Culture Change

This post gives me the chance to carefully consider an issue of organizational culture that I have wanted time to ponder: the process of creating a new corporate culture during a time of radical change. This could include mergers, acquisitions, or turnarounds.

Just as there are times of market failure in the macro-economy, there are culture failures in the macro-organization of the corporation. These periods come when there is significant change or volatility in either the external or internal environments. This usually comes in the form of a shock to the system such as a merger, acquisition, or significant competitive change brining on the need for a turnaround. These shocks mark the trigger event for reevaluating the organization’s culture and initiating a change process when necessary.

A trigger event would conceivably include the decision to merge with or acquire another company, including people and capital. It could also include the reporting of significant negative results from ordinary business activities. These negative results would signal a marked change in the competitive landscape, and it is likely that other triggers could be used that would signal that change before the end of period reports, e.g., the entry of a large competitor into a market your firm participates in.

Often the trigger events are identified in the strategic planning process. The trigger signals a time of reevaluation of the firm’s strategy, including product mix and positioning, organization structure and talent, and, hopefully, culture. While product mix, product positioning, organizational structure, and even, to some extent, organizational talent are fairly well understood and can be evaluated and planned for; organizational culture is poorly understood and often overlooked as unquantifiable or unchangeable.

Because of the implicit and tacit nature of organizational culture, evaluating culture usually consists of ethnographic surveys and studies, including observing activities and environment, as well as gathering organizational narratives in order to unearth deeply seated values. One model from organizational psychology uses the above methods to begin to create an image of the shared “mental map” of how the organizational behaviors reflect the values the organization espouses. This is one of the best understood techniques for understanding organizational culture, but it is slow and difficult to implement and manage and may not be the best option for quickly shifting the organization to adapt to the changes brought on by the trigger event.

Future research should probably focus on what organizational structures and processes might make this process faster and easier to accomplish. This would also be an important component to creating a more flexible organization to compete strategically.

The culture change process usually centers around one principle, changing the shared behaviors the organization believes reflect their core values. There are a number of approaches to this issue depending on whether the change effort is top-down or bottom-up. The most common approach is to change the organizational structure and environment in order to force different activities. With different stimuli, rewards, and punishments it is expected that the people will behave differently and thus culture will change. This is the view put forth by proponents of rezoning during an urban revitalization effort and the proponents of organizational redesign in times of corporate change. Alternatively, the change can be made though changing the organizational narratives to reflect new behaviors for the espoused organizational values.

Fostering Individual and Collective Expertise

All of knowledge management is divided into two parts – knowledge creation and knowledge reuse. All of a firm’s future capability and profit is locked into these two components. Even inventory in stock must be sold using the knowledge that has been gained of marketing and sales by those employed by the firm. This whitepaper will focus on each of these areas in turn, giving a simple model and a few suggestions for tools or methods that might be employed to strengthen each component of the models.

Knowledge Creation
Knowledge creation, in this case process discovery and development, can be thought of as being the convergence of four factors, as illustrated in Figure 1. These factors include expertise, creative skills, network, and opportunity. Each of these must be present in order for innovation to flourish and the firm to be able to adapt to changing circumstances.

The first factor is expertise, although the factors need not come in any particular order. There are many measures of expertise, almost as varied as the types of expertise to be measured. Some may be expert financial analysts, others expert engine mechanics, still others expert designers of organizations. Each of these areas of expertise is measured and valued quite differently. Competency measures, based on behavioral-event interviews and expert evaluation, allow a consistent measure of expertise for comparable positions in the company. Additionally, competencies allow a convenient and reliable way of cascading strategic objectives through the organization. It should also be noted here that the more diverse the expertise is the more opportunity there is for novel solutions.

Figure 1: Knowledge Creation Model

The second factor is creative skills. Of all of the factors this can be the hardest to pin down. These skills are most closely related to personality factors and usually creative skills must be recruited and sought out rather than developed. These skills include regularly combining seemingly disparate ideas into new combinations, seeing opportunities where others do not.

The third factor is that of network. Even Newton acknowledged that his discoveries came because he “stood on the shoulders of giants.” In order for innovation or process discovery and development to be consistently renewed in any organization, a network for idea vetting and forming must be created among those that have the expertise and creative skills to foster the ideas. There are a number of ways to foster these types of networks, but often it is enough not obstruct the formation of a network. Creating and fostering gathering places for these types of employees to discuss their ideas will create an environment where the network can grow and strengthen.

The fourth factor in knowledge creation is the opportunity. This refers, not only to the opportunity to innovate but also to the ability for an employee to take a risk and try a new and possibly successful new process. It is also possible that the new process could fail. The biggest obstacle to success in creating renewable knowledge creation in a firm is punishing these failures because it punishes the taking of risks and trying new ideas. Not every idea can be successful, but expertise, experience, and network mitigate the risk and can lead to well managed risk and a constant flow of new process creation and development.

