Author Archives: Lynda Bourne

The maturing or ‘agile’

kitten-yogaA deliberately provocative article on Linked-In asks the question is ‘Agile Dead?’; a discussion on how various aspects ‘agile’ invented by different individuals and groups are fading from prominence follows.  Agile is not my area of expertise but the article seems designed to generate attention without really saying anything new.

What the article did prompt in my thinking was the question ‘What is agile?’. Concepts vary from:

  • The Agile Manifesto (which is basically 101 common sense) created to overcome the failures of rigid IT development that required a 100% complete fully detailed plan before people really knew what the problem was (often referred to as ‘waterfall’ development but nothing like the original ideas in the waterfall concept).
  • Through to the agile anarchist community who’s mantra seems to be ‘trust us all of our teams are above average’ and we will make you really nice software without any discipline (a concept that ignores the mathematical fact that 50% of any group have to be below average….).
  • Then there are all of the various ‘agile’ methods from ‘Scrum’ to ‘XP’.

Ergo ‘Agile’ or ‘agile’ can mean virtually anything to anyone.  In contrast to all of these specific variants, I would suggest at its root ‘agile’ is a concept or philosophy rather than a methodology or process; useful philosophies rarely ‘die’.

What is emerging I believe is a gradual understanding that the false concepts of ‘command and control[1] and ‘certainty, based on a fully detailed plan[2] are slowly disappearing from management thinking (although there are still plenty of recalcitrant ‘fossils’ embedded in far too many management structures) – detailed planning months or years in advance of the work, done at a time where the work is imprecisely understood cannot control an uncertain future regardless of contract conditions and the exhortation of management. These ideas are slowly being replaced by an adaptive approach to projects that engages stakeholders and focuses on actually achieving the stakeholder’s objectives and realising benefits, ie, an ‘agile’ approach.

Every project and every project management system can benefit from some elements of ‘agile’ (which overlaps with many other concepts such as ‘light’, ‘lean’, and ‘last planner’. The key tenets seem to be:

  • involve your stakeholders,
  • trust your team,
  • don’t waste time planning in detail things you don’t have detailed knowledge of[3],
  • adapt to changing circumstances, and
  • wherever possible avoid a ‘big bang’ approach – iterative and incremental developments mitigate the risk of catastrophic failure.

The agile manifesto certainly highlighted these important concepts but it did not invent them. These elements of fundamental common sense are ignored in far too many situations. What the agile manifesto and the subsequent changes in attitude have done is refocus on the importance of people and relationships in any project.

On the ‘Agile front’, many of the ridiculous excesses promoted by consultants and experts are certainly fading into obscurity. Executives are learning that ‘agile’ is not a cure all ‘silver bullet’ it needs pragmatic management and proper planning the same as everything else, it just the way planning and managing is done that differs; for more on this see: http://www.mosaicprojects.com.au/PDF_Papers/P109_Thoughts_on_Agile.pdf

Certainly there has been a realisation that the agile anarchist’s concept of ‘trust us’ (and their abandonment of any pretence of strategic planning and documentation) really does not work. An appropriate degree of planning, coordination and documentation are essential to achieve success, particularly on larger projects and in the longer term when the inevitable updates and maintenance cut in.

In summary, if ‘agile’ is a philosophy that prioritises people over rigid process, and it will change and adapt over time; it’s not ‘dead’ but it is evolving into a pragmatic management process. Certainly some of the narrowly defined concepts and methodologies branded as ‘agile’ are failing and being abandoned as ‘passing fads’ and new adaptations are emerging, but that’s normal. The core underpinnings of the original Agile Manifesto are still alive and well.

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[1] In the 1950’s Peter Drucker identified the need for a new way of managing ‘knowledge work’, see: http://www.mosaicprojects.com.au/PDF_Papers/P070_A_Simple_View_of_Complexity.pdf

[2] “All models are wrong, but some are useful” (Prof. George E.P. Box), and every estimate used in the plan is wrong to a greater or lesser degree, see: http://www.mosaicprojects.com.au/WhitePapers/WP1051_Cost_Estimating.pdf

[3] For more on ‘rolling wave’ planning see: http://www.mosaicprojects.com.au/WhitePapers/WP1060_Rolling_Wave.pdf

