Posts Tagged ‘governance’

Enterprise Risk and Psychopathic Employees

Saturday, October 1st, 2011

 

Star employee or Psychopath?

Star employee or Psychopath?

 

 

 

A  German[1] study has highlighted similarities in brain function between convicted and certified psychopaths, and traders.   Interestingly the traders were more concerned with reward and, “spent a lot of energy trying to damage their opponents”, compared to the prisoners.  Whilst the study was relatively small (27 traders and 24 psychopaths),[2] it would seem to be backed up by anecdotal evidence from, and recent events in, the banking sector.[1] 
 

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.

 

[1] University of St Gallen: authors Pascal Scherrer and Thomas Noll

[2]The brain chemistry/mechanism that could be at play has been evidenced by  research published by the University of Vanderbilt  http://news.vanderbilt.edu/2010/03/psychopaths-brains-wired-to-seek-rewards-no-matter-the-consequences-109865/

[3] Psychopathic tendencies do not automatically mean that an individual becomes a psychopath.  The difficulty is semantic, the association with criminality.  As we have noted elsewhere, psychology and neurobiology are useful sciences to inform our interaction in the real world which is where organisations operate. 

[4] See our ‘Hard Wired to Fail?’ www.theperformancepractice.co.uk/ideas-blog May 2011


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

Friday, September 23rd, 2011

Is your Boss a psychopath?
Is your Boss a psychopath?

What a great headline and timely – we’ve all worked with bosses from hell, and at times of turbulence when people are very stressed, these stories have a particular resonance. But the headline is a gross simplification.  **1 in 25 out of small sample of 200 individuals – that’s 4% of a really small population. 

Many of the skills sets required to be a good boss could easily be confused with those described as psychopathic traits.  Doing business means that we are not always authentic in our emotional response to situations.  Appropriate senior management behaviours include:

·         Always outgoing and charming in public, (even if you’ve just lost a major contract).

·         Knowing when not to engage at an emotional level, and even when to ignore individuals (and how not to give offense when you do not).

·         Staying adult, (whatever the provocation), with staff, and customers.

·         Maximising time to useful contacts; minimising time given to those who are not useful – and making assessments about the ‘usefulness’ of the people concerned.

·         Firing people  – even if they have families to support and there is no other employment for them.

·         Making political accommodations and contracts with people and companies you do not ‘admire’.   

Consider also entrepreneurs?  Individuals who succeed against the odds – be it in commercial or not for profit sectors tend to have different psychological traits to those of the general population.  Some of these traits are not very attractive.

Here is how to protect your organisation from psychopaths:

1                    Know your business – it’s hard to fake when managers are knowledgeable about their business. 

2                    Manage performance – manage performance against objective criteria and agreed timelines.  To underline the point, business plans usually come with numbers and dates. 

3                    Have robust hiring systems.

4                    Inform everyone one of and apply relevant processes (including informal networks) to stamp out bullying.

5                    Ensure the Organisational Values are alive, not just written on a piece of paper – which means including them in performance management.

 

 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.

*The Guardian newspaper and other media sources.

**The study was conducted by Dr. Paul Babiak, you will find more – including a (n interesting) check list of psychopathic traits at http://aftermath-surviving-psychopathy.org.

Competence and Risk….. Pigeons coming home to roost!

Tuesday, September 28th, 2010

Are your pigeons coming home to roost?

The news that the Irish government is to wind up Allied Irish Bank, and in doing must consider the markets reaction and the impact on the Irish economy and government (and of course people), is perhaps an extreme example of the proverbial pigeon coming home to roost.

This one is very tatty indeed having been battered by forays, into the debt boom. If Anglo Irish Bank’s exposure to Quinn Insurance is indicative of a lack of effective risk management and associated management competence, it will be interesting to see what is in the balance sheet at Allied Irish.

The bubble made making money appear easy as the market surged upwards, everyone was a Super Hero – and the risk was managed by wonderful IT systems. But there is no substitute for competence – not just technical risk, but management (governance) competence. The ability to understand what staff are doing, (however arcane or black box it may appear), and when it is appropriate to challenge it, and to do so effectively are key competencies that are developed not innate. Business is still about people.

From the outside we cannot know the motivations, and positive actions that led AIB to build up such a toxic balance sheet. We may however seek to ensure that our own Super Heroes do not fall into the same trap and become homing pigeons.

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.

Attracted by Super Heroes?

Tuesday, September 21st, 2010

Super Hero In these uncertain times, substantial comfort is possible from a belief in Super Heroes, not least from the possibility of rescue. High achieving staff and managers are at particular risk of believing their own PR simply because it is easier.  Confronting difficult markets and working on those challenging influencing skills is not so easy. 

 

When an entire management team subscribe to the belief, then it often leads to significant trouble. ‘Star’ cultures often make organisations vulnerable.

  If the team believe themselves Super Heroes, the resultant loss of contact with the real world leads to significant reputational and other market risk.  Goldman’s and Lehmans may be recent examples.  Worse is when the customers have bought your ‘Star’ PR taking their business away when the star leaves. 

 

Cultural consequences may include difficulties with motivation and engagement as Super Heroes, (being marvellous), tend not to see the talents of other functions, or to be able to communicate with them.  Effective team working will probably prove impossible as the organisation evidently values the Super Hero income earners only.   Depending on the tax advice, the result is an atomised group of service companies/consultants with greater or lesser commitment to ‘customer’ satisfaction. 

 

Yet it need not be like this; Super Heroes are capable of and may be encouraged to learn how to both respect and talk to their ‘mortal’ colleagues.   Talk to us, in confidence and without obligation about ensuring your Super Heroes develop the competence and confidence to manage in uncertain times.

 

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