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In big move, Accenture will get rid of annual performance reviews and rankings

As of September, one of the largest companies in the world will do all of its employees and managers an enormous favor: It will get rid of the annual performance review.

Accenture CEO Pierre Nanterme told The Washington Post that the professional services firm, which employs hundreds of thousands of workers in cities around the globe, has been quietly preparing for this “massive revolution” in its internal operations.

“Imagine, for a company of 330,000 people, changing the performance management process—it’s huge,” Nanterme said. “We’re going to get rid of probably 90 percent of what we did in the past.”

The firm will disband rankings and the once-a-year evaluation process starting in fiscal year 2016, which for Accenture begins this September. It will implement a more fluid system, in which employees receive timely feedback from their managers on an ongoing basis following assignments.

Accenture is joining a small but prominent list of major corporations that have had enough with the forced rankings, the time-consuming paperwork and the frustration engendered among managers and employees alike. Six percent of Fortune 500 companies have gotten rid of rankings, according to management research firm CEB.
These companies say their own research, as well as outside studies, ultimately convinced them that all the time, money and effort spent didn’t ultimately accomplish their main goal — to drive better performance among employees.

In March, the consulting and accounting giant Deloitte announced that it was piloting a new program in which, like at Accenture, rankings would disappear and the evaluation process would unfold incrementally throughout the year. Deloitte is also experimenting with using only four simple questions in its reviews, two of which simply require yes or no answers.
Microsoft did away with its rankings nearly two years ago, attracting particular attention since it had long evangelized about the merits of its system that judged employees against each other. Adobe, Gap and Medtronic have also transformed their performance-review process.
“All this terminology of rankings—forcing rankings along some distribution curve or whatever—we’re done with that,” Nanterme said of Accenture’s decision. “We’re going to evaluate you in your role, not vis à vis someone else who might work in Washington, who might work in Bangalore. It’s irrelevant. It should be about you.”

Though many major companies still haven’t taken the leap, most are aware that their current systems are flawed. CEB found that 95 percent of managers are dissatisfied with the way their companies conduct performance reviews, and nearly 90 percent of HR leaders say the process doesn’t even yield accurate information.

“Employees that do best in performance management systems tend to be the employees that are the most narcissistic and self-promoting,” said Brian Kropp, the HR practice leader for CEB. “Those aren’t necessarily the employees you need to be the best organization going forward.”

”Brain research has shown that even employees who get positive reviews experience negative effects from the process. It often triggers disengagement, and constricts our openness to creativity and growth.

CEB also found that the average manager spends more than 200 hours a year on activities related to performance reviews—things like sitting in training sessions, filling out forms and delivering evaluations to employees. When you add up those hours, plus the cost of the performance-management technology itself, CEB estimates that a company of about 10,000 employees spends roughly $35 million a year to conduct reviews.

“The process is too heavy, too costly for the outcome,” Nanterme said. “And the outcome is not great.”

Interestingly, though, the decision to roll out an updated approach usually has little to do with reining in those numbers. Kropp said companies aren’t likely to save much time or money by transitioning away from their old ratings systems to a new evaluation process. Where they stand to benefit is, instead, the return on those investments. “The smartest companies are asking, how do we get the best value out of the time and money we are spending?” Kropp said.

That’s the question Accenture posed to itself. And its answer was that performance management had to change from trying to measure the value of employees’ contribution after the fact. It needed instead to regularly support and position workers to perform better in the future.

“The art of leadership is not to spend your time measuring, evaluating,” Nanterme said. “It’s all about selecting the person. And if you believe you selected the right person, then you give that person the freedom, the authority, the delegation to innovate and to lead with some very simple measure.
By Lillian Cunningham, Washington Post

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Even Heidrick & Struggles practice director says high-flying recruiters collaborate in the cloud!

Heidrick & Struggles practice director says high-flying recruiters collaborate in the cloud. In the high-stakes world of C-Suite recruiting, knowledge and information are the killer apps upon which deals are made. For one recruitment giant, 62-year-old Heidrick & Struggles International Inc., the demands of the business have spurred it to adjust its IT strategy accordingly, embracing any effort that supports its highly mobile human network. “The company has a great appetite to work better faster and more secure,” Katherine Graham Shannon, the company’s information executive practice director, told CIO Journal Thursday.

