Enterprise Risk and Psychopathic Employees

Saturday, October 1st, 2011

Star employee or Psychopath?

We understand the attraction of trading to those who may show psychopathic tendencies.  It is an impersonal activity – a matter of spread sheets and automatic execution into anonymous markets.  It offers all the excitement of gambling and computer gaming, with the real risks of the gamble being taken by the employer and apparently mediated by risk management software.   It doesn’t require EQ skills.

However, we don’t agree that every trader fits this profile[3].  People who are extremely numerate may not have good EQ.  Corporate cultures may reward and encourage what could be described as selfish behaviour[4].  Similarly the effort that went into destroying internal competitors may be the consequence of a failure of performance management.  The real risk management issue is not purely individuals (or trading teams).  It is both how the organisation assesses and manages performance, and the impact of the prevailing organisational culture on the development and display of these traits.   

Psychopathic behaviour damages organisations.   Sabotaging colleagues destroys team working, creating a hostile environment with an internal rather than market focus.  The consequences include increased churn, with the real talent leaving.  Once the realities of working in the organisation are known, attracting good candidates for employment becomes difficult.   Promoted into management the damage is worse.  Productivity of other teams will plummet as internal competition ‘hots up’, more talent will leave and actions for bullying and harassment will eventually surface.  The inevitable resulting internal focus compromises competitive advantage and the organisation’s future.   

Fortunately, the psychopath’s ability to blag and charm does not stand scrutiny from effective performance review.  A key part of this is the review and feedback process itself. Ironically those who are best qualified to deal with the technical competencies in this population are unlikely to have the interpersonal skill sets to do so, and will feel most challenged by it.  Given the risks, it is important that your managers are competent in their interpersonal performance management skills.  Talk to us now about how to ensure your managers have the essential interpersonal skill sets to thrive at this challenging task.

Tags: Add new tag, Bad Science, Bullying, competitive advantage, culture of challenge, Enterprise Risk, ERM, governance, grievance, High IQ, Insurance, Intelligent Workforce, leadership, Learning and Development, performance management, reputational risk, risk management, Talent, Team, uncertainty, whistleblowing
Posted in Ideas Blog

‘One out of every 25 business leaders could be psychopathic* ‘

Friday, September 23rd, 2011

Tags: Bullying, competitive advantage, culture of challenge, executive coaching, governance, grievance, Intelligent Workforce, leadership, Learning and Development, Linked In, performance management, reputational risk, risk management, service industries, Talent, Team, uncertainty, whistleblowing
Posted in Ideas Blog

Revenge of the Organic Carbon Units?

Wednesday, September 7th, 2011

Emerging news that the US Federal Housing Finance Agency is suing various banks caught our eye.  The cases allege that the banks systematically failed to follow both market regulations and their own procedures in approving mortgages in the run up to the credit crunch.  The resulting ‘bad’ loans were then guaranteed by Fannie Mae and Freddie Mac, quasi-government agencies, and the FHFA is seeking to recover the billions the US tax payer lost.

The case has been rumbling for a while, with attention initially on how the banks foreclosed using the same inadequate approach, which we mentioned back in October 2010.   At that time we asked what was the purpose of management in such organisations?  Machines would be simpler to employ, less troublesome to manage. 

Now it would seem that the malaise was deeper, perhaps revealing a cynical disregard for the customer in the chase for short term advantage? If so the cynicism would seem to have been less than smart on the part of the banks’ Boards, as one of the customers they ‘turned over’ was a powerful government agency.  Such customers, backed with legal as well as market power, tend to hit back hard.   

Our premise still stands - management matters, and it is the Board that ultimately sets the standard.  Was this a sin of commission rather than omission?  It will be interesting to see the resolution of these cases, and the resulting impact on the regulation of financial markets and the banks.  

 Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively.  Solutions that engage, motivate and fit around, rather than disrupt the business.

 (from October 2010) So, why use people?

