The executive’s alignment with his employer had increased, but it was driven purely by convenience.

Smart organizations would avoid this situation by being aware of various dimensions of what drives each employee. DIY Pulse surveys are a good way; Managers who listen to their team members and do something about their concerns are even better.

A static employee engagement program is not enough neither is a “one-size-fits-all” approach. Like ‘generically designed’ antibiotics can have unexpected nasty side-effects in patients, employee engagement strategies designed for ‘masses’, ‘cohorts’ or ‘segments’ can induce the reverse effect. The pharmaceutical industry has woken up to the importance of pharmacogenomics to counter the ill effects of ‘universal-design’ for medicines – its time for HR professionals to follow suit.

Acknowledgements: 

Post title inspired by the Twilight Zone series (1958)

Impact of Role Relevance-Competence Fit on Engagement

Every hour and every day I’m learning more/The more I learn, the less I know about before/The less I know, the more I want to look around/Digging deep for clues on higher ground (Higher Ground, UB40)

In my post yesterday I talked about the ABC Drivers of Intrinsic Motivation. (Achievement, Belief and Camaraderie). A sense of achievement is something you derive by, among other things, being in the job/role that is right for you and then being very good at it.

The 2×2 grid (yes, blame it on the B-school stint) below shows how where you lie on the Role-Relevance and Role-Competency axes will determine your sense of achievement.

RRRC_Matrix_Relevance:Low, Competence:Low – Disengaged Employee: If an employee is in the third quadrant i.e he is placed in a role that he doesn’t like and also does not have the skills to perform then he is effectively being setup for failure and will be highly disengaged as he has little motivation to do a good job. If an employee finds himself in this situation then it is a failure of the organization and specially his immediate supervisors more than his own.

Relevance:Low, Competence:High – Efficient Employee: If an employee finds that he has a role that he doesn’t like but is good at then he is efficient at his job but is not engaged. He will do assigned tasks well and deliver on time, but will not be motivated to put in discretionary effort. Good managers can make a difference by listening and understanding what truly motivates their team members and finding a way to move them from Q1 to Q2 or Q3

Relevance:High, Competence:Low – Motivated Employee: When an employee is in a role or team which he wants to be in but is not trained for then he is motivated (but not competent). By providing the right training and support, employees who are in this quadrant can be easily moved into the ideal situation – into Q2.

Relevance:High, Competence:High – Engaged Employee: This is when employees are motivated to give their best to the job. They are in a role they want to be in and have the required training and competence to deliver results. When employees are in this quadrant, their sense of achievement is the maximum.

 Companies on the 2013 list of Fortune 100 Best Companies to Work for, offered 66.5 hours of training annually for salaried employees, with around 70% of those hours devoted to employees’ current roles and nearly 40% focused on growth and development.

Organizations that are not bound by rigid hierarchies and siloed org-structures have the flexibility to, better engage their employees by investing in training and having the opportunity to move them to roles they prefer. These are exactly the kind of facts that a good Employee Engagement Survey should throw up.

RRRC-Transition_

It is not a coincidence that a majority of the top rated employers also have the highest investments in learning. These organizations know that investing in engaging employees with the right role and competency fit, also prevents a ‘brain-drain.’ Employees in all age-groups and roles need continuous support to expand their skills. Investing in skills and knowledge training, of employees communicates a sense of commitment by the organizations in the future of its employees and goes a long way towards fostering a sense of achievement.

The Impact of A$s*@!#% on Organizational Performance

AbusiveBoss_The Indian media is at present abuzz with discussions around the ‘Rohtak sisters’. That video, of two fragile looking girls lashing out at men who tried to harass them on a bus (while other passengers just sat there watching them) – got me thinking about the effect of another kind of harassment – workplace bullying.

At some point or the other, we have all had to put up with unpleasant people at the workplace – The kinds who seem to get away with anything because they are ‘rainmakers’ or perceived as ‘too powerful.’ Workplace bullying unlike the pedestrian kind seen on the streets comes in various shades and some of the forms take on a garb of sophistication that makes it very difficult for the victim to attribute as bullying. The term ‘workplace bullying’ often conjures up mental images of a manager who is ranting and screaming or of snide and tangential remarks directed at women in the workplace. These are but just a part of what constitutes workplace bullying and it is by no means limited to Type A aggressive ambitious men (who are incorrectly portrayed as always being extremely aggressive) playing a winner-takes-all game.