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Big Data Isn’t a Human Capital Strategy

This is where an algorithm for conscientiousness comes in….

Welcome to the XQ age of hiring. According to a recent Time cover story, “Questions to Answer in the Age of Optimized Hiring,” the term “XQ” refers to “X quotient,” and it is the indispensable — and pretty much indescribable — factor that employers are looking to pinpoint in today’s job candidates. In their pursuit of this mysterious metric, companies are increasingly turning to personality tests, or — as Gallup likes to call them — “talent-based assessments,” to find the best fit.

While personality testing is nothing new, the latest push has been fueled largely by the emergence of big data and predictive analytics. Many companies believe data science can do a better job of finding their next great salesperson, accountant or manager than a traditional face-to-face interview. I tend to agree with them. Day in and day out, I work with companies to help them hire top talent for a wide variety of roles. I believe in the value of predictive analytics and using assessments to identify the right fit. An assessment can be a powerful tool in raising an organization’s level of talent and, therefore, its performance.

But I also believe companies are losing sight of the bigger picture. Analytics in and of itself is not the cure-all for workplace woes. The Time article brought to mind three common traps I see companies falling into when they embrace a data-driven hiring strategy:

Getting caught up in the data movement. There is growing interest in the use of big data to inform hiring decisions. This enthusiasm makes sense — it’s easier these days to collect, store and analyze large amounts of data from a variety of sources. Analytics is no longer a niche occupation, and if a company doesn’t have someone in-house who understands how to interact with data, it can certainly outsource the job.

But accessibility and affordability don’t make data useful. While data collection is important, what the company does with the information is considerably more important. The single greatest challenge I see companies facing over and over again is how to make their data actionable.

Focusing only on the assessment. Developing a great assessment is a science and an art. But a great assessment gets a company only so far. These tests can be effective at helping organizations hire employees with great potential, but they do nothing to engage or develop those employees — that’s the manager’s job. As Gallup has found, managers account for at least 70% of the variance in employee engagement scores. If companies don’t have the right managers in place, then their newly hired, highly talented employees are unlikely to live up to their full potential and, our experience suggests, may be even more likely to leave than less talented employees who have fewer options.

Companies also need the right attraction and recruiting strategies to find talented employees. No assessment can take people with average talent and magically make them great in a role. Organizations tend to focus most of their energy on the hiring phase and far less energy on the attraction and recruiting phases. They should be looking at their employee value proposition, messaging, recruiting talent and sourcing strategies to determine the best approach for drawing top talent.

Ignoring the potential pitfalls. In a 1989 article for Harper’s, author Erik Larson wrote, “The keepers of big data say they do it for the consumer’s benefit. But data have a way of being used for purposes other than originally intended.” He was referring to junk mail and direct marketers, but the sentiment applies to the current conversation as well. Big data brings a certain set of challenges related to ethics, privacy and security. Because of this, employers have to be diligent in how they collect and use all of that information.

Cyberattacks and privacy violations are legitimate concerns in the digital age, and organizations need to safeguard against them, but they also need to consider the implications of how their data-driven strategies affect employee behavior. Some organizations are collecting real-time data about employees, asking their coworkers to submit immediate and constant feedback. This type of environment may inadvertently lead employees to engage in undesirable or inauthentic behavior.

Gallup knows a thing or two about assessments. We created the Clifton StrengthsFinder, an online assessment that helps people identify their areas of greatest potential. As mentioned in Time and originally reported in the Wall Street Journal, 457 of the Fortune 500 use the Clifton StrengthsFinder. We hope that all 500 will use it one day soon. The use of employee assessments, among other forms of big data analytics, is a superb way for any company to improve its human capital practices. However, data science must be applied correctly to maximize the benefits while minimizing unintended and unwanted consequences.

By Brandon Rigoni, Ph.D., Associate Director for Talent-Based Hiring and Development at Gallup.

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The Talent Divided

The 2015 Data & Analytics Report by MIT Sloan Management Review and SAS finds that talent management is critical to realizing analytics benefits. This fifth annual survey of business executives, managers and analytics professionals from organizations located around the world captured insights from 2,719 respondents. It finds that organizations achieving the greatest benefits from analytics are also much more likely to have a plan for building their talent bench.