Knowledge Reuse
Once the knowledge has been created, the process discovered and developed to the point that it is ready to be shared with the rest of the organization, it must be somehow packaged so that it can be reused by those not in the originating network. The activities of knowledge modularization and reuse make up the majority of most firms’ activities.
The model for knowledge reuse is even more simple and concise than for knowledge creation. This model, as seen in Figure 2, consists of three factors – expertise, network, and modularization skills. These factors, though similar to those of knowledge creation, play a different dynamic in this case.

The first factor is that of expertise. Where as above, the expertise mix sought was diverse in order to find novel new solutions, the expertise mix here is more narrowly confined to those competencies needed in order to make use of the knowledge quantum or module that has been handed off. This is the most common use of competency modeling in organizations, to make sure that everyone is competent to do their job. Here the same is true; we are seeking a minimal standard in order to ensure a quality job is done.

The second factor in knowledge reuse is network. In knowledge creation the value of the network is in the conversation within the network culminating in new ideas. Here the focus of the network is on distribution of that new knowledge through the rest of the organization. This network consists, not only of the relationships necessary to convey the new idea, but also of the relationships needed in order to ensure the proper execution and learning of the idea in the proper context. The network provides the context for the implementation of the idea. This network is best fostered by keeping the creative network somehow connected with the rest of the organization so that the ideas can expand outward.

Figure 2: Knowledge Reuse Model

The final factor in our knowledge reuse model is that of modularization skills. When knowledge moves from an implicit state to an explicit state it necessarily is quantified. This isn’t to say that it can now be tallied and calculated, but rather that now it comes in some discrete bundle of ideas and subsets of ideas that convey, within the context of the network and expertise, the new knowledge. In order for this knowledge to pass readily it must be modularized, and this is a skill set quite different from creative skills. Modularization is closely related to pattern recognition, in that it requires the ability to take new and abstract ideas and re-craft those ideas into structures that are more familiar to the intended audience, i.e., the rest of the network that is to receive the ideas.

I would like to conclude by suggesting one method that captures these elements and helps with the process of taking new ideas, testing them, and then passing on the gained information in discrete bundles. This concept is taken from the field of medicine – the Mortality and Morbidity Meeting. This meeting occurs on a weekly basis in most hospitals and is completely isolated from involvement of anyone that is not a doctor or resident. Its purpose is to discuss any critical events or near misses in the previous week, identify what went wrong, who was involved, and what should have been done. It is not meant to blame or accuse, but rather to teach. This meeting creates an environment where risk can be discussed without fear of reprisal, where experience and failure can be learned from without blame, where reflection on mistakes can lead to new insight and better practice.

An M&M meeting like this fosters the creativity network, the opportunity to take risk, the communication from the creative team to the rest of the organization, and the expertise and context of more senior members with more junior members to facilitate knowledge transfer. In essence, it is a simple process that an organization can use to foster a renewable and innovative environment.

Competency-Based Talent Management System Design for Beginners

(This is a work in progress)

Why competencies?
The idea that the behaviors needed for an individual to be successful can be mapped and measured is not a new idea. For decades experts have been advocating for and companies have been experimenting with implementation of competency-based selection procedures, performance reviews and management systems, succession planning and development planning.

Often, though, companies choose not to implement the systems or have only limited implementations. The primary reasons cited include complexity, time and expertise needed, or difficulty in changing competencies to adjust to changes in the strategic landscape. This guide is designed to help overcome all three of these issues by providing simple, but comprehensive, instruction and guidelines for implementing a competency-based talent management system that can adjust real-time to the strategic needs of the business.

So, aside from the explanation of why we, the authors, are writing about competencies, there actually are valid reasons to use them in the workplace to help align the employees with the strategy of the company. Competencies provide one of the best ways to translate strategic needs in an organization with the individual capabilities and interests on the individuals that are the employees of the organization.

I was once asked, “Would you ever ask a child to do something you know they can’t do and then punish them when they failed?” The point is exaggerated but valid. How often have you seen a goal or task set for someone who did not have the current capability or background to accomplish the task? This needs to be differentiated from the idea of “stretch” assignments, which are designed to be possible but require a doable amount personal development.
But how does one know whether someone can accomplish a certain set goal? I have often heard this question from managers who are asked to set “stretch” assignments or goals for their direct reports. A manager must understand what is needed to do the task, what the capabilities of the employee currently are, and that the gaps between those will be reasonably overcome by the employee. Requiring this from the manager, especially good managers, has not been that unreasonable in the past, but as managers are moved around more frequently and with the impending knowledge loss of the retirement of the baby-boomers, managers increasingly do not have the depth of experience in the tasks or with the employees in order to make a “stretch” assignment that will help the employee.

The other issue that has to be considered is that of strategic flexibility in the organizational structure of the company. So, what if we spend all this time identifying what each employee needs to know and do, then something happens in the marketplace and things change and now we have to do it all again. Things change, that is going to always be an issue, but there are ways we can make it smoother and faster to make these shifts.