The news that Wells Fargo management used ‘robo’ signers to approve mortgage foreclosures caught our eye*.  Also in the frame for similar practices are JP Morgan Chase and GMAC Mortgage (Ally Bank).  The Wells Fargo VP of Loan Documentation giving evidence in a Florida lawsuit said she only checked if her name and title were correct on the documents.  She also signed affadavits stating she had “personal knowledge of the facts regarding the sums of money which are due and owing to Wells Fargo”.  These were used in foreclosure proceeding.  This is gold for the lawyers who are challenging the bank foreclosures.

This information raises intriguing questions, not least what is the purpose of managers in such institutions? Does the process manage the manager or does the manager add some value by managing?  And even if the (automated?) process worked as designed (aka those affavdavits), then the fact that the lawyers are able to make hay with it, shows a management failure.  Was the organisational effort to deal with the historically challenging volume of foreclosures such that sight was lost of treating customers (and thus the market) with proper respect?  Where were the supervisory and audit functions in the organisations?

What we find most confusing of all is that if all that was required from management was a signature, why didn’t they use an automatic signature machine?  After all why pay people, and put up with all that unpredictability and emotion?

Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively.  Solutions that engage, motivate and fit around, rather than disrupt the business.

* See www.ft.com 14/10/10

Tags: Ally Bank, Barclays, business coaching, competitive advantage, credit crunch, culture of challenge, Fannie Mae, Freddie Mac, GMAC Mortgage, Goldman Sachs, JP Morgan Chase, leadership, Learning and Development, mortgages, performance management, RBS, reputational risk, risk management, securitisation, uncertainty
Posted in Ideas Blog

‘The Great Leader’ theory of Management?

Wednesday, July 13th, 2011

When very able, driven entrepreneurs succeed in establishing businesses, a management structure develops over time that supports their strengths and covers their weaknesses.   The employed individuals who succeed in these unusual management structures are, by definition, comfortable within the culture, however autocratic it may be.  Employees who challenge will be eased out more or less subtly, or leave.  

Given market stability, an autocratic structure often works very well – organisational success shows that it is adaptive for the particular market.  Command and control has the virtue of a defined hierarchy which enables quick decisions, and the ability to apply resources quickly.  However, in changing markets it is less suited.  The weaknesses are that same hierarchical decision tree, the lack of internal challenge and loss of touch with reality, and the consequent stifling of innovation.  Most entrepreneurial organisations reach their ‘natural’ limit when they are successful enough to require formal capital.  This usually occasions the provision of more ‘professional’ management by the funders, with skill sets suited to growing a larger organisation, with the founder retained on some form of earn out.

What happens when an organisation manages to grow beyond this ‘natural’ limit with the founder and team intact? Without innovation and consequent long term competitive advantage it is difficult to see how it could avoid a crisis. 

News Corps’ problems seem both significant and multiplying at an alarming rate.  A management culture is being exposed where competitive advantage seems to have been based on short term (criminal?) ruthless  behaviour.  Was the nadir of this in the UK the exposure of Fraser Brown’s illness?  Compare this with the treatment of Ivan Cameron.  Or are there still more depths to plumb?

The Fourth Estate now takes delight in exposing stories long held back by fear of retribution.  And as New Corps are discovering, thanks to the internet, what would in the recent past have stayed as a regional issue is impacting their global business.  In the US shareholders are reacting to the evident weaknesses in management and worry about the delivery of promised benefits from the promised takeover of BSkyB.  Whilst this story appears to have resonance with Maxwell and even Trollop’s Melmotte,  there is little doubt that the ‘The Great Leader’ theory of management is being cruelly exposed.

Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively.  Solutions that engage, motivate and fit around, rather than disrupt the business.

Tags: Brooks, business coaching, competitive advantage, culture of challenge, leadership, Learning and Development, Murdoch, News Corps, performance management, risk management, Talent, Team, uncertainty
Posted in Ideas Blog

Hard Wired to Fail?