Read the full report by: Sam Ransbotham, David Kiron and Pamela Kirk Prentice from MIT Sloan Management Review

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Getting beyond bureaucracy in human resources

By becoming more strategic and operating with an edge, corporate HR departments can boost their effectiveness and shed their bureaucratic reputation.

At big corporations, human-resource organizations frequently conjure up images of bureaucratic weight and paper pushing. Need that be true? This question comes into sharp relief in McKinsey alumnus Peter L. Allen’s description of HR approaches at his company, Agoda, which has been trying, with some success, to minimize the need for many traditional HR processes while transferring others to business leaders. (See “Toward a new HR philosophy.”) Although it’s easiest to see how some of Agoda’s human-resource initiatives apply to start-ups, our experience shows that it’s also possible to right the balance in large organizations without going too far. Getting more strategic and operating with an edge often are two keys to success.

Getting more strategic

One reason large organizations end up with a supersized human-resource infrastructure is that the business rationale for HR processes has been lost. But there’s an antidote to massive HR systems, questionnaire overload, and multipage templates: stimulating a dialogue about the underlying strategic purpose of those tools—a dialogue that often helps management realize that they can be controlled and applied more effectively. A global healthcare company, for example, realized that its performance-review process gave it only a superficial understanding of who its high performers were and what feedback helped them to develop. It decided to deemphasize a time-honored nine-box calibration grid in its evaluation procedures and radically simplified employee reviews. We also know a senior leader who reduced his company’s performance-review form from four pages to four questions—but who rightly insisted that those four questions had to be answered and tracked more rigorously.

In the latter case, the leader was a chief human resources officer (CHRO) with the insight to identify core business issues and the discipline to eliminate redundancies. Strategic leadership can come from outside HR, too. A financial-services company recently charged its second-highest-ranking executive with personally directing talent-review procedures for top professionals across the firm. That required him to take a step back and assess the business’s most significant talent indicators, which turned out to be poorly reflected in its HR systems. The company’s leaders, previously stuck in a process-oriented rut, have now articulated the strategic rationale for what they are doing and why it’s important—in this case, to understand the company’s people, help fill talent gaps, and thereby improve returns. It is now building a database and infrastructure to capture those results and make the highest performers more visible. HR might have had a difficult time, on its own, committing the company to new performance criteria and gaining the resources to update its systems, but collaboration with a major leader gave the effort teeth.

Operating with an edge

It’s easy to say, “HR needs to let go and get out of the way,” but the pendulum can easily swing too far in the other direction: granting managers unlimited freedom in making HR decisions can generate too much variability, potential liability exposure, and cost creep. Moreover, when HR pulls back too far, it misses opportunities for using rigor and facts to gain predictive insights, whose potential is growing with big data and advanced analytics.1

Talent pools and gaps

High-quality, timely information about talent pools and gaps represents a competitive advantage that HR is uniquely positioned to provide. For example, a grocery line manager in a global retail organization may have proved herself in Argentina just as a gap opened up in Mexico. An oil and gas organization may have a budding leader who is running out of growth headroom in the Middle East and a need for similar expertise in a bigger role in Houston. HR should ensure that these critical connections get made and then help line managers seize opportunities. The best HR organizations also offer a perspective on emerging gaps. For example, as digitization becomes more critical to cars,2 leading automakers need to put more emphasis on recruiting computer engineers—a challenge for organizations accustomed to recruiting mechanical engineers.

Compliance

Compliance efforts in areas such as labor and antidiscrimination obligations can easily make forms and layers of bureaucracy proliferate. But while an overly assertive HR department can constrain the smooth functioning of a business, companies are no better served by a “wallflower” department that misses red flags or neglects to enforce discipline. A rigorous HR function—an “adviser with an edge”—should track and interpret data and assert a point of view: “yes, we are doing well realizing internal goals or meeting industry benchmarks” or “no, we may be beginning to run off the rails.”

One leading consumer-packaged-goods manufacturer and distributor, where onsite generalists had previously taken the lead, recently created a “SWAT team” for labor relations and compliance. The team discreetly monitors metrics for proven warning signs and moves in when the company needs subject-matter expertise. Oversight has improved and line managers have clear incentives to get compliance right—without forcing HR professionals to become omnipresent process police. Rather, their mission is to interpret events and respond rapidly to potentially significant breakdowns.