Stakeholders and Reputational Risk

trust-valueYour reputation and your organisation’s reputation are valuable assets. The willingness of others to trust you, their desire to work with you and virtually every other aspect of the relationship between you and your stakeholders is influenced by their perception of your reputation (see more on The value of trust).  But reputations are fragile: they can take a lifetime to build and seconds to lose. Some of the factors influencing them are:

  1. Reputation cannot be controlled: it exists in the minds of others so it can only be influenced, not managed directly.
  2. Reputation is earned: trust is based on consistent behaviour and performance.
  3. Reputation is not consistent: it depends on each stakeholder’s view. One organisation can have many different reputations, varying with each stakeholder.
  4. Reputation will vary: each stakeholder brings a different expectation of behaviour or performance and so will have a distinct perception of reputation.
  5. Reputation is relational: you have a reputation with someone for something. The key question is therefore: ‘with whom, for what?’
  6. Reputation is comparative: it is valued in comparison to what a particular stakeholder experiences or believes in relation to peers, performance and prejudice.
  7. Reputation is valuable: but the true value of reputation can only be appreciated once it is lost or damaged.

Estimating the ‘true value’ of your reputation is difficult and as a consequence decisions on how much to invest in enhancing and protecting your reputation becomes a value judgment rather than a calculation. Your reputation is created and threatened by both your actions and their consequences (intended or not).  Some actions and their effects on your reputation are predictable, others are less so and their consequences, good or bad are even less certain. This is true regardless of your intention; unexpected outcomes can easily cause unintended benefit or damage to your reputation.

Building a reputation requires hard work and consistency; the challenge is protecting your hard earned reputation against risks that can cause damage; and you never know for sure what will cause reputational damage until it is too late – many reputational risks are emergent.

Managing Reputational Risk in Organisations

Because an organisation’s reputation is not easy to value or protect, managing reputational risk is difficult! This is particularly true for larger organisations where thousands of different interactions between staff and stakeholders are occurring daily.

The first step in managing an organisation’s reputational risk is to understand the scope of possible damage, as well as potential sources and the degree of possible disruption. The consequence of a loss of reputation is always the withdrawing of stakeholder support:

  • In the private sector this is usually investor flight and share value decline; these can spiral out of control if confidence cannot be restored.
  • In the public sector this is typically withdrawal of government support to reflect declining confidence.
  • In the professional sector client confidence is vital for business sustainability; a loss of reputation means a loss of clients.

Each sector can point to scenarios where the impact of reputation damage can vary from mild to catastrophic; and whilst the consequences can be measured after the effect they are not always predictable in advance.  To overcome this problem, managing reputation risk for an organisation requires three steps:

  • Predict: All risk is future uncertainty, and an appropriate risk forecasting system to identify reputation risk is required – creative thinking is needed here! The outcomes from a reputational risk workshop will be specific to the organisation and the information must feed directly into the governance process if reputation risk is to be taken seriously (see more on The Functions of Governance).
  • Prepare: Reputation risk is a collective responsibility, not just the governing body’s. All management and operational staff must recognise the organisation’s reputation is important and take responsibility for protecting it in their interaction with stakeholders. The protection of reputation should also be a key element in the organisation’s disaster recovery plans.
  • Protect: A regular vulnerability review will reveal where reputation risk is greatest, and guide actions to prevent possible damage. Each vulnerability must be assessed objectively and actions taken to minimise exposure. Significant risks will need a ‘protection plan’ developed and then implemented and monitored.

Dealing with a Reputational Risk Event

When a risk event occurs, some standard elements needs to be part of the response for individuals and organisations alike. For reputation enhancing risk events, make sure you acknowledge the ‘good luck’ in an appropriately and take advantage of the opportunity in a suitably authentic way. Over-hyping an event will be seen as unauthentic and have a negative effect on reputation; but good news and good outcomes should be celebrated. Reputation threatening risk events need a more proactive approach

  • Step 1: Deal with the event itself. You will not protect your reputation by trying to hide the bad news or ignoring the issue.  Proactively work to solve the problem in a way that genuinely minimise harm for as many stakeholders as possible minimises the damage that has to be managed.
  • Step 2: Communicate. And keep communicating – organisations need to have a sufficiently senior person available quickly as the contact point and keep the ‘news’ coming. Rumours and creative reporting will always be worse then the fact and will grow to fill the void. All communication needs to be open, honest and as complete as possible at the time.  Where you ‘don’t know’ tell people what you are doing to find out. (see Integrity is the key to delivering bad news successfully).
  • Keep your promises and commitments. If this becomes impossible because of changing circumstances tell people as soon as you know, don’t wait for them to find out.
  • Follow up afterwards. Actions that show you really care after the event can go a long way towards repairing the damage to your reputation.