Now to the meat of why competency-based talent management systems will become increasingly important in the coming years as a solution to these and many of the related issues. Competencies give a means to translate organizational strategy, team strategy, etc. into measurable individual goals and measures. The competencies are identified through expert experience and knowledge and verified by real-time experience in the workplace. These competencies are then used to evaluate employee performance, set employee development goals, align employee activities with strategic goals, adapt quickly to changes in the strategic environment, design those stretch assignments, etc. The rest of this book will gather the details of how to each of these and many more and explain it in easy to understand terms that will allow anyone to create these same systems in their organizations.

Why Not Competencies?

When to Use and When Not to Use Competencies



What are Competencies?
There are many ways that we have traditionally looked at creating high performance, both on the macro level and the micro. Personal performance is usually described as the product of knowledge, motivation, and ability. If you add components of alignment, clear communication, flexibility, and reflection, you have the formula for a high performing adaptable organization with engaged employees. But, as with much of what has been written on the subject, it is much more easily said than done.

Examples of a Few of the Major Theories on Performance
Micro
· P = K x M x A
· Social-Cognitive – Patterson

Macro
· Hannah – HPM
· Jay Galbraith's Star
· McKinsey 7-S
· Senge’s System Thinking


Discovering Competencies
Behavioral Event Interviews
Spencer & Spencer
McClelland
Other Methods for Identifying Competencies
Intelligence
Language
Personality
Skill tests
Validating the Competencies
Expert opinion

Creating Metrics for the Competencies
Creating a Competency Dictionary
Spencer & Spencer
Starting with Strategy
Strategic Planning
Traditional
Monitor
Scenario Planning
Real Options
Gap Analysis
Circles
Cascading the process down to the team level
Getting From Strategy to People
Translating gaps into competency shifts
Putting those into the system
Workforce Planning
Succession Planning
What competencies do candidates need?
What competencies will candidates need?
Process outline
Acquisition: Getting the Right People
Employer Brand
All that I know about employer brand (I don’t know how this relates to comptencies)
Sourcing
Who has the skills, where are they (or where are they most likely to be), and why should they work for you?
Preparing for the Interview
From job description to BEI
Development: Getting the Right Seats

Expatriate Assignments
As companies expands globally, it is important to ensure that the leadership here has the breadth and depth of experience to handle and drive international growth. Expatriate assignments broaden the geographic and cultural understanding of the individual, and will prepare him or her for a strong general management or international management role. These assignments are one of the highest-impact development tools available. They are also some of the most expensive and high-risk.

Careful attention should be paid to differentiating “overseas” assignments designed to access a specific skill or drive a specific outcome (e.g. installing a new IT infrastructure in Europe) versus “expatriate” assignments, which are developmental in nature and will likely carry a broader mandate and be more open-ended.

Takeaways
Overseas assignments should be differentiated from developmental expatriate assignments
Expatriate assignments are used to develop HiPos with a specific need for geographic or cultural exposure and broadening to prepare the HiPo for general or international management roles.
These assignments should generally be one-time events as developmental return diminishes on multiple cross-cultural assignments.

Specific developmental goals should be set before the assignment and monitored throughout the assignment to ensure the needed development occurs.

Resources
· GlobeSmart Website

Developmental & Rotational Jobs
Research indicates that the most powerful tool we have at our disposal for personal development is the actual work that people do. Because of this, the use of developmental work is purposefully encouraged and supported at the company. All staff are encouraged to seek “job enrichment” opportunities—where they can stretch and grow within their current job (see Developmental Projects section). In addition to in-place opportunities, two types of more formal job-based development are at our disposal:

Developmental Jobs: Specifically identified to fit a person, these jobs may be configured as a result of an organization restructuring or attrition-associated opening. Importantly, the role is constructed to fit a particular set of development needs identified for the person taking the role. Purposefully configuring a role for an incoming talent should be rare and will typically be used with senior succession candidates to further “readiness” through specific experience.

Rotational Jobs: Rotational roles differ from “developmental” in that they focus on the “job” rather than the person. A small number of intentionally-developmental roles are set aside—usually for High Potentials and/or specific cross functional development. Ongoing roles in OCP and other groups designed to provide incumbents with broad exposure and rapid challenge are potential examples.

Takeaways
Developmental jobs will be managed and configured at the discretion of the business and HR leaders. Careful planning and attention should be paid to these to ensure that they never become a dumping ground of responsibilities that don’t fit well anywhere else…
The primary focus of rotational jobs will lie inside functions, although a limited number of true cross-functional jobs (e.g. finance to R&D) will be identified and managed through corporate talent reviews for target grades 30 and above.
Inside functions, specific jobs ought to be identified for semi-permanent rotational development. Particular attention ought to be paid to HIPO talent in early management roles.
Specific developmental goals should be set before the assignment and monitored throughout the assignment to ensure the needed development occurs.
Resources
“High Flyers” - Morgan McCall

Did you know?
Low variety and low stress lead to low development. Development requires us to be kicked out of our comfort zone, to confront things we’re not ready for. Rotational jobs should include significant challenges in order to be developmental.

