Sunday, 10 April 2016

Fooled AGAIN by The Talent Mindset.

Remember Enron?
Beware The Talent Mindset Myth

Even in the midst of a looming recession, many companies continue to regard top talent attraction and retention ahead of planned layoffs despite global economic slowdown and massive internal organizational re-structuring.  They fear losing the right critical people so needed to engage and lead the coming unprecedential onslaught of the next wave of globalization and marketplace transformation.

The term “talent” is used to differentiate from the mediocrity of mere competency sets and recognises the varying diversity of people talent in the organisation. In a now classic study published in 1998, McKinsey, a strategy consultancy company, published a study entitled ‘The War for Talent’.  This became quickly the choice management fad in the first decade of the 21st century, even today. From interviews with hundreds of managers, McKinsey consultants concluded that building a better talent pool is not about building a better Human Resource department. They claimed that it was not about better training or development either. Nor was it about offering more stock options.  They argued that it is crucial for leaders and managers at all levels to embrace a “talent mindset”.

Leaders with a talent mindset make talent management a huge and crucial part of their job. They understand it can't be delegated, so they commit a major part of their time and energy to strengthen their talent pool and helping others in the company to do the same.  Finally, leaders with a talent mindset have the passion, courage, and determination to take the bold actions necessary to increase and strengthen their talent pools.

A “talent mindset” is the deep-seated belief that having better talent at all levels is how one can outperform the competitors.   It is the belief that better talent is a critical source of competitive advantage. It recognises that it is better talent that pulls all the other performance levers.   For McKinsey, a talent mindset is the catalyst that activates the other talent-building imperatives.

The belief in a "talent mindset" also explains the high premium placed on MBA degrees from top business schools, and why the many compensation packages for top executives have become so lavish and out of sync with their own company profits.   In the modern corporation, the system is considered only as strong as its “star” employees, the only talent that matters.

This talent-myth came crashing down in 2001 in a company where McKinsey had conducted twenty separate projects, billing nearly US$10m a year, and where a McKinsey director regularly attended board meetings, and whose CEO himself was a former McKinsey partner. The company was Enron.

The Enron scandal is now compulsory reading in all business schools.    Enron was the ultimate "talent" company, whose culture was crafted single-handedly by McKinsey. It chronicles the strategic failure of leadership to understand the dynamics of human talent which led eventually to the downfall of a company worth more than US$70 billion at its peak.

“The only thing that differentiates Enron from our competitors is our people, our talent," Kenneth Lay, Enron's former chairman and CEO, once told the McKinsey consultants when they came to the company’s Houston headquarters.  Another senior Enron executive put it to Richard Foster, a McKinsey partner who celebrated Enron in his 2001 book, "Creative Destruction" that "we hire very smart people and we pay them more than they think they are worth".

Enron management did exactly what McKinsey consultants advised that companies ought to do in order to succeed in the modern economy.  It hired and rewarded the very best and the very brightest. The company was promoting people based on personal evaluations that were not related to overall performance, and the needs of customers and shareholders were secondary to those of its “stars”. And these, among other factors, drove Enron into bankruptcy and oblivion.

The reasons for its collapse are complex and complicated. One fact remains however undisputed: Enron failed not because of the lack of talent, but in spite of its talent mindset and many talented employees. 

Enron believed and only hired the best business and MBA graduates from the top US Business Schools. This is its first strategic error.  Indeed, smart people are not measured by school grades and MBAs from top universities, and doing so make them overrated.

The most pervasive, and strategically misconceived, approach to talent management remains the McKinsey’s “star” approach. For McKinsey, talent refers to “the best and the brightest” and many organizations adopted the term to refer to their “A Level” employees who rank in the top 10-20%.  Eventually, companies become focused on just a group of highly paid individuals with MBAs whom they believe to be able to deal better with complexity and uncertainties.  These are also complicated, psychologically unique and high maintenance individuals; they believe more in their own individual performance in a corporate culture which earned them rapid promotions and huge financial rewards.

