Tag Archives: Stakeholders

Governmentality – the cultural underpinning of governance

Governmentality1Two major governance failures in recent times highlight the importance of organisational culture in delivering a well-governed entity.  Professor Ralf Müller has adapted the term ‘governmentality’ to describe the systems of governance and the willingness of the people within an organisation to support the governance objectives of the organisation’s governing body. When the willingness to be governed breaks down, as these two examples demonstrate, governance failures follow.

Toyota

The Lexus ‘unintended acceleration problem’ from 2009 has cost  car manufacturer Toyota a staggering $1.2 billion fine to avoid prosecution for covering up severe safety problems and continuing to make cars with parts the FBI said Toyota “knew were deadly.”  In addition to numerous civil actions and costs of reputational damage.  The saga was described as a classic case of corporate culture that favoured the seemingly easy way out instead of paying the cost and doing the right thing.  But, the actions of the people who magnified the problem by attempting to cover up the issues fundamentally contradicts the ‘Toyota Way’ that has guided Toyota since 2001. The Toyota Way has two core principles, respect for people and continuous improvement (kaizen).

Respect for people puts ‘people before profits’, and this is not an idle slogan.  Following an Australian Government decision in 2014, all motor vehicle manufacturing in Australia will cease by 2018 (this affects General Motors Holden, Ford and Toyota). In February 2014 Toyota president Akio Toyoda personally came to Australia to tell his workers of the closure and Toyota’s commitment to its staff through training and other activities has maintained staff commitment at our local Altona plant with everyone working to make the “last car the best global car!”.

The difference between the “people first equals customer first” attitude demonstrated in the approach to closing the Altona plant where people are still being released for paid training to up skill for new roles and the ‘customer last’ approach that dominated the Lexus saga is staggering.  The reaffirmation of the ‘Toyota Way’ may have been driven in part by the Lexus disaster but this does not explain why quality and customer service was allowed to fail so badly in the company that practically invented modern quality.

Volkswagen

A similar dichotomy is apparent in the Volkswagen diesel engine emissions scandal.  A company renowned for engineering excellence, from a country renowned for engineering excellence allowed engineering standards to slip to a point where the cars being sold were illegal.  The actual emissions were only part of the problem, Volkswagen engineers had developed a software program dubbed the ‘diesel dupe’ that could detect when the cars were being tested and change the engine performance to improve results. When the cars were operating under controlled laboratory conditions – which typically involve putting them on a stationary test rig – the device appears to have put the vehicle into a sort of safety mode in which the engine ran below normal power and performance thereby reducing emissions. Once on the road, the engines switched out of this test mode.

Governance issues

Neither of these issues involved ‘a few bad apples’ – the excuse used by most institutions to explain banking and financial scandals. They both required extensive management involvement and cover-ups or acquiescence. A substantial subset of both organisation’s management felt that doing the wrong thing was in the best interests of either themselves or the organisation (or both, at least in the short term). But the governing bodies of both organisations would seem to have maintained a commitment to their overall philosophy, the ‘Toyota Way’ and ‘Engineering excellence’.  So what caused the governance failure?

Governmentality

One element that seems central to both of these failures was a breakdown in the willingness of managers to comply with the overall governance philosophy of the organisation which in turn caused the governance processes to fail; this is the domain of governmentality. Governance cannot be successfully imposed on a population that does not want to be governed!

Governmentality2Governmentality is a term coined by philosopher Michel Foucault around 1980 and refers to the way in which the state (or another governing body) exercises control over, or governs, the body of its populace. The concept involves a complex series of two-way transactions involving:

  • the way governing bodies try to produce the people best suited to fulfil those governments’ policies;
  • the organised practices (mentalities, rationalities, and techniques) through which people are governed, and
  • the techniques and strategies by which a society is rendered governable.

In the same way as governments rely on most people complying with legislation most of the time, organisational governance mechanisms such as ‘project management offices’ and ‘portfolio management’ cannot function effectively without the cooperation of the people being governed. When governmentality breaks down and people no longer support the governance processes they cease to be effective.