Developmental Projects
Promotions and rotational jobs provide excellent development opportunities, but development must continue between those opportunities, and much of that development comes in the form of developmental projects. Identified in partnership with the direct supervisor, staff make these the most powerful day-to-day development tools in organizations. People create the most lasting change in their capabilities through rethinking their current role, engaging others in their development (like a coach or mentor) and stretching beyond current responsibilities.

Developmental Projects: Appropriate for almost all staff and driven by individual initiative, these could include special projects or events, additional responsibilities to core work, etc. Opportunities will vary depending on availability, the individual’s current development plan, and the personal initiative of the individual and his or her manager.

Takeaways
Individuals are responsible for their own development and should take the initiative to find the development opportunities they need based on their development plan. Job-enrichment, stretch goals, task-force participation, etc. should be a thoughtful part of most (if not all) development plans…

Resources
“88 Assignments for Development in Place” – Center for Creative Leadership
Coaching & Mentoring
Often, the most developmental experiences in a person’s career are associated with having a coach—to provide feedback, support, and guidance. We strongly believe in making coaching a part of any business culture and encourage employees to take advantage of the coaching resources available to them. This encourages the sharing of knowledge between levels in the organization and sometimes between functions. Coaching is not mentoring and typically focuses on more technical, work-related guidance (vs. career, personal, etc. often found in mentoring relationships) and is often time-bound by a few months or the scope of a project. Effective coaching relationships are supported from three perspectives:

Coaches: Managers are often the first line of coaches—and should see it as one of their primary roles. Additionally, they can support staff in seeking peer or other coaches outside the immediate team as needed…
Staff Members: Staff (at all levels) should assertively pursue coaching to support their job, technical and (sometimes) career growth. Staff should actively identify others who role model behaviors or skills they are developing and enlist help…

Mentors play an important role in developing both themselves and others in the organization. Mentoring is an ongoing relationship that provides career/professional guidance and learning on a range of skills. It often involves coaching—but should not be confused with it—as mentoring relationships tend to focus on broader career, personality/style, and personal needs. Mentoring can be especially helpful when individuals are making significant career transitions (such as individual contributor to manager). Additionally, since this relationship is built on trust and is often formed through finding commonalities and a personal connection, mentors are difficult to “assign.” As in coaching, three perspectives are important in mentor relationships:

Mentors: Managers and leaders (especially those considered to be thought leaders or role models) should be vigilant in looking for people to mentor and open to being “found.” They should add these relationships to their formal goals for the year and highlight them with management…
Mentees: As with finding a coach, taking the initiative to identify and seek out potential mentors is the individual’s responsibility. Further, staff are encouraged to form multiple mentoring relationships as time permits to provide guidance and experience from varied perspectives.
· Types of mentoring: One-on-One, Group, Career, Technical

Takeaways
· External coaches may be available for Associate Directors and above (grades 30 and above). LSOD provides a list of certified external coaches and an outline of how to best leverage the process.
· Specific developmental goals should be set before engaging a coach and monitored throughout the coaching to ensure the needed development occurs.
· Functions are encouraged to identify and use specific “technical” mentoring or other programs as they fit the functional context…

Resources
· “Leader as Coach” - PDI
· eAdvisor™ - PDI
· Corrective Counseling – HR Intranet
· How and When to Mentor (Verna Ford)
· AWIN Website - Mentoring

Did you know?
The presence (or absence) of a coach is often correlated with individual high performance. Coaches provide guidance and support (often directly related to the work) that allow individuals to be more efficient, learn new skills, and take manageable risks…

Poor self-knowledge and poor relationships is the most frequent reason for manager and executive termination. Engaging a mentor can help an individual before these become problems.
Developmental & Performance Feedback
Self-awareness and felt-need are the cornerstones of personal development. As a part of “agility,” the ability to know oneself both allows individuals to appropriately target their developmental efforts and encourages them to take well-reasoned risks (not too far outside their comfort zone). Accessing feedback then, is an important part of building self-awareness and we places a strong value on asking for, receiving, and giving feedback—in the spirit of teaming and driving to high performance. Companies should provide specific development tools designed to highlight areas of strength and possible gaps in skills and performance:

Self-Assessments: While not truly feedback, self-assessments can provide important insights that drive development and in the spirit of proactivity, individuals should often start here…
Managerial Assessments: The manager’s feedback can often be the most impactful—given the relationship. Care should be taken to ensure that individuals receive “developmental” feedback in a safe, non-punitive environment.
360 Feedback: The ultimate view of one’s performance can be had through asking multiple stakeholders for their feedback. Often, peers provide the most accurate, direct feedback on development needs. The company provides specific tools to gather 360 feedback…

