Wednesday, April 17, 2024

When We Hire, Should We Consider How Well-Connected Candidates Are?

Does an organization benefit when its employees are highly connected to workers in other firms and industries? Or does the benefit simply flow to the employees themselves, as they perhaps are building better future job prospects through these connections. Shelley Li, Frank Nagle, and Aner Zhou set out to examine this question. They built an enormous dataset comprised of approximately 9 million employees with 2 billion individual employee relationships at more than 7,000 publicly held companies in the United States. The scholars discovered that companies whose workforces are more connected tend to produce more valuable innovations. The authors summarized their conclusions as follows:

Although employees do not necessarily make connections for the company’s benefit, we find that companies’ centrality in the employee network positively predicts company value. This effect is largely driven by mid-level employees. Furthermore, company centrality in the employee network predicts company innovation inputs (R&D spending), and controlling for these inputs, predicts the quantity, scientific impact, and economic value of companies’ patented innovation outcomes.

Nagle commented to HBS Working Knowledge about their findings: "What we’re trying to say is there are many more jobs than you might imagine where having the right connections can be helpful to your company.”  He also notes the implications for managers as they search for job candidates. 

“Managers, when they hire somebody, know to look for many different qualities. How well-educated are you? How much job experience do you have?  Today, in some jobs, such as sales or higher-level management, managers may think about how well-connected you are, but our work shows that might be a consideration for a broader set of jobs.”

I'm quite interested to know more about the particular jobs where these connections matter most.  Beyond science, engineering, and sales roles, are there other positions where these networks are important?  Moreover, rather than simply thinking about hiring people who are quite connected, I'm curious to know how organizations can help their employees build more relationships with workers in other organizations.  What can business leaders do to help foster these connections for their middle managers?  

Thursday, April 04, 2024

Be a Loud Listener

I'm looking forward to hearing David Brooks speak at my daughter's graduation from Vanderbilt University next month.   Brooks, a writer for the New York Times, has written a new book titled, " How to Know a Person: The Art of Seeing Others Deeply and Being Deeply Seen.  I'm reading the book now, and it has some terrific insights on how we can connect, empathize, and communicate with others more effectively.  Brooks appeared recently on Matt Abraham's podcast from Stanford.  Brooks introduces a very interesting concept.  He describes the value of being a "loud listener" when communicating with others:  

First, regarding attention, treat attention as an on off switch, not a dimmer. So, when you’re talking to somebody, it should be a hundred percent or zero percent. Don’t try to 60 percent it and have 40 percent of your attention on your phone. Be a loud listener, I have a buddy when you’re talking to him, it’s like talking to a Pentecostal charismatic church, he’s like, uh huh, yes, yeah, uh huh, amen, I preach, preach. I love talking to that guy. And some people are loud with their voices, some people are loud with their faces, they’re emotionally reacting. And so, I love talking to those people.

Brooks is emphasizing an important part of active listening.  It involves really showing the other person that you are paying attention.  You are truly leaning into the conversation when you are a loud listener.  Brooks also reminds us that we aren't very good at multitasking.  We have to give others 100% of our attention in a conversation, rather than trying to do two other things at the same time (which we all do, of course). 

Friday, March 29, 2024

Three Voices Every Leader Needs

Fortune's Michal Lev-Ram and Alan Murray recently interviewed Otis Elevator CEO Judy Marks at Deloitte University. Marks offered some great insights to the assembled group of leaders from a variety of companies.  In the interview, Marks offered a great comment about the types of voices that a leader needs to hear now and again.  She specifically mentioned three voices:

You need a group of very trusted people who are going to tell you truth because things get filtered and they really do. So you need to call one of them a loyal irritant as long as it doesn’t really bother them. You need someone who’s going to kick you under the table every now and then and say, “Okay, enough, Jude.” Right? They got your point. Okay, it’s enough. Let go. You need someone who’s going to say, I think be really good if this got on your calendar because you can’t be everywhere.