To be fair, McKinsey’s talent definition did refer to “the sum of a person's abilities … his or her intrinsic gifts, skills, knowledge, experience, intelligence, judgment, attitude, character and drive”.  Supposedly, it also includes his or her ability to learn and grow.  Truth is, everyone is a talent embodied by various skill-set, knowledge, attitudes and other human psychographics.

The fundamental flaw in the “talent mindset” argument is the simplistic and naive notion that the overall performance of an organisation is just the sum of what its “best” individual “talents” can achieve.  Performance is not a stable fact but is impacted by human interaction; team/social dynamics, communications, incentives and leadership are far more important. In many world-class companies, there is plenty of evidence that a great team can outperform a loosely connected group of more talented individuals.   Creating impactful performance is also made more difficult when senior executives fail to identify the best people for the best fit with the rest of the organisation.

The conventional wisdom, or a true lie, is that an organisation's intelligence is simply a function of the intelligence of its employees. It is easily understandable to want to believe in “stars” because our lives are so obviously enriched by the inventions and discoveries of brilliant individuals. However, organisations operate and live by different sets of rules. They do not just create; they plan, execute, compete and coordinate the efforts of many different people, and the organizations that are most successful at that task are the ones where the system of key processes is the star.

Talent is overrated and often misunderstood. Leadership expert John Maxwell cautions: “Talent is never enough.  There is little correlation between a person’s effectiveness and his intelligence, his imagination or his knowledge. Intelligence, imagination and knowledge are essential resources. But only effectiveness converts them into results.  By themselves, they set limits to what can be contained.” (The 360 degree Leader, 2005)

Talent has discarded most of its elitist connotations and now, for HR professionals, refers to the company’s entire workforce, for a better talent management strategy.

Like Enron not so long ago, many companies today have also fallen victim to the “talent mindset” myth. They often hire talented people for the wrong reasons.   Even those that hire the right people often make little efforts to integrate and motivate them with a learning and development agenda.   Many young, new talents often became disappointed, realized that their jobs do not always require their level of expertise, did not feel that they are growing, ended up not fitting in, and finally leave.

HR thought-leader David Ulrich takes a holistic view of talent with his definition: [Talent = Competence, Commitment, Contribution] (Ulrich, 2006). To Ulrich, competence means that individuals have the knowledge, skills and values that are required for today and tomorrow. Commitment means that employees work hard, put in the time to do what they are required to do, and to give their discretionary energy to the company's success. Contribution means that they are making a real contribution through their work — finding meaning and purpose in their work.  The corporate cultural context of [competence, commitment, contribution] defines the talent landscape for a truly sustainable competitive talent advantage.


Thursday, 7 April 2016

No Layoffs, Choose De-Employment

De-Employment as The Alternative to Layoffs
A New Talent Solution as the Recession Looms

Few companies will miss the obvious signs of impending business doom. Declining orders, falling sales, narrowing profit margins, increasing relative costs, inventory build-up, fewer competitors, fewer customers and increasing difficulties in accounts receivables.
Layoffs in Singapore reached a 5-year high with weakening job vacancies since the 2009 global recession triggered then by the banking and currency crisis.  Nearly 16,000 lost their jobs in 2015; mostly middle-aged executives with degrees and higher-skilled workers.  Most of them also did not find a job within 6 months from their layoff.

A careful analysis revealed that about 71% of the layoffs were skilled and experienced professionals, managers, executives and technicians (PMETs), ages from 40-49 years old, up from 66% in 2014, even though PMETs made up only 54% in the workforce.  Also, an increasing number (44%) of the higher educated – degree-holders – lost their jobs when compared to just 41% in 2014.

Embracing De-Employment as the New Normal
Given the demo-psychographics of the talents most susceptible and vulnerable to layoffs, de-employment becomes an innovative, empowering and integrative human resource management (HRM) solution best suited to manage talents long before their layoffs are deemed necessary. 