Summary

Reputation is ephemeral and a good reputation is difficult to create and maintain. Warren Buffet in his 2015 memo to his top management team in Berkshire Hathaway emphasised that their top priority must be to ‘zealously guard Berkshire’s reputation’. He also reminded his leadership team that ‘we can afford to lose money–even a lot of money. But we can’t afford to lose reputation–even a shred of reputation’ (discussed in Ethics, Culture, Rules and Governance). In the long run I would suggest this is true for every organisation and individual – your reputation is always in the minds of other people!

Ethics and competition

EthicsThe report of The Senate Education and Employment References Committee report: A National Disgrace: The Exploitation of Temporary Work Visa Holders; released on the 17th March highlights a major National problem.

The report consolidates and affirms issues raised in some of our earlier posts including:

In a nutshell, the report confirms that large numbers of unethical employers are routinely exploiting 1000s of temporary visa holders to inflate their profits.  The report is worrying reading and hopefully will result in proactive government action to stamp out the worst of the excesses.   It’s in the government’s interest, many of the exploited visa holders in work are preventing an unemployed Australian from obtaining work; this is equally true in the unskilled categories and in skilled categories where skilled, older workers are frequently discriminated against.

What is more worrying, and the focus of this post is the ‘Coalition Senators’ total failure to understand business and competition.  One of the major areas of malfeasance with some of the worst exploitation of temporary workers is the Labour Hire business.  The committee recommendation #32 is that:

9.309 The committee recommends that a licensing regime for labour hire contractors be established with a requirement that a business can only use a licensed labour hire contractor to procure labour. There should be a public register of all labour hire contractors. Labour hire contractors must meet and be able to demonstrate compliance with all workplace, employment, tax, and superannuation laws in order to gain a license. In addition, labour hire contractors that use other labour hire contractors, including those located overseas, should be obliged to ensure that those subcontractors also hold a license.

In an annex to the main report, Coalition Senators state that they do not agree with this recommendation on the basis ‘it would punish those labour hire firms which are already complying with relevant laws’; and that the actions of a ‘minority of labour hire firms which are doing the wrong thing, in most cases, is already illegal’.

No one likes additional ‘red tape’ so superficially the Coalition Senators position is understandable.  What the Coalition Senators ignore is the effect the illegal activity is already having on the honest firms they purport to support!  The owners and operators of the dishonest firms using illegal and exploitative practices do not expect to get caught, and if they are caught expect the profits they make from their activities to significantly outweigh the penalties. Unethical is not synonymous with ‘stupid’ – the people making the decision to act illegally expect to make large profits. However, as a consequence of their illegal actions:

  • Honest labour hire firms cannot compete on price with the dishonest firms exploiting temporary workers and suffer as a consequence. The honest operators either make far less profit or go out of business.
  • The users of ‘hired labour’ from labour hire firms are also in competition and need to minimise input costs. They are incentivised to accept the low-cost offerings from the dishonest firms exploiting temporary workers and not to look too closely at their practices to compete within their market.  The alternative is to pay more for the workers and be at a competitive disadvantage to organisations that ‘turn a blind eye’ to the problem.

A licensing scheme will increase the cost of compliance for all of the businesses in the labour hire market, but if implemented properly, it will have the effect of largely eliminating the unfair competition created by the unethical exploitation of temporary workers.  Which will be hugely beneficial to those ‘honest’ businesses that are acting ethically and already fulfil their legal and moral obligations; both within the labour hire industry and the wider community.

The Coalition Senators do ‘support the prosecution of these illegal operations’ (as does everyone) the problems with implementing a clean up strategy focused on prosecutions alone are:

  1. The damage is done before the prosecution can take place.
  2. No prosecution stops illegal behaviour in the future. In an unlicensed regime the same unethical people can set up other businesses and carry on indefinitely through a series of ‘phoenix companies’.
  3. As suggested above, no criminal expects to get caught – deterrence is highly overrated.