Leadership development

Many leadership-development efforts don’t achieve their goals, because they ignore the business context and offer insufficient opportunities for personal reflection and individualization.3 While it would be easy to conclude that corporate HR can add little value to leadership development, the reality is more complicated. Letting “a thousand flowers bloom” often means that leadership gets ignored in some corners of a company and that others reinvent the wheel too often. An assertive HR department clarifies expectations for leadership development across the company, provides a baseline backbone of proven tools and methodologies, and flags priorities to adapt them to the needs of businesses and individuals. HR and business-unit leaders then collaborate to fine-tune programs.

Managers must lead, and HR must help them to do so. But the well-founded inclination to swing the HR-process pendulum away from bureaucracy and toward a freer hand for management should not lead organizations to veer from “ditch to ditch.” Shifting too drastically is plainly a bad idea; in many cases, a complete HR overhaul is unnecessary. At all events, HR has opportunities to assert its expertise and strategic thinking in a low-profile, nonintrusive way. That requires both rigor and restraint—but, we’ve found, provides the sort of insights about talent, leadership, and performance management that all companies need, regardless of their size.

April 2015 | by Neel Gandhi and Bryan Hancock, McKinsey Quarterly

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Toward a new HR philosophy

HR should empower managers to decide on standards, hire how they choose, and develop company-wide leaders.

What is the appropriate role for the human-resources function? Many companies view it as merely administrative, with little or no strategic impact. Of course, HR leaders bridle at this perception and regularly seek ways to have a seat at the table. In the quest to be viewed as more strategic and more important, HR often tries to take on greater responsibility.  Yet the gap between HR’s aspirations and actual role persists.

I’ve observed this gap in a variety of organizations, both as a consultant and as an in-house manager at several multinationals. Fundamentally, I believe, the gap arises from two complementary causes. First, executives and managers often think their job is to get financial results rather than to manage people. Second, when executives and managers neglect people management, the HR function worries about lapses and tends to “lean in” to right them itself. On the surface, this approach seems to meet an organization’s needs: management moves away from areas it views as unrewarding (and perhaps uncomfortable), while HR moves in, takes on responsibilities, solves problems, and gains some glory in the process.

But this approach is based on erroneous thinking. It is bad for management and bad for the company as a whole. When HR sees itself as manager, mediator, and nurturer, it further separates managers from their employees and reinforces a results-versus-people dichotomy.1 That’s why many HR teams refer to the rest of the company as “the business”; too often, they don’t really perceive themselves as a core part of that business.

Helping managers manage

I joined the online travel agency Agoda.com three years ago to lead the HR function. Mindful both of problematic patterns in other organizations and of a CEO deeply averse to traditional HR, I have tried to build a different model. My department’s fundamental goal is to help managers manage better, not to manage on their behalf. While we have a long way to go—Agoda is still in many ways in start-up mode, despite having over 2,000 employees in 28 countries—we’ve made significant progress.

I believe that sharing our experience may prove useful for other organizations as well. Our approach is based on a few core principles:

  • Managers, not HR, should define, live, and develop the company’s leadership.
  • Managers, not HR, should do the hard work of managing people—hiring, evaluating, rewarding, and disciplining employees—and managers should be evaluated on their results.
  • Employees, not HR, should “manage up” and take responsibility for solving problems directly with their managers.

In addition, we’ve taken the symbolic but important step of renaming our department People and Organization Development rather than Human Resources. We’ve also tried to hire the smartest and most talented people we can find, regardless of whether they have traditional HR backgrounds. Results so far have been promising.

Developing leaders

While leadership development should always be a top priority for HR, many companies approach it in counterproductive ways. One major division of a Nasdaq 100 company, for example, outsourced leadership development to an external provider—not uncommon given the proliferation of specialist consultancies offering this sort of service.

Outsourcing leadership development, though, is risky. Perhaps not surprisingly, the management of this division was ultimately taken over by a different part of the organization. In another multinational I worked with, every level of employee development (from job candidates to executives) was evaluated on a different set of leadership criteria, creating confusion about what mattered for success. In addition, this company’s high-potential pool varied by as much as 40 percent from year to year because the assessment was so subjective. Although HR tried to treat these employees as privileged and told them they were destined for great things, senior management continued to fill open senior roles from the outside because it did not value the “high-pos.” Predictably, many of them left the organization.