The steady 2015 unemployment rate in Singapore last year at 2.9% for Singaporeans, and 2.8% (2.4% in 2014) when included Permanent Residents (PR) belie the looming onslaught of layoffs expected in 2016 given the weakening global economic conditions and persistent low oil prices. 

A company facing high risks of layoffs to happen sometime in the next 6-9 months can manage the risks by adopting a strategy of de-employment. Embarking on the de-employment journey, the company prepares its employees as it enters into a joint-employment relationship with a “Surrogate Employer”

A Surrogate Employer (SE) reinforces the corporate culture concurrently as the company engages the competitive forces that are affecting the business.  On the one hand, the SE empowers the company’s recovery strategy by focusing on its core competencies to restore and grow their bottom line whilst pursuing vigorous costs reduction. On the other, the SE augments the company’s talent management team by assuming responsibilities for the strategic re-configuration of its talent pool leading to whatever necessary re-calibration and re-sizing in order to service the increasingly difficult marketplace more successfully.      

The goal of de-employment is business recovery with a particular emphasis on key talent retention, redevelopment and excess talent deployment. Strategy and talent management are the twin challenge of the de-employment strategy.  Strategy focuses largely on the external competitive space, and talent management in de-employment involves radical and fundamental internal organizational re-structuring. 

Organisational re-structuring aims at reducing layers and widening job scope through job re-design, job merging, job sharing and jobs elimination. This deploys a lean thinking approach to eliminate wasteful cost drivers and, more importantly, the retooling of talent through re-skilling, redevelopment and redeployment for and in anticipation of business recovery.

Important HR tools like shorter work week, wage/benefit cuts, working online/off-office, mandated vacation and outsourcing workers to other companies can be attempted, but recognize that these are merely short-term measures that merely postpone the inevitable.        

What is crucial in a de-employment strategy is to assure continual smooth business operations without the often disruptive effects and morale-depressing sentiments from layoff exercises.  This means the transfer of the entire (or most of the) workforce – including a large number of prospective redundant and excess workers – to the SE, who is now tasked with the mission to assure continuous income flows, not necessarily at their previous levels, to those workers who are not needed by the company either on a full-time or part-time basis.  This way, the company can reduce its labour-related costs immediately paying only for talents that it actually needs. The other redundant and excess talents are engaged by the SE to work in other companies.        

The de-employment strategy promotes income assurance in the participating workers, instead of job security.  Layoffs would be a thing of the past.  They will be continually engaged rather than occasionally employed.  Their works are assignments as they perform them not always at physical workplaces but at designated service-hubs or centres, which may be virtual or through social media cyberspace or on the internet. They are not controlled through adherence to some fixed reporting times but managed through agreed performance milestones or indicators.  They also commit to at least 100 hours of continuous learning and development per year, so as to be empowered and eventually become truly independent to pursue their desired career experiences.

Companies participating in de-employment no longer worry about layoffs as bad times loomed. They retain their relevant key talent on a full-time or part-time basis as mutually agreed with the SE.  Talents with flexible skills are able to work at more than 2 service-hubs or centres to multiply their income streams.  And they can work at their own pace and place without infringing the legal restrictions on working hours or working during holidays and rest days.   

The SE is essentially a community of talents who are well educated, skillful and experienced (like PMETs, for example).  Their SE provides such portable benefits as CPF, medical, dental, vacation leave and various other welfare benefits usually enjoyed by regular employed workers. They can seize available opportunities for multiple enhanced income streams from assignments to various SE clients.  Their skill-sets are continuously revised, upgraded and re-calibrated to ready them for future jobs which are yet unknown.   

The crucial difference between de-employment and HR out-sourcing is that the SE is contractually part of the company, instead of its outsourced labour contractor. The SE and the company have joint coaching and mentoring responsibilities for their talents. Their relationship entails regular feedback and communications with each other and with their talents. In this manner, de-employment assures the sustainable relevance of talents to the companies. They are also co-decision makers with regard to talent engagement, deployment and redistribution. Talents can be converted from de-employment status to direct employment status in accordance with agreed conditions. 