Licences may not be ideal, but they do offer a practical way to support ethical behaviour that ‘prosecutions’ cannot. Good governance at every level is getting the balance between rules and flexibility right – the balance needs to support ethical behaviour without constricting innovation and growth. No one except the criminals benefits from the situation exposed in the Senate report that allows virtually unfettered unethical behaviour.

The art of ‘practical ethics’ is to develop systems that disadvantage unethical behaviour and encourage people to do the right thing. The combination of a beefed up ability to prosecute offenders and a licensing system that will make it difficult for unethical operators to remain in the labour hire business is the best way to drive the culture change needed in this industry, and in the businesses that rely on labour hire firms for their staffing needs.

Practical Ethics 2

EthicsA couple of weeks ago I posted Practical Ethics discussing the undue reliance governments and others  place on other people’s ethics, Through naivety, undue optimism, or laziness, they set up situations based on blind trust in the ethical standards of others which have resulted in deaths, injury and the loss of $billions.

In this post I want to look inside an organisation and discuss reason why Determining the ethics of the organisation is at #2 in my Six Functions of Governance and Creating the culture of the organisation is at #3.  #1 in the list is Determining the objectives of the organisation.

The underlying approach I’ve taken, founded in stakeholder theory, is the presumption that the best way to achieve an organisation’s objectives is to work with the organisation’s full spectrum of stakeholders so they contribute to the success of the organisation and everyone benefits. This requires a strong ethical foundation and an outwardly focused culture. The role of the governing body is to set the objectives and create the organisation’s culture and ethics, the role of management is to work within this framework to achieve the objectives. Whilst many aspects of governance can be delegated to a degree, setting the ethical standards of the organisation in particular is non-transferable. It starts and stops at the top – with the governing body.

The ethical standards of an organisation are created in two ways:

  • The way the organisation’s leaders act;
  • The ethical standards the leaders are prepared to tolerate in their subordinates.

This post will look at both of these aspects, using the example of the current scandal surrounding Comminsure (the insurance arm of the CBA bank) to highlight their importance – see more on the scandal.

 

Leaders set the standard.

Generally speaking, the top managers in an organisation create a ceiling on ethical behaviours. Leaders at the next level down tend to be rated lower than their managers on every leadership dimension including their honesty and integrity, many may rate equally but it is very rare to find a subordinate acting more ethically than the organisation’s leaders (for more on this see Ethical Leadership).

The key here is the word ‘act’ – leaders set the ethical standards of the organisation by their actions, not their statements. It more than ‘walking-the-talk’, talking is almost irrelevant.

One glaring examples from the Comminsure scandal will serve to demonstrate the issue.  The CBA’s CEO said that he placed a high value on transparency and open communication; this included both encouraging and protecting ‘whistleblowers’ within the bank. A commendable and highly ethical position; and from a practical perspective essential for the minimisation of wrong doing in a workforce of 55,000.

However, actions speak louder than words! In November 2014 the chief medical officer of Comminsure, Dr Benjamin Koh, disclosed his concerns over “an improper state of affairs” concerning aspects of Comminsure’s business to key independent directors at Comminsure including the chairman Geoff Austin. Two months later Comminsure began to investigate Dr Koh and he was sacked by the managing director of Comminsure, Helen Troup, for ‘misconduct’, in August 2015. He is now suing Comminsure and the CBA for unfair dismissal.

The appearance is that the bank’s management won’t fire you for whistle blowing but they will find some other excuse. The bank virtually admits as much, in this statement which states: “Commonwealth Bank encourages all employees to speak up if they see activities or behaviours that are fraudulent, illegal or inconsistent with our values. We provide a number of different safeguards to ensure that there are no negative consequences for raising concerns. We have thanked Dr Koh for raising concerns that led to the CMLA Board conducting a review. Dr Koh’s employment was not terminated for raising concerns. It was terminated primarily for serious and repeated breaches of customers’ privacy and trust involving highly sensitive personal, medical and financial information over a lengthy period of time.”  What they fail to mention was one of major issues raised by Dr. Koh was the manipulation, alteration and loss of information from the records he is accused of mishandling.

The perception may be incorrect, but to anyone looking on from outside of the organisation it would seem the person running Comminsure preferred to sack a whistleblower rather than deal with the problems he raised.

