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Tag: Nassim Nicholas Taleb

Talent: what REALLY matters

By Geoff Callard
au.linkedin.com/pub/geoff-callard/7/160/9

 

The ‘Talent Management’ industry is a recent phenomenon – and it does not bear up under scrutiny.  There is no evidence to suggest that it helps organisations succeed and it ignores the need to take a deeper, systemic look at the best ways to develop people into consistently high performers.  As authors Pfeffer and Sutton declare in their book, Hard Facts, Dangerous Half Truths and Total Nonsense there are ‘…too many business adages…built on flimsy information, miracle cure hype and flawed thinking about best practice…’.   Talent Management is one of these.

We are all Biased

Talent Management is a multi-million dollar industry entrenched in most large corporate HR departments. People’s careers are built around it and those who need it to succeed are very likely to be subject to the very human biases that blind them to evidence that contradicts the fallacies that their industry is built on; that individual ability is largely fixed and invariant; people can be reliably sorted based on their abilities; and the context and the system in which they do it in is less important than individual talent.

In his book The Black Swan, Nassim Taleb summarises these biases’.  They include:

  • A Confirmation Bias in which we have a rule in mind that we then use to select examples to support an hypothesis
  • A Narrative Bias with which we fool ourselves with stories that cater to our desire for patterns in order to simplify and understand the world
  • A Remembering and Causality bias in which we more easily remember the ‘facts’ that support the outcome we have invested in and neglect the ‘facts’ that do not.

We are, of course, all susceptible to these biases.  It is part of human nature to filter that which we perceive to fit our world view and we are driven to find patterns and simplify the world in order to survive. ‘Talent Management’ is just one of the areas where we have ignored actual evidence in order to justify our actions.

Talent is not Fixed

‘Talent’ in the workplace is dependent on context, i.e. the support of the surrounding system, self-belief and effort.  High performance is more a function of having access to the right information and tools, than it is on a set fixed of attributes that are then treated as predictors of performance.

In addition, repeated studies show that abilities improve markedly when people believe they can get smarter. In other words theories of performance and ability become self-fulfilling. Talent it seems is far more malleable than we are led to believe.

The Flaw of Category Based Associations

In Situations Matter, Sam Sommers explains how we unwittingly view the groups with which we associate quite differently to those with which we are unfamiliar.  This book is a powerful reminder of how much context influences us in everything we do and it is not surprising that this is reflected in how we recruit into our organisations.

Put in behavioural terms, entrenched beliefs will cause perceptual bias regarding talent and performance. Sommers sites two examples relevant to the misguided notion that we can recruit ‘talent’.

The first is a University of Chicago and Harvard Study: ‘Are Emily and Greg More Employable than Lakisha and Jamal?’ in which 5,000 resumes were sent out. Using birth records the researchers gave half the resumes white-sounding names and the other half black-sounding names. They set up separate voice mail boxes for their black and white fake applicants and found that it took 50% more black applicant resumes to get a call back.  Why?  Sommers concludes that with the pressure of successive judgements to be made with little opportunity to scrutinise, our pre-existing (and often sub-conscious) default associations make a big difference.

In a similar Princeton Study white participants were asked to interview students (one white, one black) for an academic team contest. The researchers found that they spent 33% time longer with white candidates and were generally more engaged and communicated with greater warmth and confidence. The interviewers were ‘normal’ but their behaviour changed to create a different experience for white and black candidates.

In a second study one set of interviewers were trained to replicate the experience of the white interviewees; sitting close, taking more time, being more engaged, and so on.  The interviewees assigned to the ‘engaging’ interviewers consistently outperformed.  Watching the playbacks Sommers concludes that one would be convinced that that group were just a more qualified, impressive and interpersonally savvy group of people. So much for recruiting for talent.

Category based associations make a significant difference.  We are not as fair-minded as we think we are.