The challenge facing every governing body, in every organisation, is in three parts

  1. Creating an authentic vision and mission for the organisation.
  2. Creating an effective governance system that supports the achievement of the vision.
  3. Creating and maintaining an ethical culture that embraces and supports governmentality.

Effective governance systems can weed out the bad apples and correct errors, but they cannot oversee the actions of every manager all of the time if the majority of people do not wish to follow the governance dictates, or actively work to subvert them.

Developing the ‘right culture’ by employing the right people (and importantly offloading the wrong people) starts at the top.  The governing body needs to ‘walk the talk’, their CEO and senior executives need to model the desired behaviours and ‘doing the right thing’ needs to be encouraged throughout the organisation.

Achieving this requires authenticity and a holistic approach to the way the organisation functions; all of the elements need to work together cohesively. Achieving this is the primary responsibility and challenge for the ‘governing body’, in most organisations, the Board of Directors!

If you get the vision, mission and culture right, even major lapses such as the ‘Lexus unintended acceleration problem’ can be overcome.  Despite the damage this caused, Toyota is now the world’s largest automotive manufacturer with a market capitalisation that is nearly double that of Ford and GM combined.  This is also the reason why Objectives, ethics and culture are the top three elements in my model for the ‘Functions of Governance’.

Seeking a definition of a project.

Good definitions are short and unambiguous and are essential for almost every aspect of life. Even something as simple as ordering a snack requires a clear understanding of what’ required – this understanding is the basis of a definition. For example, doughnuts and bagels have a lot in common, they are both round and have a hole (a torus), and are made from dough but they are ‘definitely’ very different commodities! If you need a bagel for breakfast or a doughnut for you coffee everyone involved in the transaction needs to understand your requirements if your expectations are to be fulfilled.

bagel

donut

 

 

 

 

 

The simple fact is if you cannot define something precisely, you have real problems explaining what it is, what it does and the value it offers, and this lack of definition/understanding seems to be a key challenge facing the project management community (by the way, the bagel is on the left…… the other picture is a Krispy Kreme donut).

Definitions serve two interlinked purposes, they describe the subject of the definition in sufficient detail to allow the concept to be recognised and understood and they exclude similar ‘concepts’ that do not fit the definition. Definitions do not explain the subject, merely define it.

Way back in 2002 we suggested the definition of ‘a project’ was flawed. Almost any temporary work organised to achieve an objective could fit into almost all of the definitions currently in use – unfortunately not much has changed since. PMI’s definition of a ‘project’ is still a: temporary endeavour undertaken to create a unique product, service or result. This definition is imprecise, for example, a football team engaged in a match is involved in:

  • A temporary endeavour – the match lasts a defined time.
  • Undertaken to create a unique result – the papers are full of results on the weekend and each match is unique.
  • Undertaken to create a unique product or service – the value is in the entertainment provided to fans, either as a ‘product’ (using a marketing perspective) or as a service to the team’s fans.

Add in elements from other definitions of a project such as a ‘defined start and end’, ‘planned sequence of activities’, etcetera and you still fail to clearly differentiate a team engaged in a project from a football team engaged in a match; but no-one considers a game of football a project. Football captains may be team leaders, but they are not ‘project managers’.

The definition we proposed in 2002 looked at the social and stakeholder aspects of a project and arrived at an augmented description: A project is a temporary endeavour undertaken to create a unique product, service or result which the relevant stakeholders agree shall be managed as a project. This definition would clearly exclude the football team engaged in a match unless everyone of significance decided to treat the match as a project but still suffers from a number of weaknesses. To see how this definition works download the 2002 paper from, www.mosaicprojects.com.au/PDF_Papers/P007_Project_Fact.pdf

 

Updating the definition

Since 2002 there has been a significant amount of academic work undertaken that looks at how projects really function which may provide the basis for a better definition of a project.  The key area of research has been focused on describing projects as temporary organisations that need governing and managing; either as a standalone organisation involving actors from many different ‘permanent organisations’ such as the group of people assembled on a construction site, or as a temporary organisation within a larger organisation such a an internal project team (particularly cross-functional project teams). The research suggests that all projects are undertaken by temporary teams that are assembled to undertake the work and then dissipate at the end of the project.