The CEO and the Directors of CBA can talk until they are blue in the face about the ‘ethical standards’ they purport to uphold, their actions speak louder. The person running Comminsure and responsible for the issues raised by Dr. Koh is still in her role, the ‘whistleblower’ is out of a job. If the board really meant what is says, the whistleblower would have been protected and the manager attacking him disciplined. Everyone else in CBA will clearly understand the message.

It really does not matter what the final outcome of all of this is; the actions of CBA and Comminsure management have made it clear to every one of their 55,000 staff that if you raise concerns within the banks ‘whistleblower’ processes you will be fired!

Given this perception, is it any wonder that the leaders of the CBA seem to be continually in the dark about what’s really going on in their organisation……..  Unfortunately for those in governance role not knowing is not an excuse.

 

Tolerating unethical behaviour.

Ethics2The second plank underpinning an ethical organisation is the degree of unethical behaviour it is prepared to tolerate. If an organisation is prepared to tolerate a person increasing his or her bonus by not paying out an insurance claim to a dying person for 3 or 4 years, everyone else in the organisation will understand the acceptable level of behaviour.

Comminsure has been shown to have withheld legitimate payments to claimants for years to boost profits and bonuses (only rectified after the national broadcast was imminent).  As far as I can tell everyone responsible from the managing director down are still in their jobs.

Previously the CBA was shown, courtesy of a Senate enquiry, to have misrepresented information to clients and falsified documents.  Again, most of the people responsible still work for the CBA and the ethical benchmark has been determined by this fact.

If the behaviours were ethically unacceptable people would be fired or moved into roles where they cannot adversely affect customer’s lives. The fact most people are still in their roles and still have their bonus payments from previous years indicates to everyone the CBA believes these behaviours are ethically acceptable and will continue to reward people for placing profits ahead of customers (see The normalisation of deviant behaviours). Management’s actions speak far louder then PR announcements and so called ‘public apologies’ that only eventuate after adverse national publicity.

 

Culture

Culture is ‘the way we do thing around here’ – one of the key elements of culture is the ethical standards people see as ‘normal’; another is the learned experience of how to behave within the organisation. As outlined above these settings are very different from the rhetoric.

But, ethics and culture are always shades of grey; the CBA’s culture is clearly flawed if the bank claims to be concerned about its customers. However, if the CBA is really only concerned with short-term profits, the culture, ethics and PR spin may be appropriate. In the last 6 months, the CBA achieved a remarkable return on equity of above 17 per cent, and a $4.8 billion half-year profit. And, despite the scandal, its shares have increased in price today. The cost is the damaged lives of some of its customers; the unresolved question is what are the acceptable limits? Maybe a Royal Commission will let everyone know.

Legal implications aside, the challenge facing the CBA is that changing culture and ethical standards is a massively difficult task and the people who created and thrive in the current culture are unlikely to be willing participants in changing it.  There’s no easy answer to this dilemma.

 

Conclusion

The real measure of an organisation’s ethical standards are set by the way people behave when no one is looking on – there will always be mistakes and unethical actions by a few, others within the organisation will correct these deviations and being behaviours back inside the culturally acceptable norms of behaviour of the organisation. This has undoubtedly been occurring within CBA and Comminsure on a daily basis, unacceptable behaviours will have been corrected or sanctioned; desired behaviours rewarded. What’s acceptable and unacceptable is determined by the culture of the organisation and its ethical standards.

The ethical standards of an organisation are set by the actions of its leaders. What they do themselves sets the ceiling and what they tolerate in others the floor. The rest of the people in an organisation will generally find a position between these two limits and the culture of the organisation will adapt to see this level of ethical behaviour as acceptable. The problem the governors and leaders of the CBA face is the simple fact that changing the ethics and culture of an established organisation is extremely difficult.

Practical Ethics

EthicsA string of disasters over the last couple of years suggest many business and government leaders simply do not understand ‘practical ethics’.  Through naivety, undue optimism, or laziness, they have set up situations based on blind trust in the ethical standards of others resulting in deaths, injury and the loss of $billions.