De-employment is the best alternative to layoffs by maximizing returns on human capital and talent.  Workers should not simply be discarded in layoffs as some useless garbage in a business downturn. For sure, surviving soldiers are not killed when battles are lost. Instead, they are systematically collected, re-organised, retrained, re-equipped and re-motivated to await mobilization for the next battle that would hopefully bring forth eventual victories and success.  

Corporate sustainability and business success depend on the strategic leverage of the human talent. Leaders know that the human talent is the highest and most decisive form of technology that makes the key difference in successful strategy. 

Monday, 4 April 2016

Growing Wisdom in Your Organisation

Wisdom is The Missing HR Goal
Next HR Challenge is to Grow Wisdom throughout the Organisation

Knowing what we understand now to be continuous uncertainties and ambiguities in the operational space between the present here and distant there in the future, and where the only viable strategic responses are agility and flexibility, the most effective talent management response is human wisdom, referring to that boundless synergy of human cognitive, reflective and affective abilities.
The knowledge economy today replaces hitherto robot-like manufacturing workers with relationship workers in the fast-growing service industries.  Leaders, managers and workers alike are expected to anticipate and deliver consistent excellent services within a narrow 6-sigma band. Globally, technological innovation in mobility and communications also rapidly accelerates the tsunamic digital transformation of the marketplace and workplace, empowering the multiplication of social networks between peers, between strangers and between business2consumers/businesses.

Strategic failures abounded over the past 2 decades: corporate goliaths fell; “body-less” cyber companies become profitable and popular; conventional corporate strategies turned on their heads; legacy core strengths transforms overnight into weaknesses; intense “red ocean” competitions turns bloody; “blue oceans” quickly turns pinkish, becomes bruised purple  before turning red …..  Exactly, what went wrong? 
The Simple Answer: the absence of wisdom.

Engaging the confluence of timing, context and capability to occupy strategic space requires wisdom. Even as learning and development (L&D) professionals have kept pace with new programs to parch organisational and talent needs of the emergent globally networked knowledge economy, the proliferation of L&D professionals, training literature, strategy consultants and strategy formulation tools have not prepared companies for the onslaught of change. 

And as human talents are laid off by the thousands in traditional responses to economic downturns, it aggravates a looming talent management crisis through the associated loss of wisdom, which is a core tacit knowledge resident in the human talent within the organization.  Replacing this lost wisdom is most difficult and well nigh impossible.

The failure to grow wisdom in talents and in organizations is squarely on L&D professionals. The L&D profession is responsible for the increasing fragmentation and specialization of knowledge and L&D programs in recent decades, even as the world becomes more disorderly, inter-connected, networked and globalised in such a manner that it no longer could be perceived, managed or engaged by a silo-mentality L&D approach to knowledge and experience.  

There is also a deep-seated but wrongful belief in L&D professionals that wisdom cannot be taught, but can only be developed within the individual; and that wisdom comes from a combination of insight and intuition based on knowledge and experience. 

There is no one precise definition of wisdom.  It is a multi-dimensional construct around the idea of goodness, cognitive diagnosis, strategic insight, intellectual development, competency excellence, management foresight and experience. 

Wisdom is a unique human talent process.  It can be regarded as a concurrent series of processes which overlap understandings to forge an awesomely indescribable alchemy of human action in accordance with underlying principles that earn eternal admiration by peers and generations to be the gold standard of a desired completely satisfying human existence. It is not, and should not be confused with a human capability. 

The dimensions of wisdom from the relevant literature include being practical, reflective, experiential, ethical sensitivity, respectful of diversity, socially interactive, boldness, unconventional, a readiness to learn from uncertainty and being comfortable with ambiguity.