Rather than hand leadership development in its entirety over to external experts, we’ve tried to build it from the inside. Our CEO and senior leaders worked to clarify our own leadership characteristics, the qualities that make people successful at Agoda, and the behavior and principles that make it grow. We’ve shied away from evaluations based on leadership potential because we are skeptical of our own ability to predict future performance. Instead, we focus on behavior that we can observe now.

Individually, the leadership characteristics we esteem are not unusual: most organizations, after all, value qualities such as integrity and intelligence. But when we combine these with “thinking like an owner,” innovation, and the ability to inspire others, we begin to define leadership in ways that really matter in the Agoda context. We apply the same leadership principles to every stage of the employee life cycle. We use them to guide hiring decisions; we teach them in new-hire orientation sessions; we rate them in semiannual performance evaluations; and we use them to assess an employee’s readiness for promotion. This approach means that we have a set of criteria for the skills and behavior managers should live by and employees should believe in. It helps us to select and reward employees who contribute the most to the organization, both in the short and the long run. Leadership at Agoda is truly suited to the company.

Leadership is also something we expect of all our employees, whether or not they have people-management responsibilities or direct reports. We start teaching this principle and the relevant leadership skills during the orientation of new hires, so that our values are clear from the beginning. To make sure that the leadership style we teach is really our own, we involve managers heavily in assessing the needs of the company, designing and building curricula, and teaching. Not all managers are born to play that role, of course, but we teach them teaching skills and cofacilitate where appropriate. We strive to make it clear to everybody that our leadership values are specific to our company. They are the rules we live by.

Letting management manage

As often as possible, we strive to ensure that managers make the critical HR decisions. Managers have to live with the results the people on their teams produce, so managers should be empowered to make relevant decisions and held responsible for outcomes. If HR constrains decisions too closely—by determining who should be hired, how much they get paid, or their performance ratings—managers no longer have the freedom to obtain the results they desire. In that case, it is neither logical nor productive to hold those managers accountable.

With freedom, of course, comes responsibility, especially the responsibility to make good decisions. One example is recruitment. Our People and Organization Development team provides a flow of qualified candidates, but it is the managers who conduct the interviews and choose whom to hire. Our role is to provide managers with actionable data and useful tools, such as an in-house recruitment certification program we are building to develop hiring skills.

We also evaluate our candidates using an array of standardized tests—an important approach for our global company, which, at last count, employed people of 65 nationalities. Test scores help us compare different candidates in a group with each other and with our current employees. While we don’t have strict cutoffs, we are building guidelines that correlate with performance. The goal is to enable managers to make better hiring decisions through objective data.

Agoda applies the same philosophy to other people processes, including performance assessment; our goal is to help shape management decisions rather than make them. We’ve adopted an employee-scoring system and work hard to communicate what the five-point scoring range means for managers and employees (exhibit). We do not try to fit every department’s scores to a predetermined ratio. Instead, we take the data from each review cycle back to department heads and ask them whether their evaluations really reflect their departments’ performance—and what their underlying development needs really are. We ask a lot of questions and share lots of data, but we don’t come up with the answers. This approach, we believe, builds responsibility and makes for better management over time.

Compensation

As with performance, so with compensation: the People and Organization Development team consults rather than controls. We do not set strict minimum and maximum pay numbers. Instead, we research market salaries and provide guidelines (but not limits) to managers. Departments make compensation decisions because they are responsible for hiring the right people and managing how those people perform. We make a particular point of not setting predetermined caps for jobs (in technology, for example) that provide a significant competitive advantage for the company.

Perhaps surprisingly, this approach does not fuel extravagant pay. Department heads have an incentive to be conservative with pay packages because senior management’s compensation depends on the company’s profitability. At times, indeed, we encourage departments to pay more than they first proposed to do. In addition, our CEO reviews all annual compensation, providing a company-wide check and balance. If we conclude that an employee’s contribution will justify his or her cost, we can compensate at levels higher than industry norms. While this approach may lead to inconsistencies in the pay of employees who are nominally at the same level, we’re willing to accept this outcome. We believe that the resulting improvement in company performance benefits all of our employees.

Dealing with conflict

Our philosophy of helping managers to manage plays an important role when people problems arise. Traditional HR departments often find themselves—or put themselves—in the position of mediator between managers and employees. We try to avoid this role. Instead, our goal is to empower both managers and employees with the skills, information, and best practices to resolve problems together. We teach people-management skills not only to managers but also to employees, who need to know that they are responsible for helping to resolve problems by having difficult conversations and “managing up.” This belief reflects our philosophy that leadership skills are critical for everyone in the company.