Just a few examples:

  • The ‘Home insulation program’ of 2008/9 resulted in 4 deaths, numerous house fires and many well established businesses being destroyed. The naive assumption by the Government seemed to be that with $millions of government funding easily accessed, businesses would still act ethically, train staff and comply with occupational health and welfare standards. The failure by businesses to meet this expectation has resulted in numerous prosecutions after the damage was done.
  • The outsourcing of technical and further education training (TAFE) to the private sector. Private providers under the VET Fee-Help scheme are paid for students signed up to courses, not for students qualified from courses – the naive assumption by the Government seemed to be that with $millions of government funding easily accessed, businesses would still act ethically and only sign up students that could benefit from the courses and would deliver good training outcomes. $hundreds of millions of public funds have been wasted – most of which can never be recovered.
  • Downer EDI’s Board of Directors appear to have blindly trusted their management to run the disastrous $3 billion Waratah train project. Normal governance feedback seemed to have been ignored to the point where the Directors were unable to get information on the project when needed, blowing a $20 million loss into a $200 million loss.

In each of these cases the government and business leaders seemed to have either assumed everyone would act ethically or relied on Adam Smith’s ‘Invisible hand’ (a flawed theory much loved by the rabid right, particularly in the USA). Unfortunately ethics is not that simple!  Writing a code of ethics[i] is a relatively simple process; encouraging people to live up to the code is far more difficult. There are several factors needed:

  • First, the organisations leaders need to lead by example. The ethical standards of the organisation and its supply chain are unlikely to exceed the standards set by the leadership (see: Ethical Leadership).
  • Second, the expected standards need to be clearly and unambiguously articulated. Saying you require one standard of behaviour and then paying people to perform differently will inevitably lead to the organisation getting what it has paid for (see: The normalisation of deviant behaviours).
  • Third, the governance and management systems need ‘real-time’ feedback to both encourage the desired standards of behaviour and to detect any ‘slips’ very early in the process so corrective actions can be implemented before there is a major issue (see: Self Correcting Processes).

Unfortunately governments in particular are reasonably good at enforcing standards years after the breach took place and seem to assume that the ‘deterrent effect’ will suffice to maintain ethical standards – this assumption patently does no work!  I doubt the £2.25m fine imposed on UK consultancy Sweett Group[ii] for bribing a prominent United Arab Emirates (UAE) businessman in return for work will have much effect on other unethical business people contemplating paying a bribe – for a start, no one expects to get caught. The ‘pink batt’ prosecutions occurred years after the scheme was closed, prosecutions under the VET Fee-Help scheme are still to eventuate (and rip-offs are still continuing). The simple fact is the fear of a potential prosecution in a few years time compared to the opportunity to make $millions now has very little effect on unethical people.

Conversely, over policing ‘ethics’ and watching every move can be as destructive as ‘blind trust’. If people feel they are not trusted, there is no incentive for them to act ethically.  Micro management is a major de-motivator and will inevitably lead to suboptimal performance with people doing ‘just enough’ and seeing how much they can get away with[iii]. This approach stifles innovation and creativity.

Practical ethics requires pragmatic trust. You need to trust the people you are working with, governing or managing, but have agreed processes that provide feedback and monitoring, that demonstrates your trust is being honoured.

  • In my ‘Six functions of governance’ management control functions are expected to provide feedback to the governing body that allows it to hold its management accountable and ensure conformance by the organisation being governed. Had these functions been implemented effectively EDI-Downer would be in a much better position today.
  • Demand feedback – even if you do not want to hear bad news! The recent announcement by CSIRO that its climate division will be virtually eliminated may be a pragmatic response to government initiatives and cost cutting but serves no one in the long term. Governments and business rely on climate science to make billion-dollar decisions. Without it, they will be relying on guesswork. Shooting the messenger simply means everyone is ‘flying blind’.
  • Build feedback into management systems. In the various government debacles mentioned above (and others) simple changes in process could have reward desirable outcomes rather than rewarding unethical behaviour. The purpose of any TAFE course is to educate a person and demonstrate learning by success in an exam.  Why not pay most of the money on completion of the course? Then make sure audit processes are in place to validate the exam performance is genuine – these exist and are easily applied.

Pragmatic trust is a graduated process – as people demonstrate their trustworthiness and ethical standards less oversight is needed (but less does not mean no oversight); the challenge is to design systems that reward desirable behaviours and outcomes creating a win-win, people who demonstrate high ethical standards are rewarded.

This approach is the antithesis of the current government approach which seems to rely on blind trust, assumes everyone is ethical, and as a consequence directly benefits unethical behaviours (at least in the short term). Not only have the $millions paid out in VET Fees to unethical providers resulted in minimal return to the government; they have actively encouraged unethical standards and have damaged businesses and organisations that do offer quality courses. A lose-lose outcome in which the only winners are the unethical businesses that have ripped off the system – the Pink Batts Royal Commission found a similar effect on the insulation businesses.