‘It is terrifying’

In a study that revealed some startling insights, psychologists at the University of Surrey compared personality profiles of high-level executives with those of criminal psychiatric patients and found that three of the eleven personality disorders were actually more common in the executives.

The executives seemed to be prone to the following three maladies:

  1. Histronic Personality Disorder: People who suffer from this disorder demonstrate a pattern of excessive attention seeking. They tend to show superficial charm, insincerity, and egocentricity and often indulge in manipulative behavior.
  2. Narcissistic Personality Disorder: People suffering from this type of personality disorder are excessively preoccupied with power, prestige and vanity. They are seen to have an exaggerated sense of self-importance and have a strong need for constant admiration.
  3. Obsessive-Compulsive Personality Disorder: These are executives who are overtly focused on perfection. They tend to come across as extremely devoted to their work and tend to be rigid and stubborn with dictatorial tendencies.

In his book Corporate Psychopaths: Organizational Destroyers, Clive Boddy identifies two types of bullying in the workplace:

  1. Predatory Bullies: These are people who enjoy tormenting others just because they can – they are no better than their roadside variants. (The ones that gang up on a soft-spoken member of the team, the ones who pass snide remarks at women in the workplace, the manager who gives a team-member lower rating for no particular reason)
  2. Instrumental Bullies: These are the smart ones. Their bullying is always to further their own goals. More often than not these bullies are narcissists.

Narcissists in the workplace usually resort to indirect (and sophisticated) bullying. Typical tactics include withholding information, leaving team members out of the loop, getting others to keep doing work below their competence level, gossiping and putting down others behind their back.

‘They walk among us’

In his book “The No Asshole Rule” (and the inspiration for the post’s title), Robert Sutton lists down twelve everyday actions that he feels Assholes use:

  1. Personal Insults
  2. Invading one’s ‘personal territory’
  3. Uninvited physical contact
  4. Threats and Intimidation: Verbal and Non-Verbal
  5. ‘Sarcastic Jokes’ and ‘Teasing’ used as insult delivery systems
  6. Flaming e-mails
  7. (IM) Status slaps intended to humiliate others
  8. ‘Status Degradation’ rituals
  9. Rude Interruptions
  10. Two-faced Attacks
  11. Dirty Looks
  12. Treating people as if they were invisible/Ignoring people.

Everyone who has been in a high-pressure situation at work has demonstrated one of more of these behaviours at some point or the other. Sutton points out that psychologists make a distinction between ‘states’ (fleeting feelings/actions) and ‘traits’ (enduring characteristics).

Surveys and research has shown that workplace bullying is not isolated or restriced to a few unlucky ones. In her dissertation titled ‘Workplace Bullying: Aggressive Behaviour and its Effect on Job Satisfaction and Productivity’, presented by Judith Lynn she says:

“The data in this study found that 75% of participants reported witnessing mistreatment of coworkers sometime throughout their careers, 47% have been bullied during their career…”

 

The (real) impact on Organizations (that put up with A&$*@!#%)

In the past companies (read top management) used to often look the other way when people reported about badly behaved superiors. There are several reasons why this happened. Maybe (and this is often the reason) the intolerable executive was delivering numbers or maybe he was the rainmaker and leadership felt they couldn’t afford to loose him. Sometimes the person is the leader and the culture then percolates down to lower levels of the company.

In his book Sutton gives the example of Linda Wachner, former CEO of Warnaco who would ‘dress down’ her senior executives and made them feel ‘knee-high’. To make matters worse former employees allege that the attacks were ‘personal rather than professional and not infrequently laced with crude references to sex, race or ethnicity’. He also talks about ‘Chainsaw’ Al Dunlap, former CEO of Sunbeam who is described as ‘like a dog barking at you for hours…He just yelled, ranted, and raved. He was condescending, belligerent and disrespectful’

How engaged do you think people working for these leaders felt?

Organizations are waking up to the risks of putting up with people that are mean or ones who sideline people to further their ‘divide and rule’ strategy.

Research has shown that at the very least workplace bullying leads to increase stress among the workforce, which causes disengagement, productivity loss and even health issues. All of these have a real measurable impact on the bottom line at the end of the day. In some extreme cases, that victims display Post-Traumatic Stress Disorder (PTSD) – usually associated with severe trauma like rape or being in a conflict-zone.

That’s not all. Companies have to put with the associated costs of increased attrition – not only of the victims but even those who witness it.

Based on replacement cost of those who leave as a result of being bullied or witnessing bullying, Rayner and Keashly (2004) estimated that for an organization of 1,000 people, the cost would be $1.2 million US. This estimate did not include the cost of litigation.