My feeling is recognising the concept of a project as a particular type of temporary organisation provides the basis for a precise and unambiguous definition of ‘a project’. But on its own this is insufficient – whilst every project involves a temporary organisation, many temporary organisations are not involved in projects.

Another fundamental problem with the basic PMBOK definition is the concept of an ‘endeavour’.  The definition of endeavour used as a noun is: an attempt to achieve a goal; as a verb it is: try hard to do or achieve something.  But, ‘making an effort to do something’ is completely intangible; projects involve people! Hitting a nail with a hammer is an endeavour to drive it into a piece of wood but this information is not a lot of use on its own; you need to know who is endeavouring to drive the nail and for what purpose?

Nail-Quote-Abraham-Maslow

Another issue is the focus on outputs – a product service or result; the output is not the project, the project is the work needed to create the output. Once the output is finished, the project ceases to exist!  A building project is the work involved in creating the building, once the building is finished it is a building, not a project. But confronted with the need to create a new building different people will create different projects to achieve similar results:

  • One organisation may choose to create two projects, one to design the building, another to construct it;
  • A different organisation may choose to create a single ‘design and construct’ project;
  • Another organisation may simply treat the work as ‘business as usual’.

The scope of the work involved in any particular project is determined by its stakeholders – projects are a construct created by people for their mutual convenience, not by some immutable fact of nature.

 

A concise definition of a project

Unpacking the elements involved in a project we find:

  • A temporary organisation is always involved, but not all temporary organisations are project teams.
  •  Projects cause a change by creating something new or different – this objective defines the work to be accomplished and usually includes constraints such as the time and money available for the work. These requirements and scope of work included in a project have to be defined and agreed by the relevant stakeholders at some point – there are no pre-set parameters.
  • The stakeholders have to agree that the work to accomplish the scope will be managed as ‘a project’ for the project to exist; the alternative is ‘business as usual’ or some other form of activity.

Modifying our 2002 definition to incorporate these factors suggests a definition along these lines:

A project is a temporary organisation established to deliver a defined set of requirements and scope of work, which the relevant stakeholders agree shall be managed as a project.

The definition originally proposed has been updated based on discussions with colleagues to:

Project:  A temporary organisation established to accomplish an objective, under the leadership of a person (or people) nominated to fulfil the role of project manager.

Project manager: A person (or people) appointed to lead and direct the work of  a project organisation on behalf of its stakeholders, to achieve its objective. The job title and the degree of authority and autonomy granted to the project manager are determined by the governance arrangements established by the project’s stakeholders.

Project management: The application of knowledge, skills tools and techniques to lead and direct the work of a project organisation.

This definition overcomes many of the fundamental problems with the existing options:

  • It recognises projects are done by people for people, they are not amorphous expenditures of ‘energy’.
  • It allows for the fact that projects do not exist in nature, they are ‘artificial constructs’ created by people for their mutual convenience, and different people confronting similar objectives can create very different arrangements to accomplish the work.
  • It recognises that projects are only projects if the people doing the work and the people overseeing the work decide to treat the work as a project.  The ‘always present’ factors are:
    • People decide to call the work a project (but just calling it a project is not enough)
    • The work is directed to achieving an objective that involves a change in something (new, altered, improved, demolished, etc)
    • The people doing the work are part of a temporary organisation (team / contract / ad hoc / etc) created to facilitate achieving the objective.
    • The work is led by a person fulfilling the role of a project manager and the work is managed as a project (PMBOK / ISO 21500 / Agile / etc).

What do you think a good project definition may be that is concise and unambiguous?

The challenge is to craft a technically correct definition, and then apply the Socratic method of thinking outlined in our 2002 paper at:  www.mosaicprojects.com.au/PDF_Papers/P007_Project_Fact.pdf.

I look forward to your thoughts!