Deming-Quote

It’s All About the Environment

Bob Kierlin, co-founder of Fastenal, a US-based industrial supplies company, sums it up in Keith McFarland’s book The Breakthrough Company.  He says; ‘We started by believing in what people could do.  Then we figured out how to create an environment where ordinary people could do extraordinary things’.

As McFarland says, this is less about ‘getting the right people on the bus’ and much more about ‘creating a bus worth riding on’. Creating an environment that helps ensure people will succeed based on a carefully and precisely defined business model, access to the right resources and an infrastructure that supports their work is what leads people to achieve high levels of performance. In other words great systems are more important than great people.  This is precisely what W. Edward Deming was demonstrating more than 50 years ago when he ascertained that if there was a business problem, 9 times out of 10 any improvement required a change to the system not the people.

NASA is an unfortunate and regularly-cited example of how poor systems will override good people.  Seventeen years after the Challenger tragedy the Columbus Space Shuttle broke up upon entry back to earth killing all seven astronauts.  The subsequent Columbia Accident Investigation Board investigation concluded; ‘…cultural traits and organizational practices detrimental to safety were allowed to develop…’, citing ‘…reliance on past success as a substitute for sound engineering practices…’ and ‘…organizational barriers that prevented effective communication of critical safety information…’.

Tragically even though the people were different the system was not, producing a similar outcome to that seen seventeen years earlier.

Equally compelling is Boris Groysberg’s study of ‘star’ Wall Street investment analysts.  In his book The Myth of Talent and the Portability of Performance he traces the performance of thousands of star analysts who change firms. His research showed that they suffered an immediate and lasting decline in performance and that their earlier excellence appears to have depended heavily on their former firms’ resources, organizational culture, networks, and colleagues.

So why do so many companies put so much emphasis on ‘recruiting talent’ and so little on building and sustaining great systems to drive systemic high performance?  Is it partially due to our glorification of rugged individualism and reluctance to credit a systemic approach when things go right?  Is this another blindness that pervades the ‘talent mindset’; a tendency to over-attribute success and failure to individuals?

How do the Really Good Businesses ‘Manage Talent’?

It seems that the truly great businesses believe everyone is capable of the highest performance and focus on developing systems that makes it possible to turn that belief into reality.  They understand that hiring people with the right attributes is difficult not least because the right attributes today may not be what is needed tomorrow. McFarland’s research in The Breakthrough Company shows that the consistently high performing businesses ‘hire attitude and build aptitude’. A large part of the ‘talent’ equation has nothing to do with the way the ‘talent management industry’ says it works.

The old fashioned and unfounded virtues of hiring people of character and spending time and effort developing a supporting system that allows those people to develop into consistent high performers is what we should be focusing on.  The sooner the myth of talent management is disassembled and organisations focus on what really makes a difference, the better.

The weakness of hierarchies

The linear hierarchical structure has, almost without exception, become the only type of structure used in organisations. The entrenchment of line-based management in modern organisations reflects the conviction that productivity is an outcome of time-and-motion efficiency.  Enterprises invest heavily in increasing motion, compressing time and utilising tools such as fish-bone diagrams, decision trees, organisation charts, pedigree charts, tree charts and flow charts to manage most of their activities in pursuit of their desired productivity increases.

10th_Airborne_Command_and_Control_Squadron

10th Airborne Command and Control Squadron Emblem

De-layering in organisations has been a focus ever since those running organisations recognised the downsides of command and control structures include the cost of the structure itself. Those who sit in the middle and top of the chain of command cost more than those who do the work to deliver on production or service requirements.  To activate each line of production or service, the work needs to be broken down for each work group pushed down the line to each set of tasks to be completed, and then re-aggregated up the line to, hopefully, create a cohesive piece of work that meets all its separate requirements including financial, service, safety, quality and efficiency. Other costs are the time that organisational hierarchies take for decisions to be implemented and the degree to which they slow down the organisation’s ability to respond to the market. Concentration of power has also been a much-documented source of poor decisions with too much authority invested in the thoughts of too few. Two popular practices have been widely used to offset these drawbacks: downsizing (to cut costs); and promoting leadership as the quality that subsidises the reduction of management control.