To HR professionals, the key L&D question: is it possible to define “wisdom” sufficiently and to operationalise it adequately for the universal purpose of integrated L&D designs?

Yes.  Learning and growing wisdom is essentially a sense-making process.  The learning outcome of wisdom in T&D is action - powerful, wise and impactful action. Wisdom curriculum development is designed as the pathways to learning and thinking as the prelude to impactful action that is sustainable and socially responsible.

Wisdom develops as we make sense of life after participating in an event or situation.  Through discussion with others and subsequent explanations, we then construct the meanings of our experiences. Sense-making thereby creates “new” realities in a better understanding, and for a “better” wisdom.

Wisdom is sense-making in action.  Great judgment, best competent decisions and creative problem-solving are the results of the interplay of thinking, learning and development which shape cognition and the cognitive development of wisdom. L&D professionals already know that participants learn best through their own activity; that sensory experience is basic to learning; and that effective learning is holistic, interdisciplinary, and specific.

Learning wisdom is fundamentally a social activity. People construct their knowledge, not merely from direct personal experience, but also from feedback or being told by others and by being shaped through social experience and interaction. The construction of wisdom is therefore not effected in social isolation, but is co-constructivist in essence within the reality of the social and cultural space. 

The development of wisdom begins with experience.  Learning is essentially the determination of meaning out of an experiential encounter with real situations. The meaning derived would be the result of the interplay between what the person brings to the experiential situation and what actually happens there.   The person works on every new experience to “make sense” of it. He uses the knowledge or meaning derived from previous experience to work on the new experience so as to make sense of it.

Experience by itself is however not learning.  Wisdom learning requires reflections and “making sense” in relation to some referents.  The basic idea of sensemaking is that reality is constructed through an ongoing accomplishment that emerges from efforts to create order and make retrospective sense of what occurs. Sensemaking is simply “how people make sense out of their experience in the world” (Duffy, 1995).  The most important lesson in cultivating wisdom from experience is not what has happened, but what the happening means for the happiness of others and oneself.

Incorporating sensemaking in a T&D wisdom curriculum involves everything from creativity, comprehension, curiosity, mental modeling, explanation and situational awareness in a motivated, continuous effort of coaching and mentoring to empower understanding and connections of the dots in the uncertainty and complexity space, in order to anticipate the nature and direction of consequences so as to pro-act or react effectively. Wisdom can be grown in organisations because it can be designed, and its learning outcomes in the form of changed behaviors can also be observed and evaluated.

Wisdom frames its own question, and brings sense-making to bear for the final answers. Through thinking the unthinkable, predicting the improbable, anticipating the impossible, visioning the unimaginable, wisdom then asks the impossible question(s); and wisdom answers its own questions that we do not yet know how to ask, concerning objects or issues that we have not yet envisaged. 

Here’s an example: The goal of a typical T&D Curriculum is to empower agility and flexibility in strategic response to the environmental uncertainties in the marketplace, with the following objectives:

[1]  Develop a personal growth process to apply knowledge and skills with a conducive and insightful mindset informed by conscious experience on a specific situation defined by the sustainable community interests of stakeholders.

[2]  Empower an intuitive sense-making deployment of capability and capacity to achieve desired sustainable impact in a specific situational context with the right decisions and timings. 

The quality of wisdom is more than just a skill-set, knowledge domain or an attitude. It is tempered by experience, burnished by age, dignified by virtue, empowered by instinct and unified by deliberate action from the consilience of empirical and deductive processes in life’s rich mixture of successes and failures, of blessings and disappointments, of pain and suffering, of benefits and losses, of love and rejection, of victories and defeats, of truth and hypocrisy, of lies and half-truths, of reality and surrealism, of chance and design; and of ultimate good vs evil.  

The beginning of wisdom in T&D is to unlearn and debunk the legacy mental firewall that wisdom cannot be trained or developed.  Growing wisdom is the next challenge of T&D professionals for a world where change is the only constant.  If not us, who?  If not now, when?  Be wise, and act.