Selling Change – lessons from Brexit

Is the reason so many change initiatives fail an excessive focus on the ‘technical benefits’ and future value?  Some of the lessons from the Brexit campaign would suggest ‘YES’!

brexit

Before people will buy into a new opportunity (the ‘change’) it helps if they are unhappy with the status quo.  If this unhappiness can be magnified the willingness to embrace an uncertain future can be increased.  The Brexit ‘Leave campaign’ is an extreme example of creating this desire. Most of the focus of ‘Leave campaign’ seems to have been tailored towards raising the level of unhappiness with the status quo. A few key examples:

EU bureaucracy – it exists and it is a significant burden; by simply focusing on the ‘perceived pain’ (most electors have very little contact with the regulations) a desire to leave was generated. The counter points carefully ignored include:

  1. If the UK leaves it will need its own regulations for public health and safety
  2. Firms that want to export to Europe will have more bureaucracy to deal with, complying with both the UK rules and the EU rules (the alternative is to cut off 50% of your export market).

EU bureaucrats – the unelected and unaccountable masses in Brussels!  This ignores the fact UK bureaucrats are unelected and both sets are accountable to their respective parliaments.  However, the perception of lack of control and accountability was significant despite the fact 99% of the UK electors have no control over UK bureaucrats.

Immigration and Islam. ‘Taking control of UK borders’ seemed to be the biggest factor in the debate.  It’s a nice idea that ignores history:

  1. The vast majority of Islamic migrants in the UK arrived before the UK joined the EU (or these days their parents arrived…). Until the 1960s Commonwealth citizens had UK passports and a right of residence in the UK.
  2. The EU is less than 5% Islamic.
  3. Freedom to work in the EU is a two-way process – the right to work and access to workers is important (and has virtually nothing to do with ‘immigration’).

Trade deals. Negotiating ‘trade deals’ to the benefit of the UK…..   Ignoring the fact that any trade deal requires concessions and most take 5 to 10 years to negotiate. The ‘other party’ has to see a significant benefit.

 

Lessons from Brexit!

The positive lesson for change proponents is to spend more time on creating the desire for change. Most people in an organisation can ‘live with’ the status quo (but are aware of the problems and pain points), and are likely to be frightened with the perceived threats and challenges of the proposed change.  Digging into the ‘pain points’ and offering constructive solutions may provide a powerful basis for building the desire for change.  This is a very different approach to starting with an emphasis on the future benefits and opportunities the proposed change will bring.

The processes needed to sell the change to the organisation’s executive decision makers have to focus on benefits and value, but Brexit suggests a different approach may be beneficial when approaching the people within the organisation affected by the change.

Ethics matter!  “You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time[1]”. What has yet to wash out in the Brexit aftermath is the lack of ethics and in some cases blatant dishonesty of the ‘Leave campaign’. I suspect there will be a major backlash against the people responsible for the ‘Leave campaign’ as people become aware of the exaggerations and deceptions.  The current crash in the Pound and the almost inevitable recession it will cause were predicted.  What was missed from the UK debate, and is essential in an organisational change initiative, is recognition of the challenges of the change – offset by the vision of future benefits. Ethics are not negotiable!

Simple language is important.  Creating and emotional commitment to change requires the use of language that is easy to understand. The ‘Leave vision’ was simplistic rather than simple but it worked – ‘make Britain great again’ and ‘regain sovereignty’ sound appealing[2] but lack substance.  The difference between the Brexit ‘con job’ and ‘informed consent’ is understanding what you are committing to, both the vision and the journey. But the language of projects, engineers and technicians used to define and develop a change proposal is frequently inappropriate for effective communication to the rest of the people affected.  This is discussed in my paper: Understanding Design – The challenge of informed consent.

Summary

The Brexit campaign is an extreme example of creating a desire for change based on developing a level of dissatisfaction with the status quo.  This tactic can be a very useful early phase in the communication processes around a proposed organisational change – dissatisfaction with the current state is a powerful driver to accept change.  The flip side, also observable in the Brexit campaign, is that ethics and honesty matter. Democracy requires informed consent!  We have no idea what the consequences in the UK would have been if the ‘Leave campaign’ had been more ethical and spelt out a future; but judging from the reaction of many, large numbers of people now seem to feel conned by the ‘leave’ campaign.