Friday, May 6th, 2011

The connections between the physical form and functioning of the brain and behaviour continue to be revealed. Professor James Fallon,  a true believer in genetic determinism ( i.e. that behaviour is driven by the brain’s biology), makes an interesting appearance on the BBC’s All in the Mind. He reveals his own personal journey to understanding the importance of environment and nurture, recounting his discovery that he had the brain structures of a psychopath, and comes from a long line of convicted murderers. Yet in his case he has ‘turned out well’. What made the difference was nurture and environment.

At the time of writing the interview is still available on the BBC at http://www.bbc.co.uk/programmes/b010mcl1

It was Alice Miller, back in the 1950s, who pinpointed nurture and the wider environment as key protective factors in child development. Her work was an investigation into how Hitler became such a monster. This work highlighted that most of the children she studied, who were brought up in unacceptable circumstances, went on to be useful members of society, rather than psycho or socio paths. As Fallon demonstrates by his own life– genetics and biology do not inevitably determine behaviour.

It is not necessary to scan the brains of your employees to identify and exclude the undesirable. Some of those problematic brain structures probably explain success – engineers/quantitative people with autistic tendencies for example. But the science does have useful lessons. Environment may switch certain tendencies ‘on’. We see this particularly in organisational cultures which admire strong leadership. ‘Strong’ leadership may just be sociopathic tendencies playing out – RBS and Fred Goodwin and his apparently bullying sales culture being an example.

Just as for the young, environment (culture) is protective for the organisation. Setting expectations and limits, defining and rewarding appropriate behaviour etc. All make a difference.

Good management skills are not a nice to have, they are a requirement for success.

Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively. Solutions that engage, motivate and fit around, rather than disrupt the business.

Tags: Bullying, competitive advantage, culture of challenge, leadership, Learning and Development, nature or nurture?, neuroscience, performance management, risk management, Talent, Team
Posted in Ideas Blog

Change Lessons from Psychopathic Toddlers?

Wednesday, March 30th, 2011

Two leading criminologists (see below) at the American Association for the Advancement of Science conference in Washington have presented studies that they suggest show that violent tendencies may have a biological basis. They believe brain scans on children as young as 3 could identify the future violent and criminal.

What a marvellous idea - that through the marvels of science (rather than messy interaction and assessment), we may identify those who do not conform to our community norms and that we may do so when they are still small enough not to be really dangerous. Even better and very comfortingly, if behaviour is an inevitable result of biology (rather than nurture or environment), then surely nothing may be done to change it. The attraction of the thesis is obvious.

Of course, there is one glaringly obvious flaw. Ask any parent; small kids daily demonstrate psychopathic and anti social tendencies in their almost complete disregard for the wishes and concerns of others. Then they grow up.

Caution is always needed with these discourses – remember phrenology, eugenics and genetic predetermination? They pander to our understandable reluctance to manage difference. Perhaps relevant for a governmental department which is able to make people do things, and a prison service that acts as a final destination storage facility for those who will not or cannot conform. They are particularly damaging when it comes to creating and changing high performing organisations. Building an organisation of ‘People Like Us’ (homogeneity), is not great for success in the fast moving complex markets of the global economy.

The comfort in sameness is understandable. Managing people from very different backgrounds is difficult as it requires the manager to stay adult. It usually challenges the manager’s assumptions about behaviour which will have been built up since childhood – be it how stress (emotion) should be expressed, how women should behave, or the place of people of different sexuality. For high IQ managers, who have often had the personal advantage of a relatively stable upbringing and education, it may be particularly onerous.

With change destroying networks, fracturing teams and making new demands upon existing staff, (never mind the incomers), even once apparently staid ‘people like us’ can suddenly become fractious and difficult. With the pressures of revenue and profit delivery, it is easier to not even try – just buy the myth, the software that promises automated work processes and oust those who complain. Yet the rewards for just a little effort are immense; re-invigorated individuals, engaged and high performing teams, continuity of knowledge and external relationships.

The challenge for senior teams and CEOs is to find of way of helping their managers improve their skills without it feeling too personally risky and distracting from business.

Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively. Solutions that engage, motivate and fit around the business

http://www.telegraph.co.uk/science/8339772/Child-brain-scans-to-pick-out-future-criminals.html

Tags: Bad Science, competitive advantage, culture of challenge, High IQ, Insurance, leadership, Learning and Development, performance management, risk management, Talent, Team, uncertainty
Posted in Ideas Blog

Supernova – when your Star explodes

Friday, March 4th, 2011

The Pain of Performance

After much professional struggle and personal pain, you are a Star in your industry. But life is not going so well, using alcohol and maybe some other substances to dull the pain, you lose control in public and are arrested for racist and anti-Semitic defamation. The instantly recognisable face of a global retail brand, the outburst filmed by a bystander goes viral on youtube.com. Then you are fired as your employer attempts to avoid brand contamination. Sober, and publicly shamed, you apologise profusely. But the damage is done.

John Galliano’s very public meltdown caught our attention as managing staff performance – however senior or much of a Star they are – is a key indicator of organisational success. UK organisations have a duty of care towards employees that includes the stress from their employment. Failure will, as Dior are finding out, damage your market and employer reputation, may further damage (and thus increase the risk of your being sued) your failing employee and will certainly waste the monies that you have spent developing and hiring him or her. For Dior to un-mesh their corporate identity with that of the Galliano ‘brand’ is a further cost.

High value services and products require teams to deliver into globalised market places. Leading teams of different generational, functional and cultural backgrounds is a daily reality for most managers. You are part of the team you lead and work alongside them every day, and you may even like them. With current market turmoil, the possibility of reducing stress by average scoring and giving the standard pay rise has gone. No wonder it is difficult to persuade managers to engage with this personal and interpersonal challenge.

No surprise then that the banks and IT developers are talking about developing software that will de-risk the 1:1 of leadership – Cyber or Android Manager to take the pain away?

We beg to differ. The solution starts with the senior team acknowledging the significant risks and costs involved with poor execution of these skills. Performance management belongs to line management rather than HR, as it is in those thousands of ‘moments of truth’ as teams interact that performance is managed. Giving managers the competence that leads to expert and confident delivery requires an accessible, engaging, individually low risk programme that fits around demands of running a business.

Talk to us today, in confidence and without obligation, to ensure your managers produce stellar performance from the whole team

NB: Dig a little deeper into the Galliano story and it transpires that the individual who managed the interface between Galliano and his employer, (Steven Robinson), died four years ago. Perhaps this exposed the designer to the stresses of managing his own relations with a corporate culture, and removed an important reality check. Whilst Galliano will no doubt recover from the shock, it is a shame for both the organisation and the individual concerned that the realisation that there was a problem came only after such public and shaming exposure.

Tags: competitive advantage, culture of challenge, Dior, Galliano, Generation Y, High IQ, leadership, Learning and Development, performance management, reputational risk, risk management, service industries, Talent, Team, uncertainty
Posted in Ideas Blog

Avoidable risk continues for Beeb

Thursday, February 10th, 2011

‘Being told what to do is not the same as understanding what you should be doing…..Understanding what you should do is not the same as being confident and competent in doing it.‘

The BBC’s official statement[1] following the tribunal verdict against them on ageism and harassment is interesting for the questions it raises. The Beeb admit they were at fault and then promise more ‘training’ for responsible executives and ‘new guidance on fair selection for presenter appointments’. It goes on, ‘These findings also raise questions that need to be addressed by the whole industry.’

We have identified 3 particularly interesting points in the statement.

‘Being told’ or understanding?

Offering yet more training may not solve the problem. Being told what to do is not the same as understanding what you should be doing – albeit it gives HR proof of attending training for the Disciplinary. Understanding what you should do is not the same as being confident and competent in doing it. Setting limits and challenging behaviour is what managers do whatever the group or work team that the manager may be part of thinks. This, after all, is why managers are paid more than others.

Selection Criteria and Competence?

In the tribunal it was apparent that the BBC did not have clear criteria for presenter competence. Given the relatively recent changes to employment law on harassment and bullying, the risks should have been evident. Has the BBC confused the encouragement of an entrepreneurial/creative culture with giving rein to the whims and fancies of ‘Kings and Princes’[2]? Is this much vaunted people business unable to manage people?