Obviously, problems do arise, but we teach employees that when they do, their next port of call is not HR but the manager’s manager—or even managers further up the chain, up to and including the department heads who report directly to the CEO. This approach is a challenge, but it works when management is prepared to take on greater management responsibility rather than say, “HR can handle it.”

People people

Last, we take a somewhat unconventional approach to hiring into People and Organization Development itself. Our function is quite lean, and we are rigorous about whom we hire. We test candidates and make sure they are interviewed extensively, both by senior members of the department and by our internal clients. And while some department members do have direct experience in HR fields, a number—even some in senior roles—do not. In fact, we usually rule out candidates with too much big-company HR experience; we find them excessively bound to an HR-knows-best philosophy. Instead, we look for very smart people with an interest in the field and a desire to enhance the company’s performance from a people perspective. International education, high test scores, emotional intelligence, and commitment matter more to us than résumés that check the HR boxes.

Creating a different kind of people function requires a shift in perspective from the department and company management alike. We believe that HR best serves the company’s interest by analyzing and sharing data, building skills, and developing leaders. The company’s management, for its part, must take real responsibility for hiring, evaluating performance, determining compensation, and releasing underperformers. This shift is still a work in progress.

But as both sides let go of old attitudes, the false dichotomy between employees and managers is beginning to fade. Our people are working together, and our company is becoming more productive. By taking what appears to be a less active role than other HR departments do, we are actually gradually achieving greater influence and greater success—both for the company and for ourselves.

April 2015 | by Peter L. Allen, McKinsey Quarterly

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Today’s Personality Tests Raise the Bar for Job Seekers

More companies use assessments to hire, with fewer willing to take a chance on anyone who doesn’t measure up

The Delaware North Cos., a hospitality company whose customer-service representatives help people plan vacations at national parks, sometimes struggles these days to keep 80 or so seats filled at its call center in Fresno, Calif.—a city tied for the 9th-highest unemployment rate in the U.S.

The company has no shortage of job applicants. But finding the right candidates has gotten tougher since the company started using a customized assessment last year to see how applicants stack up against top call-center workers in such traits as friendliness, curiosity and the ability to multitask.

Managers said the new test, administered online, has reduced turnover and allowed Delaware North to more accurately select applicants who best fit the job. “Now we understand better what makes a great reservation sales applicant,” said Andy Grinsfelder, vice president of sales and marketing for the Buffalo, N.Y.-based company’s parks and resorts division.

Pre-hire assessments have been used for years, but never have such tests been deployed so widely at companies across the U.S. The automation of the job application process, combined with powerful data tools and inexpensive online software, have led to falling costs, more accurate results and a surge in use.

Eight of the top 10 U.S. private employers now administer pre-hire tests in their job applications for some positions.

These tests have, in effect, raised the bar for U.S. job seekers: With more companies holding an alleged formula for workplace success, fewer are willing to take a chance on anyone who doesn’t measure up.

In 2001, 26% of large U.S. employers used pre-hire assessments. By 2013, the number had climbed to 57%, reflecting a sea change in hiring practices that some economists suspect is making it tougher for people, especially young adults and the long-term unemployed, to get on the payroll.

Employers are taking longer than ever to fill jobs, with the stepped-up search for excellence joining other factors that slow hiring, such as the reluctance to raise wages, and mismatches in skill or education between applicants and jobs.

Companies aren’t settling for people with minimum skills; they want applicants who stand out in ability and workplace temperament, a new recruiting standard they say yields longer tenure and higher productivity.

Steven Davis, a University of Chicago economist who has studied the gap between job openings and hires, found the annual sum of hires and separations—called labor-market churn—has declined by more than 25% since 2000, suggesting, he said, that as employers intensify their front-end screening, among other factors, “a larger fraction of the people they hire are working out.”

The latest generation of pre-hire assessments augments other hiring hurdles whose use has also grown over the past decade, including criminal-record and credit checks. “The incentives to screen before hiring have increased over time, while the costs have declined,” Mr. Davis said. “Both those things are encouraging employers to move away from what was essentially a trial employment situation to just screening people out in advance.”