Performance feedback differs significantly from developmental feedback. While the Leadership Attributes or other behaviors may be assessed (as in e-Feedback) the additional focus of performance feedback is the work output and goal achievement. This type of feedback then ensures that people stay on track with goal-setting and accomplishment. The guarantee of anonymity that usually accompanies developmental feedback disappears here—and the explicit agreement with performance feedback is that it will be used to assess performance and may show up in MAP. As with developmental feedback, self, managerial, and 360 assessments all play a part. Guidance on performance feedback is four-fold:

Contracting: Clear goals and objectives, set at the beginning of the year, should be the basis for eventual feedback gathered.
Other Raters: Self and managerial assessments will be the core of performance feedback—as the individual and direct supervisor should have the best view into the specific work. Additionally, direct reports, project team members, and peers can provide important feedback.
Giving Feedback: Whether at year-end in MAP or in a mid-year review, care should be taken to ensure precision and accuracy when delivering performance feedback. The quality of year-end (or project-end) feedback will be directly related to the quality of goals set in the beginning of the year…

Takeaways
· The company has a clear point of view on the use of developmental vs. performance-based feedback instruments and provides several of each. The Leadership Attributes are the core of the most used of these instruments—and care should be taken to rationalize any assessment against these behaviors.
· LSOD provides a variety of best-practice tools to measure style, behavior, etc. and facilitate development and growth.
· Functions are encouraged to first use the company-endorsed set of tools and processes—but are free to go outside as warranted. A proliferation of different tools across functions should be avoided.

Resources
· Turning Feedback Into Change (Joe Folkman, PhD)
· Values Assessment – Beverly Kaye
· “Deal Me In” Cards – Beverly Kaye
· Successful Manager’s Handbook – PDI
· FYI: For Your Improvement – Lominger
· Novations - Novations

Did you know?
The most common reason previously successful managers fail in a new assignment is an overriding flaw or weakness that suddenly matters.

Rigorous performance feedback is about three times more effective at building high performing organizations than just hiring better employees in the first place.
Developmental Planning
The Company is committed to the development of people and provides significant resources in support of this commitment. While company investment supports development, the primary responsibility for driving it lies with the individual staff member. Feedback plays a primary role in development and staff who are proactive and assertive in both gathering feedback and in managing their own growth will find many tools at their disposal. These tools can be captured in three broad categories:
The Job/Work: Staff members’ current roles provide the most impactful and attainable development opportunities—through projects, task forces, etc. The basis for any future growth is always high performance in the current role.
Relationships/Coaching: Direct supervisors, peers, etc may function as a coach or mentor…and the company provides a variety of feedback tools to support these relationships.
Training: Corporate/functional curricula directly support the company’s Leadership Attributes—and job-relevant outside courses are also available. Most training can be accessed through the LMS.

Takeaways
· Development plans are required for all staff as a part of the annual MAP process.
· Partners in Education (tuition reimbursement) provide access to outside courses seen as relevant to performance in the current role—with manager approval. The yearly limit for staff participation is $10,000. This program is administered by Benefits… [click here]
· Functions and work teams may augment the company development planning process with specific job-related skills, processes, or competencies seen as important to performance—and will provide function-specific support tools as necessary.

Resources
The Four Stages Of Careers: Gene Dalton
“Up is not the Only Way”: Beverly Kaye

Did you know?
The major reason employees look to leave their present employer is due to a lack of career growth and development. They often feel blocked by a manager…
Peer Learning Groups
The company has an unbelievable number of best practices and great ideas that are locked up somewhere and are just waiting to be linked up to become something great. In addition, these great ideas and the processes for getting at them ripple out and provide development opportunities throughout the organization. Formal or informal opportunities for employees to gather and share best practices and other tacit knowledge increase overall corporate capability and unlock the great ideas of the future. Additionally, such gatherings create more and stronger relationships within the organization improving retention and collaboration.

Affinity groups
Research discussion groups
Inter-disciplinary learning groups
OCP Best Practice Round Table

Targeted Leadership Programs
Targeted leadership programs address the specific needs and level of understanding of different tiers of leadership. Each of these programs addresses specific company needs and provides practical learning and tools to make our leaders more effective both in the short- and long-term. Although sometimes the development need requires an external program, employees are encouraged to first consult the Training and Development Group to decide if one of the internally offered programs could be adapted to fulfill the need.

Takeaways
Any courses in the core curricula for emerging leaders can be scheduled by an individual or their manager and should be taken as needed according to the individual’s development plan.
Other targeted leadership courses are signaled by events in an individual’s career and the individual will be notified when they should take the course.
External courses are available based on need and manager approval.

Did you know?
Managerial training has an average ROI of 45%.
Management Curricula
The core company curricula directly support the Leadership Attributes. Built from best-in-class consulting and training research available, the company’s leadership development team tailored and customized proven developmental approaches and models to fit the company culture. While formal training (as a developmental lever) is less effective than coaching/mentoring or developmental job assignments, it is often the place to begin the developmental journey. Core curricula present roles/steps in MAP, detail on the Leadership Attributes, a robust development planning process, etc. which all allow leaders to easily identify and access developmental actions directly related to their situation. Core curricula is organized for five progressive levels of development:

Emerging Leader: this is the core curricula supporting all staff and managers.
New Leader: this includes company's Management Orientation and is required of all newly promoted managers.
Experienced Leader: this provides managers with an optional program to continue their development.
Advanced Leader: this provides much needed training for managers at the Associate Director level.
Executive Leader: this includes all of the ELDP courses and is required of all directors and officers.