Sector leader or follower?

The BBC has significant State guaranteed income. It is hugely economically, culturally and politically powerful. Thus it is difficult to understand why it should be overly concerned about ‘industry practice’. Sector ‘leaders’ do not usually follow the practices of sector ‘followers’ – especially when it comes to talent, a key differentiator of performance.

The Beeb itself now has more than an external PR problem. The BBC generally does better than many large employers at hiring, promoting and retaining female staff, not just presenters. It is this group who must really be wondering about the value of the organisation’s much vaunted statements of equal opportunity. When tested by tribunal process, policy was found not to be practice.

Yet it doesn’t need to be like this. Correctly engaged and motivated even your highest IQ and most creative or technical managers can become super competent in those difficult soft skills they usually avoid. Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively.  Solutions that engage, motivate and fit around, rather than disrupt the business.

Tags: BBC, Bullying, competitive advantage, culture of challenge, High IQ, Intelligent Workforce, leadership, Learning and Development, risk management, Talent, Team
Posted in Ideas Blog

What a show! Avoidable Risk – Management Error?

Friday, November 12th, 2010

It really is quite a show! We are being treated to a very public airing of accusations of sexism, ‘lookism’, ageism, personal vindictiveness and opaque process. To the delight of the press it includes elements of ‘cat fight’, as personal accusations are exchanged between professionals. This is all from such an avowedly high IQ and intelligent organisation, the BBC.

The corporation is paying the financial and distraction costs of a tribunal as a result of comments allegedly made by managers when discussing an employee’s performance and future. As gender, age and looks are not characteristics that an individual may (easily) change, and are shared by large proportions of the population especially theBBC’s audience and tax paying pay masters, the market and political damage is reasonably significant.

High IQ individuals often find the soft skills required to manage performance a challenge to perfect.  Performance feedback is an important and constant part of a manager’s job. Staying adult is part of the competency. However, the BBC team appear to have resorted to personally vindictive behaviour. This may be bullying and harassment, and whether deliberate or accidental, is certainly unnecessary and avoidable.

As more than one manager within the team appears to have demonstrated shortcomings, was it an isolated management failure with the senior manager failing to correct errors? Or was this a case of tick box compliance to policy?

Are your managers to exposing your organisation to unnecessary risks?

Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively.  Solutions that engage, motivate and fit around, rather than disrupt the business.

http://www.telegraph.co.uk/culture/tvandradio/8117730/Countryfile-presenter-forced-out-as-payback.html

Tags: BBC, Bullying, competitive advantage, Generation Y, High IQ, leadership, performance management
Posted in Ideas Blog

Managing Risk - bullying or strong leadership?

Tuesday, October 26th, 2010

Attending a Cardinus/IISRM conference to hear Lord Young talk about his proposal to reduce unnecessary Health and Safety bureaucracy was thought provoking. Describing his area of concern as only ‘low hazard’ environments, Lord Young included workplaces as low risk. This is of particular interest to us as there are greater personal risks at work than ‘slips and trips’, especially the fairly common confusion of bullying with ‘strong leadership’. In difficult business conditions where the pressure for performance is strong, this tendency is enhanced.

Some people are deliberate and systematic bullies – Sir Fred Goodwin’s management style was often described in this way. High IQ managers are normally less deliberate in their intentions, but without the EQ competence of how to address difficult team performance issues, the impact is just as dire. As we know, bullies are often emotionally weak, with poor interpersonal skills: bullies do what is easiest for them and what they are allowed to get away with. Legislation has now defined as ‘harassment and bullying’ behaviour that some managers have traditionally viewed as a ‘strong’ management style. It’s probably then, time to help those of your team who are in danger of overstepping the mark. One of the best ways of doing this is by having a culture that supports competence and allows whistle blowing.

Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively. Solutions that engage, motivate and fit around, rather than disrupt the business.

www.cardinus.co.uk

Tags: Cardinus, competitive advantage, Insurance, leadership, Lord Young, performance management, risk management
Posted in Ideas Blog