In an organisational context, this loss of trust will be disastrous.  However, the fact the ‘Leave campaign’ could persuade a majority in the UK to vote in favour of an uncertain future that will reduce living standards and increase costs in the short-term (at least) without even bothering to paint a clear vision of their proposed future (or how to get there) shows how powerful the techniques discussed above can be.

The challenge for ethical organisational change is to harness the power without resorting to the deceptions.

 

[1] Adapted from: “Traité de la Vérité de la Religion Chrétienne” by Jacques Abbadie (1684, Chapter 2)

[2] Britain was ‘Great’ in the period leading up to WW1 based on its Empire (not the Commonwealth); it is and has been a sovereign nation since 1066…… Neither of these concepts was fleshed out possibly allowing 1000s of different self-made visions to fill the space. Potentially a good tactic but fraught with problems going forward.

The language used to define risks can contribute to failure.

Risk1If a risk is going to be adequately managed, it needs to be defined.  Failing to describe the actual risk (or risks) will almost inevitably lead to project failure and will frequently exacerbate the damage.

In recent times, there seems to be an explosion of documents in the public domain, including academic papers (where one would have hoped the reviewers and editors knew better) listing as ‘risks’ factors that cannot ever be risks.  The ‘fact’ hides the real or consequential risks that may be manageable.

RiskRisk 101 – a risk is an uncertainty that may affect a project objective if it occurs. For something to be a risk, there has to be an uncertainty and the uncertainty may have a positive or negative impact on one or more objectives (see more on risk management). Risk management involves balancing the uncertainty, its potential impact and the cost and effort needed to change these for the better. But to do this you need to focus on the uncertainties that can be managed.

head-in-sandOne of more frequently miss-described risks is ‘technical complexity’.  The degree of technical difficulty involved in a project is a FACT that can be measured and described!  Some projects such as launching a space rocket are technically complex, other less so; but NASA has a far higher success rate in its rocket launches than most IT departments have in developing successful software applications that achieve their objectives.  The technical difficulty may give rise to consequential risks that need addressing but these risks have to be identified and catalogued if they are going to be managed. Some of the risks potentially arising out of technical complexity include:

  • Inadequate supply of skilled resources in the marketplace / organisation;
  • Management failing to allow adequate time for design and testing;
  • Allowing technicians to ‘design in’ unnecessary complexity;
  • Management failing to provide appropriately skilled resources;
  • Management lacking the skills needed to properly estimate and manage the work;
  • Etc.

Another common risk in many of these pseudo risk lists is ‘lack of senior management support’.  This is a greyer area, the project team’s perception of management support and the actual level of support from senior management may differ. Developing an understanding of the actual attitude of key senior managers requires a methodical approach using tools such as the Stakeholder Circle.  However, even after defining the actual attitude of important senior managers the lack of precision in the risk description will often hide the real risks and their potential solutions or consequences:

  • If there is a real lack of senior management support the project should be cancelled, its probability of failure is greater than 80%. Continuing is simply wasting money.
  • If the problem is senior management failing to understand the importance of the project, this is an issue (it exists) and the solution is directed communication (see more on directed communication). The risk is that the directed communication effort will fail, leading to project failure, this risk needs careful monitoring.
  • If the problem is a project sponsor (or steering committee) who is not committed to project success and/or a sponsor (or steering committee) lacking understanding of his/her role (see more on the role of a sponsor) this is another issue with a solution based in education or replacement. Depending on the approach to resolving the issue (and its guaranteed impact on project success if the issue remains unresolved) the risk is either the necessary education process may not work and/or poor governance and senior management oversight will allow the issue to continue unresolved – these specific risks need to be explicitly described and acknowledged if they are to be managed.

Fine tune your detectorsThe first step to managing risks effectively is developing a precise description of the actual risk that requires managing. If there are several associated risks, log each one separately and then group them under a general classification.   The description of each risk is best done using a common meta language such as:

  • ‘[Short name]: If a [description of risk] caused by [cause of risk] occurs, it may cause [consequence of occurrence]’. For example:
  • ‘Storms: If a heavy thunderstorm caused by summer heat occurs, it may cause flooding and consequential clean up’.