Takeaways
LSOD provides corporate core curricula and mandatory training requirements for managers—which can often be tailored and customized to fit functional needs.
Functional training groups offer technical and functionally-specific training that supplement core curricula inside the different areas.
Outside education is also available to staff through the Partners in Education program.

Did you Know?
Formal training alone is a relatively ineffective approach to development. Guaranteeing the training connects to the work, ensuring accountability and follow-up from the manager, and specifically measuring change can all improve the value of (and change from) training.
Professional Skills Training
An important aspect of an employee’s development is the professional and technical skills they need in order to be more productive and confident in their job. Many of those skills can be provided cost-effectively here at the company and can be accessed through the LMS.

Did you know?
ROI for training varies depending on the subject matter, but can be as high as 418%, as is the case for sales and marketing training.

Occupational Skills Training
Being Effective
Typical Costs and Benchmarks
Deployment & Leadership: Getting the Right People in the Right Seats
Alignment
Retention and Engagement: Keeping the Bus Moving
Values

Evaluation, Performance, and Compensation:
The Old Principle-Agent Problem
Table of Contents
Why competencies?
Would you ever ask a child to do something you know they can't do and then punish them for failure?
Ability
Core to human capital model and integrating the human systems
What are competencies?
Discovering Competencies
Behavioral Event Interviews
Other Methods for Identifying Competencies
Validating the Competencies
Creating Metrics for the Competencies
Creating a Competency Dictionary
Development methodologies
Pyramid and breakdown w/resources
Effectiveness
What you need to know to make it sticky.
Typical costs/benchmarks
Identifying what to do
Strategy development
Hannah's Model (OPM)
Ability, Opportunity, Motivation
Going from strategy to people
Circle exercise
Doing and validating evaluations
Acquisition assessment
Intelligence
Personality
Development
360-degree
Performance
Compensation
Promotion
Other things to measure
Culture
Intelligence
Adaptability
Entrepreneurship
Succession Planning
Workforce planning
Retention/Engagement
Leadership/Alignment
Integrating with OD (Hannah, Weisbord, 7-S, etc.)
Understanding the lag time to effect
Measuring business results
Adapting it to international settings and other cultures
Potential measures
PIP (Human Performance)
Making the case to Management (or anyone else)
Plan, acquire, develop, deploy, retain, evaluate
Engage, lead

8 Keys to Anticipating Change

One of the most valuable skills in nature is being able to anticipate threats in our environment. This may have been a significant differentiating factor for modern humans – we can anticipate threats rather than only react to them when they happen. Being able to react quickly to unforeseen events is also very valuable, but I would argue not as valuable, day-to-day, as preparing beforehand.

In the financial industry, how you manage risk and how well you anticipate threats and changes often decides how profitable you are. The same is true of most business, but measured on a longer time scale in most circumstances. Outlined below are a few keys to anticipating change. All of them are common sense, but some are not commonly practiced.

Scan the environment
The first key is making sure that all of the information is getting to you. Start with general publications such as national newspapers (Wall Street Journal, New York Times, or Washington Post), magazines (Fast Company or Fortune), news media (CNN, NPR, etc.), and websites (CNN.com, Google News). These will give you something to talk about with friends and coworkers and feed you the information you need.

Trade and industry publications will give more detailed information on your business. Reading Industry publications will also help you get to know the thought leaders and those at the cutting edge who are most likely to spot coming changes.

Another great source is the people around you. Talk to friends, family, clients, customers, and coworkers. This is where the newest and freshest information comes from and most of it doesn’t make the national news.

Identify trends
Once you have set yourself up at the center of all of this information, its time to figure out what to do with it so that it becomes useful. Some of the work we may leave up to experts to write about emerging trends and converging ideas. But no expert knows our business like we do. What trends or patterns do you see emerging in all of the information? What are the causes for those patterns or trends?

An excellent example of this came from an experience I had talking to a floor trader with some twenty years experience. He explained to me that when the Federal Reserve changes the reserve rate, then bond prices react and move to the new price. This is obvious economics that we all learn at some time. But, the interesting thing is what the price does on the way there. The bond market is huge, the volume of shares traded is something unimaginable and difficult to manipulate because it is so large. The closest thing to a perfect economic pricing model found in real life. It should just switch to the new price. But it doesn’t. It almost always overshoots, recoils back beyond where it was and then slowly moves to the new price. This floor trader always makes money on that movement. He identified the pattern, and I could appreciate that, but I could not understand why the bond price would move like that. He explained, as though it were obvious, that it was all psychology. Bond traders react initially to the news, they flood the market with orders causing the price to move and overshoot the target because of the volume of new orders. Then, because all of the orders stop, the price recoils back beyond the original price. Then there is no longer enough volume to move it quickly and it will move more slowly to the new equilibrium price.