The cost of workplace bullying represents a ‘Clear and Present Danger’ to responsible organizations that are looking to foster a motivating and innovative work culture. It will be nearly impossible for organizations to attract top-talent when a lot of their energy is wasted in managing the fall-out of aggressive behavior or petty-politics.

Good leaders realize this and are starting to take the ‘bull by the horn’. Work Culture is clearly defined and those who seek to undermine it are not tolerated – no matter how important they might seem to the organization. They might be critical today, but the damage they do in the long run will far outweigh any gains they provide.

‘Do you believe your manager/supervisor indulges in manipulative or divisive behavior?’ is a question that might soon start appearing in Employee Engagement Surveys.

 

In case you are interested, here are some related Tools:

You might feel that none of this applies to you (and you might be surprised). You can take the ARSE (Asshole Rating Self-Exam) here (http://electricpulp.com/guykawasaki/arse/)

If you strongly feel that your boss is the problem, then test your theory. Take the BRASS (Boss Reality Assessment Survey System) Test here (http://goodbadboss.com)

If you want to get a peek at the Financial Cost of Organizational Conflict, check out the online calculator based on the research of Dr. Dan Dana here. (http://www.mediationworks.com/dmi/toolbox.htm#tools)

 

Acknowledgements and References:

Image courtesy of FreeDigitalPhotos.net

WORKPLACE BULLYING: AGGRESSIVE BEHAVIOR AND ITS EFFECT ON JOB SATISFACTION AND PRODUCTIVITY, Dissertation, Judith Lynn Fisher-Blando http://www.Workplaceviolence911.com

The No Asshole Rule, Robert Sutton, Piatkus

Narcissism in the workplace, Wikipedia References

Estimating the cost of employee engagement: A Leader’s Guide.

LossDueToDisengagement

You stole my money honey/You’re cold your blood’s stopped running/And know you’re buying your new life/Can’t help but find you funny: You Stole My Money Honey, Stereophonics

Companies worldwide agree that they are paying the price for having disengaged employees on their workforce. But what is often not clear is the extent of impact disengaged employees can have on the financials of the organization. Considering the heavy costs of disengagement (and investments supposedly made into employee engagement), this might seem pretty surprising to most. Not so, if you consider that the effect of disengagement is difficult to quantify at the least and nearly impossible to isolate at worst.

Can the CEO attribute the failure of a major product launch to disengagement? Maybe the market research got it wrong. Maybe the bugs were introduced because of the crunched timelines. Maybe the communication that went out didn’t convey the correct messaging. Maybe the products were not innovative enough – but was that due to caliber of the team or were they just not motivated enough to think things through? Maybe the business leader was overbearing with is ideas and no one cared enough to stand up to him?

As you can see, unlike clear financial and sales metrics or project timelines, identifying the extent of disengagement and its contribution to failure is a Herculean task. Herculean – Yes, Impossible? No.

Lets try and break down the costs in the typical areas where employee disengagement impacts the organization.

 

Part 1: The short-term/immediate impact

The productivity cost:

Research has concluded that engaged employees are about 31% more productive than their dissatisfied counterparts. Engaged employees will find ways to fix customer issues, reduce costs, improve processes that disengaged employees will not. When faced with a problem, chances are disengaged employees will throw the company rule book at you while engaged employees will go and find ways to fix it – sometimes using mechanisms that are not there in the rule book! (in a good way of course – in fact that is another impact covered in a later point)

So lets factor in (A) up-to a 31% productivity cost due to disengagement.

 

The sales topline impact:

According to CSO Insights’ Sales Compensation and Performance Management Study, at organizations where less than 50% of the salespeople were actively engaged, only 39% achieved their quota. This number almost doubled to 63% achieving their targets when 75% of the sales staff was engaged. A disengaged sales force might see issues ranging from macro market situation to a problem with the product, the sales collateral, the brand positioning – whereas engaged employees will figure out what it takes to get the sales. They won’t tell you the sales collateral is all wrong, they will talk to the marketing guys to point out exactly what is wrong and get it fixed.

So if you don’t have a full engaged sales force factor in (B) up-to 50% shortfall in sales targets being met.

 

The employee replacement cost:

Disengaged employees are more likely to quit – now that’s hardly news. What is astonishing is the fact that surveys shows they are 87% more likely to quit than their more engaged counterparts. Would you take a flight that is 87% likely to fail somewhere along the way?