For each risk you need to:

  • Define the risk category and short name;
  • Describe the risk using an effective ‘risk meta language’;
  • Determine if the risk is an opportunity or threat and quantify its effect;
  • Prioritise the risk using qualitative assessment process;
  • Determine the optimum response;
  • Implement the response and measure its effectiveness (see more on risk assessment).

A simple Excel template such as this can help: http://www.mosaicprojects.com.au/Practical_Risk_Management.html#Tools

Managing issues is similar, the key difference is the consequences of an unresolved issue are certain – the issue is a fact that has to be dealt with (see more on issues management).

There are a number of factors that can cause both risks and issues to be improperly defined, some technical, most cultural. Three of the most important are:

  • Dealing with easy to identify symptoms without looking for the root cause of the risk / issue (see more on root cause analysis).
  • A management culture that does not allow open and honest reporting of risks and issues; preferring to hide behind amorphous descriptions such as ‘technical complexity’ rather than the real risk ‘management’s inability to manage this level of complicated technology’.
  • Failing to allow adequate time to analyse the stakeholder community using tools such as the as the Stakeholder Circle so that the full extent of risks associated with people’s capabilities and attitudes can be understood – these can account for up to 90% of the actual risks in most projects.

Management culture is the key to both allowing and expecting rigorous and honest assessment of risk. One of the key functions of every organisation’s governing body is to design, create and maintain the organisation’s management culture, this is a problem that starts at the top! For more on the roles of governance see: http://www.mosaicprojects.com.au/WhitePapers/WP1096_Six_Functions_Governance.pdf.

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.

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.

Some ideas for making project management effective and efficient in 2016

SuccessIt’s a New Year and by now most of us will have failed to keep our first set of New Year resolutions! But it’s not too late to re-focus on doing our projects better (particularly in my part of the world where summer holidays are coming to an end and business life is starting to pick up). Nothing in the list below is new or revolutionary; they are just good practices that help make projects successful.

Most projects that fail are set up to fail by the organization and senior management (see:  Project or Management Failures?).  80% of projects that fail don’t have a committed and trained project sponsor. An effective project sponsor will:

  1. Give clear project objectives.
  2. Help craft a well‐defined project scope.
  3. Remove obstacles that affect project success.
  4. Mediate disagreements with other senior stakeholders.
  5. Support the project manager.

The role of the project or program sponsor is outlined in: WP1031 Project & Program Sponsorship.

Customers or end‐users are critically important to the success of ‘their project’. Unfortunately there is an extreme shortage of ‘intelligent customers’.  A ‘good customer’ will:

  1. Help refine the project scope – no one gets it 100% correct first time.
  2. Convey requirements fully and clearly
    (see: WP 1071 Defining Requirements).
  3. Avoid changing their minds frequently.
  4. Adhere to the change management process.

Every project team needs expertise – this is frequently provided by external experts. Subject‐matter experts should:

  1. Highlight common pitfalls.
  2. Help rather than hinder decision making.

The work of the project is done by ‘the team’. A committed and motivated project team will:

  1. Buy into the project’s objectives.
  2. Identify all of the required tasks and ensure the schedule is complete and accurate.
  3. Provide accurate estimates.
  4. Report progress and issues truthfully.
  5. Deliver their commitments.
  6. Focus on achieving the intended benefits
    (see: WP 1023 Benefits and Value).

Finally, the project manager

  1. Recognises that there is no “I” in project and works with the team and stakeholder community to create a successful outcome
  2. Resolves issues and risks that may arise from the 18 items above quickly, efficiently and effectively.

Making Projects WorkAlmost all of the items listed require action by people other than the project manager – this highlights the fact that projects are done by people for people and the key skill required by every project manager is the ability to influence, motivate and lead stakeholders both in the project team and in the wider stakeholder community.

For more on Making Projects Work see: http://www.mosaicprojects.com.au/Book_Sales.html#MPW