Slippery-slopeEthics are by definition based on the standards of behaviour considered acceptable by a group[iv].  When a significant proportion of the groups members start to let standards slip, they will tend to drag the rest of the group with them down the slippery slope – it is very hard to stand out against the normally accepted behaviours of your group. And as with any slippery mountain slope, it is far easier to slide towards the bottom than to keep your footing and climb towards the top.

The role of ethical leaders is first to set the ethical standards, then live up to the standards themselves, and finally require their followers to conform to the standards using pragmatic trust and encouragement rather than after the event punishment.


 

[i] The PMI Code of Ethics and Professional Conduct is a good example: http://www.mosaicprojects.com.au/PDF/PMICodeofEthics.pdf

[ii] See: http://www.globalconstructionreview.com/news/sweett-group-must-pay-32m-bri7bery-a7bu-dh7abi/

[iii] For more on motivation see: http://www.mosaicprojects.com.au/WhitePapers/WP1048_Motivation.pdf

[iv] For more on ethics and leadership see: http://www.mosaicprojects.com.au/WhitePapers/WP1001_Ethics.pdf

Project Risk Management – how reliable is old data?

One of the key underpinnings of risk management is reliable data to base probabilistic estimates of what may happen in the future.  The importance of understanding the reliability of the data being used is emphasised in PMBOK® Guide 11.3.2.3 Risk Data Quality Assessment and virtually every other risk standard.

One of the tenets underpinning risk management in all of its forms from gambling to insurance is the assumption that reliable data about the past is a good indicator of what will happen in the future – there’s no certainty in this processes but there is degree of probability that future outcomes will be similar to past outcomes if the circumstances are similar. ‘Punters’ know this from their ‘form guides’, insurance companies rely on this to calculate premiums and almost every prediction of some future outcome relies on an analogous interpretation of similar past events. Project estimating and risk management is no different.

Every time or cost estimate is based on an understanding of past events of a similar nature; in fact the element that differentiates an estimate from a guess is having a basis for the estimate! See:
–  Duration Estimating
–  Cost Estimating

The skill in estimating both normal activities and risk events is understanding the available data, and being able to adapt the historical information to the current circumstances. This adaptation requires understanding the differences in the work between the old and the current and the reliability and the stability of the information being used. Range estimates (three point estimates) can be used to frame this information and allow a probabilistic assessment of the event; alternatively a simple ‘allowance’ can be made. For example, in my home state we ‘know’ three weeks a year is lost to inclement weather if the work is exposed to the elements.  Similarly office based projects in the city ‘know’ they can largely ignore the risk of power outages – they are extremely rare occurrences. But how reliable is this ‘knowledge’ gained over decades and based on weather records dating back 180 years?

World-Temprature

Last year was the hottest year on record (by a significant margin) as was 2014 – increasing global temperatures increase the number of extreme weather events of all types and exceptionally hot days place major strains on the electrical distribution grids increasing the likelihood of blackouts.  What we don’t know because there is no reliable data is the consequences.  The risk of people not being able to get to work, blackouts and inclement weather events are different – but we don’t know how different.

Dealing with this uncertainty requires a different approach to risk management and a careful assessment of your stakeholders. Ideally some additional contingencies will be added to projects and additional mitigation action taken such as backing up during the day as well as at night – electrical storms tend to be a late afternoon / evening event. But these cost time and money…..

Getting stakeholder by-in is more difficult:

  • A small but significant number of people (including some in senior roles) flatly refuse to accept there is a problem. Despite the science they believe based on ‘personal observations’ the climate is not changing…….
  • A much larger number will not sanction any action that costs money without a cast iron assessment based on valid data. But there is no valid data, the consequences can be predicted based on modelling but there are no ‘facts’ based on historical events……..
  • Most of the rest will agree some action is needed but require an expert assessment of the likely effect and the value proposition for creating contingencies and implementing mitigation activities.

If it ain’t broke, don’t fix it???? 

The challenge facing everyone in management is deciding what to do:

  • Do nothing and respond heroically if needed?
  • Think through the risks and potential responses to be prepared (but wait to see what actually occurs)??
  • Take proactive action and incur the costs, but never being sure if they are needed???