Extensive research shows that what has appeared to be cause-and-effect or linear is often in fact small-world network behaviour.  Social network analysis on the relationships between individuals, groups and organisations, shows that performance is more influenced by our relationships and location within our network, than it is from our position in the chain of command.

Organisations that continue with the paradigm that performance must be ‘managed’ (i.e. top-down) must be very determined to ignore the social networks that occur naturally, and as the office grapevine proves time and again, operate far more efficiently than any corporate dictate.

Outdated management thinking assumes that given half a chance people will prefer to seek out friends and little formal attention is paid to their ability to build effective functional relationships.  It also wrongly assumes that even if people do prioritise social relationships, this is anti-productive.  ‘Outdated’ because it is thinking that fails to recognise the role of culture in the organisation.  When there is a culture of supporting co-worker relationships, the hierarchy becomes even less effective.  Gallup, the global consulting firm that has been studying employee engagement for decades has found that co-worker friendships increase employees’ satisfaction by 50 per cent, and employees who have a best friend where they work are seven times more likely to be fully engaged in their jobs.  This level of engagement has been correlated with company bottom line performance including earnings per share.

When the objective is command and control, the top-down hierarchy should be the organisation structure of choice.  However those that believe that the sort of productivity that comes from engagement is available from this structure are wasting their time and their money.

Hierarchical structures give us an illusion of effective control.  Sociological and organisational studies tell us people react and respond to millions of cues exchanged between people through all five senses at an estimated rate of 11 million pieces of information per second – and only a fraction of which occurs consciously.  Based on this information we decide what is important, what and who we can trust and how we will respond to different messages.  Nothing in the hierarchy acknowledges that any information we receive through the hierarchy is tested, and may be overridden by our responses to those in our network.

The increasingly technical and sophisticated approaches for managing performance and behaviour in the workplace convince us that people can be effectively influenced by the hierarchy.  This helps explain why despite the concerted effort to improve employee engagement, it continues to be persistently low costing businesses billions of dollars.

By depending on lines of authority or chains of command the enterprise all but guarantees that its organisation will have pockets of non-performance.

Many organisations dabbled in self-managing and autonomous teams at some point but few were actually game to understand and allow the social network to operate.  It would not only mean a wholesale dismantling of systems, and more importantly mindsets, on which we currently rely but it would seem that we would be risking control for chaos.  Here too, they would be wrong.  Hard evidence has emerged that networks are actually not random at all.  The activity that connects individuals, invariably follows a mathematical formula that leads the the formation of hubs (key connections) and hubs can then be used to manage everything from innovation to communication.

Even better, social networks are able to naturally produce many of the outcomes organisations have always desired and spent enormous energy and resources trying to achieve. For example, networks have been proven to:

  • Facilitate the creation of social capital for individuals and organisations
  • Allow authority to form where it is required
  • Operate in organisations effectively in place of hierarchies
  • Promote innovation
  • Assist in the development of trust and tolerance
  • Synchronise thoughts and actions
  • Diffuse organisational practices effectively across groups
  • Shape the way individual tastes and preferences develop

Author Nassim Nicolas Taleb in his book, Antifragile: Things that Gain from Disorder, argues that by managing a rigid structure we are actually creating the weakness we intend to avoid.  Anything organic is better allowed to develop and grow. “We humans, the more intellectual we are…the more we build things that are fragile because they depend so much on our projection of the future…they depend on theories, whereas robustness does not need theories…. When you are designing a system, it has more downside than upside…there is empirical evidence showing that anything top-down is fragile; anything that is bottom-up that takes place organically is [robust].

For organisations this means develop the strategy then support the network to deliver.

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