So the organization gets saddled with the cost of replacing these employees at some point in time. The SHRM estimates that considering the costs of find a replacement, training, and productivity loss et al., the employee turnover costs in an organization ranges from 100-300% of the departing employees base salary.

Lets consider the midpoint and add that to the costs of disengagement (C) around 200% of the cumulative base salaries of employees who have quit.

 

Part 2: The medium-term impact

 

Higher healthcare costs

When the company workforce is engaged there are up-to 50% fewer accidents and up-to 41% lesser quality defects. Gallup research shows that the top 25% engaged workers in an organization in addition to having the fewer accidents; also have significantly lower health costs. If we consider the Gallup report on “The State of the American Workplace” as a reference, the Health-Related Cost to the Employer is almost 3 times for disengaged employees versus engaged ones ($11.7k vs 4.3k). Engaged employees have less days off due to illness and are more productive when they do show up at work.

The added healthcare costs have a direct impact on the bottom-line of the company and lets add that to the costs – (D) Up-to 3x the average healthcare costs when compared to engaged employees.

 

Repeat Business from Clients

It is a well established fact that the cost of selling to an existing customer is far lower that acquiring a new client. Research has now established a strong link between the levels of employee engagement and degree of customer satisfaction and loyalty. Customers are more likely to give repeat business (and recommend a business to others) if they have had a positive experience with the organization – and this experience is a combination of the product, the service and frontline staff interactions over a period of time.

Harter et. al, (in their 2009 meta-analysis) established that business units that were in the top quartile on their engagement scores, had customer ratings that were 12% higher than those in the bottom quartile.

So now lets add the cost of a lost client and the additional costs of acquiring new clients (just to replace lost business) to our list – (E) Additional costs due to need to acquire new clients to fill out lost business from existing clients.

 

 

Part 3: The long-term impact

 The very existence of the organization (or Cultural Rot)

As you can imagine, it is extremely difficult to gauge the financial impact of long-term impacts of disengagement. In fact any of the areas I mentioned prior could be seen as having both a short-term and long-term impact.

But the most troubling impact of a disengaged workforce (which can include the leadership) is the possibility of the organization itself ceasing to exist. Any one of the factors like losing clients, not innovating enough, not controlling costs, not having enough sales can balloon up to the point where things get uncontrollable and the organization cannot exist in its current form. It then becomes a target for acquisition (with the associated “right sizing”), or it runs afoul of regulators and the law (when leaders get desperate and no one cares enough to stop them or blow the whistle), or it just loses the battle in the market place and becomes a shadow of its former self (or just gives up the ghost)

 

 

In conclusion:

The costs of disengagement are anything but intangible. They are very real, very tangible and can be determined with a fair degree of accuracy – assuming the company has the will power to do so.

Determining the costs, however, is only the tip of the iceberg. The bigger question that the C-suite of an organization faces is – what next?

A true introspection about the causes of disengagement can throw up conclusions that are uncomfortable (at the very least) and need a serious investment of time and will power, more than money to set right. Sometimes the task seems so daunting that the most determined and ambitious of executives might give up even before starting. Building truly great organizations is not unlike nation building. You might have the vision, but if your employees aren’t on board that vision is going to remain just that – a vision. Just as you can’t hope to build an impressive structure if the foundation and the core are rotten, you can’t hope to build a great organization if your employees are disengaged.

The cost of disengagement in the long term?

Pretty much everything!

 

 

 

 

Acknowledgements and References:

Image courtesy of FreeDigitalPhotos.net

 Impact of Employee Engagement on Customer Loyalty, October 2012, Insync Surveys

 Why Employee Engagement has a Direct Impact on Business Bottom Line, Tolman and Wiker, Blog

A Cure of Rising Healthcare Costs? Employee Engagement, Chuck Gose, October 17, 2013, RMG Networks Blog

Employee Engagement’s Impact on Quote Attainment [Data], October 31, 2014, Emma Snider, Hubspot

State of the American Workplace, Gallup

Measuring and Mitigating the Cost of Employee Turnover, Kim E. Ruyle, SHRM Webcast, July 17, 2012

Positive Intelligence, Harvard Business Review, Jan 2012 Issue, Shawn Achor

Workplace Happiness: The High Cost of Unhappy Employees (Infographic), Lisa Chatroop, Good.co Blog, November 13, 2013

Do you know the cost of employees leaving your organization, Hay Group Blog, Satya Radjasa, December 03, 2013

People to Algorithms: “Back Off. We want to make our decisions!”