Evaluate different possible scenarios
Once we have identified different trends and thought about what the causes might be, take some time to brainstorm through a few different scenarios for how it might play out. Think through and identify all of the major players that would be involved. How is each player likely to react given the trend? How will each player react to how the other players react? This can continue until long after it is useful and probably beyond the time that it is accurate, but consider a few reactions into the future for each likely scenario. There is actually a whole discipline in economics devoted to this called “game theory,” but in business planning its called “scenario planning.” Considering alternative scenarios will give you a good chance to really try to understand your competitors, regulators, customers, etc.

Understand the implications
Now that we have a list of likely scenarios, we want to seek to understand and predict the implications the most likely scenarios might have on your business. Sometimes this is relatively easy, other times it is misleadingly complex. The whole discipline of economics is devoted to understanding implications and more recently methods such as systems thinking have come into common use to analyze how a change will ripple through a system. Take time for some careful thought into what internal changes an external change might force. In the end do a “gut” check – often our gut (especially a “calibrated gut”) or intuition will sense the implications better than our logical mind. Learn to value the input of both your mind and your gut, only experience will be able to tell when to use each.

Connect distant ideas
With the steps listed above you probably understand better than 90% of the possible risk your business faces. But there are a few more steps you can take to anticipate change. A more proactive approach is to actively seek connections in distant and seemingly unconnected information, connections that would have an impact on your business. Connecting distant ideas is often considered visionary, with all of the positive and negative connotations that come along with that. Sometimes you will see how things will turn out and be years ahead of your competitors and other times you will just be wrong. Learning to balance that and understanding how to identify a few key points along the way that will let you know early if you are wrong will help prevent spending too many resources on non-events.

Create your own luck
You now understand your risks, have a good idea of how others are going to react, and have found some creative solutions that will position you nicely. Now, with a little luck things will turn out how you planned, or will they?

Creating your own luck is another way of saying that you are going to do all that you can to make sure that things turn out the way you expect. You know who the major players are, who the thought leaders are, what intermediate steps need to occur in order for your future to unfold, now make it happen. Take a moment to figure out how you can influence thought, regulation, or events to favor you. This often involves building relationships with anyone and everyone that touches on that future, including employees, coworkers, bosses, friends, family, and lots of people you can meet if you make an effort. Make a persuasive case for your point of view, but also listen and be open to being wrong. Remember as well, that you are not just meeting to make your case; you want to build a long-term relationship so that your information now comes from those on the cutting edge.

You can do the same thing with events. You know what intermediate steps need to happen on the way toward your goal, if you have to break those down further. Now, make sure that the right things happen so that those intermediate steps occur. Now you are creating your own luck.

Hedge your bet
After all of this, you still cannot be sure of success; that is how life operates. Hedging your bet shows no lack of commitment or loyalty to your goal. It is a practical step to managing the risk of an uncertain future. Flip back to the scenarios you thought through earlier and look at the top two or three most likely. Hedging in this case means doing what you can to be prepared if one of the others occurs instead of the one you are planning on.

Take a stand
In the end, all this information can case paralysis and indecision. Information doesn’t always resolve ambiguity. But, as is true in so much else in life, it is harder to get hit while moving. Make a decision and go with it, keep an eye on your early warning signals, and adjust as you learn.

Strategic Nimbleness as a Business Culture

There is a lot said about how fast things change today. This has always been true to some extent and is not a recent event, but some types of change happen more frequently than others depending on the business climate. Examples include the increase in merger and acquisition behavior of the 1980’s, the “exuberance” of the late 1990’s, or the recession in the early 1980’s. All of these cause a surge in one type of change in most industries in a relatively short time frame.

Nimbleness
Put simply, nimbleness is being able to quickly and easily adapt to changing conditions and continue to perform at a high level. But that statement camouflages the complex and difficult nature of becoming a nimble organization.

Certain characteristics mark nimble organizations:

• Quick and effective decision making,
• A marked degree of autonomy among the employees and managers,
• High performing teams,
• An ability to work through ambiguity quickly and correctly,
• Professional and technical competence among the employees,
• An engaged workforce,
• Managers dedicated to their reports,
• And an executive commitment to the employees.

Any one of these adds some nimbleness, but they feed off of each other and the net effect is greater than the sum of the parts.

Additionally, nimble people or organizations demonstrate a knack for anticipating and preparing for changes in their business environment. This becomes increasingly important, as the business environment becomes more competitive.

Strategic Nimbleness
Also referred to as strategic agility, this is the ability to deploy the nimbleness or agility of the organization in a way that gives strategic advantage. A nimble business then responds almost immediately to changes in the business environment. These changes can be regulatory, competitive, customer, or market driven and can vary across the geography of a company.