We often hear about the need for that first voice - the devil's advocate, the trusted confidante and truth-teller.  However, the other two voices are interesting and important too.  First, you have to have someone willing to tell you when you've made your point, and perhaps you need to back off.  Sometimes leaders need to give people time and space to digest tough feedback and to determine how they want to adjust their actions moving forward.  In the moment, people can be defensive when the leader is pushing back, and just pushing some more won't cause them to listen more effectively.  They might just put up a bigger shield.  Second, you do need people who can help you determine where your intervention is needed, and when you need to make time to attend to an issue(s) that might not otherwise be on your radar.   Marks offers some good advice here.  Having these three voices and listening to them attentively can be very helpful for leaders at all levels. 

Saturday, March 23, 2024

Eliminate the Bosses? Organizational Transformation or Corporate Fad?


The Wall Street Journal's Chip Cutter has written about the transformation underway at Bayer, led by its new CEO, Bill Anderson. The article is titled, "One CEO’s Radical Fix for Corporate Troubles: Purge the Bosses." The 160-year-old company has struggled mightily in recent years, particularly after a problematic acquisition of Monsanto. Anderson's transformation plan calls for the establishment of 5,000 to 6,000 self-directed teams, as well as the elimination of many middle management roles.  He has taken aim at the pile of rules and regulations that govern employee conduct and decision making, hoping to streamline many processes.   

While the ambitious plan has many attractive features, it raises some concerning questions in my mind.  First, as I read the article, I'm reminded of the quote by the American writer and former State Department official Charlton Ogburn, Jr. He once said, "We tend to meet any new situation by reorganization, and a wonderful method it is for creating the illusion of progress at a mere cost of confusion, inefficiency and demoralization."  In many companies, attempts to redesign the organizational structure occur frequently.  Yet, CEOs are fooling themselves if they think that they will find an optimal organizational structure.  No such thing exists.  Each structure has its weaknesses.  Moreover, many transformation attempts create confusion and anxiety, as employees struggle to determine who has the decision rights on key issues.  

The WSJ article mentions that Anderson's transformation plan has introduced a whole new vocabulary regarding titles and processes.  Employees need to attend training to understand their new roles and responsibilities.  While a common language can be helpful, sometimes we are simply replacing one set of acronyms with another, without effecting profound cultural change.  Anderson will have to watch for signs of confusion in his workforce.  Moreover, there will always be some employees who think to themselves, "This too shall pass," having seen what they consider other corporate fads come and go.  Anderson will have to persuade them that this organizational transformation is not another fad.

One final thought from Wharton’s Peter Cappelli: he has compared serial reorganizing to the common tendency for doctors to administer antibiotics for minor illnesses.   He has argued that such prescriptions might address the pain and discomfort of the moment, but have adverse effects over the long run.   Why?  He argues that employees may lose faith in their senior leaders if they don't understand the rationale for yet another restructuring, if they are unclear about their roles and responsibilities, or if they think that it is yet another "flavor of the month."  

Anderson's plan has the potential to eliminate or streamline inefficient processes, while empowering employees closer to the actual work to make important decisions.  His goal is admirable and well-intentioned.  He just needs to make sure that he focuses on changing the culture and behavior, and not get too caught up in the boxes and arrows on organization charts.   

Friday, March 22, 2024

Action vs. State Orientation: Who is More Vulnerable to the Sunk Cost Trap?

Source: The MSLs' Liaison Newsletter

Some individuals have a strong action orientation.  Others have what is described as a state orientation. What's the difference?  According to James Diefendorff and his colleagues

"Individuals with a strong action orientation are able to devote their cognitive resources to the task at hand, thus enabling them to expediently move from a present goal state to some desired future goal state. These individuals flexibly allocate their attention for the purpose of task execution and goal attainment. Persons who are more action oriented are characterized by enhanced performance efficiency and the ability to complete tasks after minor failures or setbacks."

On the other hand, Diefendorff and his colleagues describe a state orientation as follows:

Alternatively, individuals with more of a state orientation tend to have persistent, ruminative thoughts about alternative goals or affective states, which reduces the cognitive resources available for goal-striving. This reduction of available resources impairs state-oriented individuals' ability to initiate activities and to follow tasks through to completion, especially when the activities are difficult, nonroutine, or both.