There is no ‘right answer’ to this conundrum, we certainly cannot provide a recommendation because we ‘don’t know’ either.  But at least we know we don’t know!

head-in-sandI would suggest discussing what you don’t know about the consequences of climate change on your organisation is a serious conversation that needs to be started within your team and your wider stakeholder community.

Doing nothing may feel like a good options – wait and see (ie, procrastination) can be very attractive to a whole range of innate biases. But can you afford to do nothing?  Hoping for the best is not a viable strategy, even if inertia in your stakeholder community is intense. This challenge is a real opportunity to display leadershipcommunication and  negotiation skills to facilitate a useful conversation.

How to succeed as a PM in 2016

On-the-busProjects are done by people for people and through the medium of social media, people power is growing.  Successful project managers know this and use it to their advantage; they create a team culture focused on working with other stakeholders to create success.

Project managers know when they get this right because their project team will challenge, follow and support them, and each other, in order to get the job done. Not only that, but word spreads and other people inside the organisation will want to join the team or be associated with its success. When a PM achieves this, they know they have created something special and paradoxically are under less pressure, can get a good night’s sleep, and as a consequence are fully refreshed each day to keep building the success. This is good for the people and great for the organisation!!

Developing the skills and personal characteristics needed to develop and lead a committed team needs more then technical training. Experience, reflection, coaching and mentoring all help the project manager grow and develop (and it’s a process that never stops). Five signs that they are on the path to becoming a great team leader are:

  1. They’re well liked. Great leaders make people feel good about themselves; they speak to people in a way that they like to be spoken to, are clear about what needs to be achieved[1], and are also interested in their lives outside work and display a little vulnerability every now and again to demonstrate that they are human. They’ll always start the day with a ‘good morning’, the evening with a ‘good night’ and every question or interaction will be met with courtesy. When the team picks up on this the project area will be filled with good humour and great productivity.
  2. They put effort into building and maintaining teams. Designing great teams takes lots of thought and time – you need the right people ‘on the bus[2]’ and you need to get the wrong people ‘off the bus’. A great project manager doesn’t accept the people who are ‘free’ or ‘on the bench’ unless they’re the right people and they’ll negotiate intensely for the people that they really need, going to great lengths to recruit people into the vision that they have. Once the team is in place, they never stop leading it, building it, encouraging it, performance managing it and celebrating it.
  3. They involve everyone in planning. Or at least everyone that matters! The PM identifies the team members and other stakeholders that need to be involved; creates a productive, enjoyable environment, and leads the process. They want to ensure that they get the most out of the time and at the end have a plan that the team has built and believe in.
  4. They take the blame and share the credit. Great project managers are like umbrellas. When the criticism is pouring down they ensure that the team is protected from it. They then ensure that the message passed down is presented as an opportunity to improve not a problem to be fixed. Similarly, when the sun is out and the praise is beaming down, they ensure that the people who do the real work bask in it and are rewarded for it. When they talk about how successful a project has been, they talk about the strengths of the team and the qualities they have shown, never about themselves.
  5. They manage up well. Stakeholder engagement, particularly senior stakeholder engagement is the key to project success[3]. Great project mangers know they need senior executive support to help clear roadblocks and deliver resources and know how to tap into the organisation’s powerlines for the support they need.

Great project mangers are also good technical managers; they have an adequate understand the technology of the project and they know how the organisation’s management systems and methodologies work. But they also know they can delegate much of this aspect of their work to technologists and administrative experts within their team. And if the team is fully committed to achieving project success, these experts will probably do a better job than the project manager anyway.

Projects are done by people for people and the great project managers know how to lead and motivate[4] ‘their people’ to create a successful team that in turn will work with their stakeholders to create a successful project outcome.
[1] For more on delegation see:  http://www.mosaicprojects.com.au/WhitePapers/WP1091_Delegation.pdf

[2] In the classic book Good to Great, Jim Collins says, “…to build a successful organization and team you must get the right people on the bus.”

[3] This is the focus of my book Advising Upwards: A Framework for Understanding and Engaging Senior Management Stakeholders, see http://www.mosaicprojects.com.au/Book_Sales.html#Adv_Up

[4] For more on leadership see: http://www.mosaicprojects.com.au/WhitePapers/WP1014_Leadership.pdf