AnalyticsDeadEnd_

“It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead.” from the Terminator (1984)

Analytics is the hottest, absolutely-must-have corporate buzzword these days. Out with the fuzzy and in with hard data. Leaders and Managers have been known to repeat Deming’s quip (and wrongly get credit for it at times) “In God we trust; all others must bring data” when faced with business proposals that are based on ‘intuition and gut-feel.’ Finance and Operations have been using advanced modeling techniques for years, fine tuning the art of showing that big revenue spike (or cost saving) just around the corner. (Hasn’t happened in the last 10 years, but next two quarters are going to be huge!) And now it’s the turn of HR. People Analytics is the next big frontier and machines are being primed to crunch numbers on human attributes and ‘go where no machine has gone before.’

Correct Data is good, Intelligent Analytics is even better. I have had enough experience with gut-feel and arbitrary extrapolation driven disasters in my life to have a deep respect for both Data and Analytics (with the qualifiers firmly in place). I also know that modeling human behavior (or worse projecting it into the future) is something best left to Ethan Hunt.

‘Let’s collect all possible behaviors about employees, get a bunch of statisticians and lock them in a room till they come up with a formula to predict who is good and who is not,’ sounds like a good idea. Only problem – seems people don’t like it. And not just any people – top notch engineers at Google who live and breathe data and analytics.

“Not only must Justice be done; it must also be seen to be done.”

Promotions are a big deal at any organization. It represents an acknowledgement of the company’s belief that you have done an excellent job in your current role and so are ready to take up further or different responsibilities. Nominating the wrong person for a role can be one of the most disengaging acts in an organization. The person(s) who lose out in the race often choose to leave the company and walk right next door to the competitors HQ.

Google has a rather elaborate process involving self-nominations, committees and appeal process for promotions of engineers. As you can imagine this process is costly, time consuming and can be tedious at times. With the rather noble intention of saving a bit of effort for everyone, the People Analytics team decided to explore the possibility of getting an algorithm, which they can use instead.

They did come up with one. And statistically it was awesome!

No possibility of bias, absolute transparency, much less effort, very accurate (based on fitment with past data). One might expect everyone (especially engineers) to love the ultimate solution to getting promotions right. All the disengagement rising from favoritism, bias, perception et.al. out of the window in one masterstroke.

Guess what happened.

The Engineers hated it!

“They didn’t want to hide behind a black box, they wanted to own the decisions they made, and they didn’t want to use a model.”

At the end of all the research, the ultimate takeaway for Google was that ‘people need to make people decisions’ Analytics serves an important role in providing the decision makers with data points and insights, but it can never replace them. It is highly unlikely that we will ever reach (or accept) a situation where algorithms and black boxes are seen as taking decisions (even if you put a human face on the screen). [See Prasad Setty talk about it in the video at the end of this post]

Speaking of algorithms and disasters: Remember the Black-Scholes Equation and 19 October 1987 (Black Monday)? And for those with shorter memories there is the Gaussian Copula function and the 2008 meltdown. And those are failures when modeling movement of financial instruments (and therefore indirectly just one aspect of human behavior which ultimately drives price of those instruments).

It has taken us decades finally realize the tyranny of the “Bell Curve” in performance evaluation though most organizations still are stuck to using what is essentially a convenient misuse of statistical formulation.

Hopefully business leaders will appreciate the pitfalls in giving into the lure of expecting everything to be boiled down to an algorithm. (Elon Musk is rumored to have referred to AI as “summoning the demon”) Even if I don’t quite share Elon’s assessment of the scenario of doom (yet), in my opinion hoping to click a button to decide people’s career path is bit of science fiction, wishful thinking and lazy management all rolled into one.

But if you are a math wiz, don’t care about what old geezers like me have to say about “free will” and social cognition, then your mission, should you choose to accept it …

(Unfortunately this blog post will not self-destruct in 5 seconds)

Acknowledgements and References for this post: 

Image courtesy of FreeDigitalPhotos.net 

Google came up with a formula for deciding who gets promoted—here’s what happened, Analyze This, QZ India, Max Nisen, November 20, 2014

Recipe for Disaster: The Formula That Killed Wall Street, Tech Biz, Wired Magazine, Felix Salmon, February 23, 2009

The mathematical equation that caused the banks to crash, Mathematics, The Observer, Ian Stewart, February 12, 2012.

Will the machines take over? Why Elon Musk thinks so, Science, The Christian Science Monitor, Anne Steele, October 27, 2014