How do these contrasting orientations affect our decision making?   Are individuals with one of these orientations more vulnerable to certain cognitive biases when making critical choices?  Marijke van Putten and his co-authors examined this question with specific focus on the sunk cost trap.  In other words, they asked the question:  Are individuals with a strong state orientation more susceptible to throwing good money after bad than individuals with a strong action orientation?   They posited that state-oriented people would ruminate about past events and dwell on past failure. Consequently, they might try to recoup past losses and escalate commitment to failing courses of action.  Action-oriented people would, according to their hypothesis, focus on the future.  That forward focus would enable them to cut their losses and de-escalate commitment to an ineffective course of action.  

The findings from an experiment confirmed their hypothesis.  The sample size was rather small, and more work certainly needs to be done in this area.  However, the initial exploratory results are quite intriguing to me.   It speaks to a broader set of psychological research suggesting that people's well-being and decision-making abilities may suffer if we them to dwell or ruminate on their emotional state. Encouraging people to shift toward an action orientation may be beneficial.  

Monday, March 04, 2024

What are Your REAL Values?

Lila Maclellan has written an important story for Fortune titled "The recent debacles at Boeing and Meta highlight the dangers of shrugging off employee concerns."  Boeing, of course, has been saddled with product quality and safety troubles for several years, including two fatal crashes of the Boeing 737 MAX, about which I wrote a case study.   Meta has had repeated instances of internet safety and privacy issues, for which senior leaders dismissed or downplayed employee concerns.  

In this article, Maclellan cites Ann Skeet, senior director at the Markkula Center for Applied Ethics at Santa Clara University.  Skeet says, “When people bring things to your attention, it’s an opportunity to reset expectations and to clarify culture.  But if the leadership says that we can continue even when people are surfacing things they feel are inconsistent with the organization’s espoused values, it suggests there is another set of values that are actually being applied.”  

Skeet makes an important distinction here between an organization's espoused values and its values-in-use (a concept first articulated by Chris Argyris).  The espoused values are those that we find on the placard posted on the wall, or articulated by senior leaders when addressing employees and other stakeholders.  The values-in-use are the REAL values as identified by the ACTIONS of the leaders in the organization.   When employees perceive a serious disconnect between the espoused values and the values-in-use, then disenchantment and disengagement rise.    Some people stay silent in the face of serious problems.  Others simply exit the organization.  Leaders at all levels need to constantly ask themselves: Are we walking the talk?  Are we living up to our espoused values?  Or, are employees perceiving us as disingenuous?  If so, why has that perception arisen?

Tuesday, February 27, 2024

Does Money Serve as an Effective Motivator for Certain Types of Work, But Not Others?


Does money serve as a more effective motivator for certain types of work, but not others? That is the fundamental question explored by scholars in a recent working paper. Pamela Osborn Popp, Ben Newell, Daniel Bartels, and Todd Gureckis have written a paper titled, "Can Cognitive Discovery Be Incentivized With Money?" They conducted six experiments. In the first five experiments, they asked research subjects to examine a set of items. The participants had to determine how the items might be categorized sensibly into groups and then assign them appropriately. The scholars describe this task as "rule discovery" work. In the sixth experiment, the subjects engaged in "rule implementation" work. In that study, the scholars told the subjects what the categorization process should be, and the participants simply had to apply that criteria. 

The scholars found that money proved to be an effective motivator in the sixth experiment, but not in the previous five studies. The scholars conclude that tasks requiring creativity, insight, and discovery are quite cognitively challenging, and they depend on both attention and working memory.   They write  that "the results suggest that performance in tasks which require novel inductive insights are relatively immune to financial incentive, while tasks that require rote perseverance of a fixed strategy are more malleable."  

The researchers note that tasks in the workplace don't fall simply into these two categories though.  There's most likely a spectrum that stretches from the highly rote work to the extremely cognitively challenging tasks require high degrees of creativity.   Moreover, our work often involves some combination of these types of tasks.  Finally, the scholars remind us that this study focused strictly on one form of monetary incentive.  Non-monetary incentives may have different effects.