It is in this role that nimbleness or agility creates value for a company. When the business environment shifts, for whatever reason, those that react fastest and most effectively can capture or gain market share, reduce business or regulatory risk, identify new market segments, etc. Thus nimbleness can become a strong competitive enabling force in a company.

Nimble Behaviors
Nimble behaviors tend to be very similar across industry and company size, but they differ depending on the level of responsibility of the individual.

Nimble executives. At the executive level at most companies, nimbleness is almost a de facto requirement. Many of these behaviors are already exhibited in most executives, but it is any that are not present that should be the primary concern. Nimble executives:

• Search the external environment and anticipate changes
• Understand how the various systems in the company interact
• Balance business systems between fit (efficiency) and flexibility (adaptability)
• Learn and adapt to new situations quickly
• Sort through large amounts of data and make good decisions based on the data
• Identify when they have made a mistake early, communicate that, and fix it
• Demonstrate to employees that they care about employee welfare

Nimble managers. The behaviors demonstrated by nimble managers differ from those needed for executives in that they are more focused on the operational aspects of any changes that arise. Nimble managers:

• Anticipate changes in the external environment that might affect their business
• Understand the role of their part of the business in driving the bottom line
• Seek out new experiences and value diversity in their employees
• Have a track record of resiliency
• Demonstrate flexibility and creativity in dealing with new challenges
• Encourage calculated risk (and forgive reasonable mistakes)
• Hold people accountable for the commitments and goals they have made
• Learn from both good and bad experiences

Nimble employees. Nimble behaviors also differ for individual contributors. Individual behaviors will tend more toward resiliency than toward anticipating possible changes. Nimble employees:

• Are curious about everything going on around themselves
• Learn from experience, whether good or bad
• Have a high level of self-confidence and self-esteem
• Adapt to new situations quickly
• Seek new and diverse enriching relationships
• Demonstrate openness and candor
• Demonstrate integrity and honesty
• Handle conflict well
• Know how to create their own luck

Creating a Nimble Culture
The first steps to creating a corporate culture around nimbleness begin by adding the nimble behaviors to leadership competencies and holding individuals responsible by tying those behaviors then to performance and compensation. By integrating it into the measures of performance and values in the company and then tying it to compensation, you can be sure that individuals will take the initiative to understand and incorporate the values and behaviors of the new business culture.

Now that you have created the need for employees to learn about the new behaviors, you need to educate about these new values. Common methods include:

• The wallet-sized card with values printed on it,
• Training programs or videos,
• Small group discussions,
• Executives and managers discussing it regularly,
• And even the perennial posters.

What is important is to talk about the new culture too much, to over-communicate (you can’t really, but it will seem like it), in order to ensure understanding of the new behaviors

When is change strategic?

One might answer, when is change not strategic? Few changes are done that are not meant to improve the competitive position of a company or at least move closer to achieving the goals of the organization. Here are some examples of changes that, if not managed well, may pose a significant risk for a business:

Start-up
Not all start-ups are starting a small company in your garage. Start-ups include opening new markets, launching new products, opening a new plant or office location. They usually include dealing with a lot of new information coming fast and furious and a lot of market ambiguity.

Turnaround
Turnarounds usually include a long uphill battle, not just against the financials, but also the momentum the organization has built. This takes the form of morale drops that affect sales, productivity, and creativity throughout the organization.

Merger or Acquisition
Any time two companies join together it is going to have a strategic impact, not only on the scope or scale of the company but also on virtually every other aspect of the way the joining companies do business. This can be a time of great success, one of one company dominating the other, or a time of failure in the case of a failed integration.

Divestiture
The greatest risk during a divestiture is not understanding the full impact and role that the business being divested plays in the system of inter-related business your company does. Sometimes, this is not a problem at all, but others it may mean significant and unexpected losses (gains are not so much of a worry).

Bankruptcy
Bankruptcy is also a significant strategic event. In recent years, it has been used repeatedly to gain an advantage with creditors, resulting in a stronger strategic position. Legislation may soon close this option. Handling the necessary changes internally and the relations externally are very taxing and experience and understanding are often the only tools available to provide any leverage in managing the bankruptcy.

International Expansion
The first time a company expends the resources to expand internationally mark a significant and sometimes risky undertaking. The costs of attempting such a venture with the large upside and usual significant downside (particularly, the blow the company image receives), make such a strategic change important to manage.

Direction Change
This type of change can be caused by many factors, but it denotes those times when the company is changing directions because of a shifting market environment and the need to adapt the company in order to continue in the same business or to adjust to a new business. This is often described as turning a very large ship, and rightly so. You must find the points of leverage in the organization and realize that shift will not all happen at once.

Corporate Life-cycle Transition
Lastly, as a company, any company, matures, it necessarily undergoes changes in order to adapt to the complexity of the market and organization that that maturation necessitates. When a company is small, it can change relatively quickly and easily because of a small and flexible structure. As the company grows, it becomes more complex in order to ensure quality service and a broader range of employee quality. These transitions introduce changes in the culture of the company in order to ensure continuity.