One result, he said, is that fewer applicants clear the bar set by employers.

Companies want to pluck only pearls from an ocean of applicants, even if it takes a bit longer. Employers in February took 26.8 days, on average, to hire for open jobs, an all-time high, Mr. Davis’s research found. Even during the peak of the prior expansion, jobs were vacant 23 days at most, on average.

Employers are figuring out how their top employees do their jobs and are using that information to screen new hires, said Jay Dorio, who develops assessment tools for the Smarter Workforce initiative at International Business Machines Corp. “That’s where the future is,” he said, “and we’re doing it today.”

Personality tests were developed for the workplace in the 1940s and 1950s by research teams at industrial companies like AT&T Inc. They were first used largely to screen candidates for management jobs. Employers wanted to know, for instance, if a potential executive was an extrovert, prone to anxiety or an office backstabber. They fell out of favor in the 1960s, after researchers questioned their reliability, only to resurface in the 1990s, when industrial psychologists determined they had value as a hiring tool.

This was followed by a shift to online job applications in the early 2000s that allowed employers to streamline the recruiting process—historically labor-intensive. Taking stock of “candidates’ data now takes minutes or seconds instead of months,” said Brian Stern, president of Shaker Consulting Group, an assessment vendor.

Falling costs

Cheap, effective software-based assessments have allowed even small companies to analyze their workforces to pinpoint the kind of employees who perform well and stick around. “The notion of using data in hiring,” Mr. Stern said, “that’s moving to all size businesses.”

Tests in the past gauged only a few broad personality traits. But statistical modeling and better computing power now give employers a choice of customized assessments that, in a single test, can appraise everything from technical and communication skills to personality and whether a candidate is a good match with a workplace’s culture—even compatibility with a particular work team.

Furstperson, the company that developed Delaware North’s test, can score personality and work styles by asking applicants if they agree or disagree with a long list of such statements as “I dislike yelling, but sometimes a little yelling is necessary,” and “I have never understood why some people find abstract art appealing.” They are designed so applicants can’t figure out the best answers to get hired.

Companies in the billion-dollar pre-hire testing industry say more precisely matching applicants with jobs leads to longer, happier careers because employees are less likely to quit or be fired.

The assessment algorithms also can be easily refined and updated. Furstperson recently analyzed 20 companies—a call center and 19 of its subcontractors—that use its test. In 2012, before the assessment test was adopted, 90-day attrition—the proportion of employees who quit or were fired after three months—was 41%. After the tests and subsequent revisions, 90-day attrition fell to 34% in 2013; 28% in early 2014; and 12% late last year, said Jeff Furst, founder of Furstperson.

The tests, of course, are fallible. “Predicting what humans will do is really frigging hard,” said Charles Handler, the president of Rocket-Hire, a consulting firm that advises companies on using the assessments. “Tests are a predictor and better than a coin toss, but you have to be realistic about them. There will be false positives, people who get through that shouldn’t, and false negatives, someone who should’ve gotten through that didn’t.”

U.S. workers looking for jobs say they aren’t happy about the new hurdles.

Chuck McCrory, a former academic adviser at the Art Institute of Philadelphia who was laid off in 2012 after 11 years, said he felt like he was up against “an invisible wall” during his lengthy job search.

“Most of the tests are what I believe to be common-sense tests,” Mr. McCrory said, questions asking, for instance, what to do when a customer calls with a complicated request for help five minutes before the end of a shift. The problem with the assessments, he said, is “you don’t get results back, so you have no idea what you did wrong or how to improve.”

In February, Mr. McCrory, age 51, started a job at Drexel University helping students navigate through registration, financial aid and other college paperwork. The school ran a background check and called his references, but it didn’t require a pre-hire assessment.

Mr. McCrory said he wished he could have spoken directly to other prospective employers during his job search. But he could never get past their tests.

“Why don’t you bring me in and see the passion for what I do, see that I’m a really kind individual that will bend over backward for your company?” he said.

Employers’ selectivity grew in the recession and has largely continued. Companies with a glut of applicants have their choice of the best talent at the right price. College degrees, for example, are asked for jobs that never before required one—so-called credential creep. Labor-market analysis firm Burning Glass Technologies found that 60% of ads for computer help-desk jobs in 2013 required a bachelor’s degree, even though only 39% of the workers in similar jobs had the credential, according to census surveys around that time.

“We look at the way applicants answer questions to see who would thrive in our environment, not just survive,” said Charlotte Harris, global HR director at Regus PLC, which rents out temporary office space around the world.

In 2013, the company started giving applicants for customer-service jobs a 15-question test designed by IBM. Ms. Harris said Regus, which employs more than 11,000 people, wants new hires with “the right DNA and mind-set to be successful here.” The IBM test screens out half of applicants.

“We’re looking at the top 50th percentile of people applying to us,” Ms. Harris said, “and we’re constantly raising that bar.”

Employers can measure and analyze what differentiates their best performers in a variety of occupations—from fast-food workers and retail store managers to insurance agents and nurses—and use the data to create a profile of ideal workers. The tests show how applicants compare.

“We use our existing employees that we know are really good at the job and then try to find people who [test] just like them,” said John Marick, co-founder of Consumer Cellular, a cellphone-service company with call centers in Oregon and Arizona.

Some tests capture not just answers, but the amount of time applicants spend on questions, or whether they scroll back to reread test instructions.

Results fed to hiring managers can be as simple as a green, yellow or red light indicating the scoring algorithm’s recommendations—or run into pages of detail about a candidate’s performance.

Researchers at the University of Toronto, Yale University and Harvard University in one of the first academic studies of pre-hire testing found, in unpublished research, that managers who ignored test results picked workers who were more likely to quit or be fired. In other words, the algorithm was better at hiring.

Employment data charts

Willing to wait

Even with the tightening job market, employers haven’t shown any inclination to lower standards. If Delaware North can’t find enough top candidates, Mr. Grinsfelder said, it will broaden the pool by posting on more job boards or allow some new hires to work from home.

Likewise, at Consumer Cellular, “If we’re struggling to fill the seats,” Mr. Marick said, “we double down on efforts to get people through the door rather than lower our standards.”

Mr. Marick said his turnover rate has fallen to 8%, about half the industry average. Fewer people, he said, now come in with the attitude of, “‘I really need a job but I don’t like people.’ If we took that person on, they’d probably decide in a few months, ‘I don’t like it here,’ and move on.”

Tougher screening has also improved retention at Delaware North’s Fresno office. The company used to hire 15 people for every 12 jobs, knowing about three workers would drop out during training. Now it hires 14.

Patrick Corbett, 46 years old, discovered the tests after he was laid off a few years ago from his job as a mortgage processor for Citibank. Though he now works in technical support for a large company, Mr. Corbett sometimes applies for jobs, he said, and assessment tests are required for nearly every one.

“Companies just keep adding more and more of these hoops,” he said.

Last fall, Mr. Corbett spent about an hour filling out the multi-page test for a mortgage processing job on the website of ClearFit, a job-matching service. Soon after, ClearFit emailed Mr. Corbett to ask that he retake the test.

“Our system can detect when people are overthinking, or rushing their responses: this may have happened to you,” the email said. “This can skew your results.”

Mr. Corbett said he didn’t bother. “When I go to apply for a job and they state ‘You must take the personality test,’ I just don’t apply,” he said. “I don’t feel like wasting another hour of my life for a job I won’t get.”

Written by Lauren Weber at Wall Street Journal

 

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On-Demand in High Demand

Why are high cost professional service providers such as lawyers, accountants and management consultants logical targets for disruptive business models?

The ranks of the large law, accountancy and consultancy firms are ripe for thinning.

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Posted on the Australian Financial Review

 

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What Successful Project Managers Do

Traditional approaches to project management emphasize long-term planning and a focus on stability to manage risk. But today, managers leading complex projects often combine traditional and “agile” methods to give them more flexibility — and better results.

In today’s dynamic and competitive world, a project manager’s key challenge is coping with frequent unexpected events. Despite meticulous planning and risk-management processes, a project manager may encounter, on a near-daily basis, such events as the failure of workers to show up at a site, the bankruptcy of a key vendor, a contradiction in the guidelines provided by two engineering consultants or changes in customers’ requirements.1 Such events can be classified according to their level of predictability as follows: events that were anticipated but whose impacts were much stronger than expected; events that could not have been predicted; and events that could have been predicted but were not. All three types of events can become problems that need to be addressed by the project manager. The objective of this article is to describe how successful project managers cope with this challenge.2

Coping with frequent unexpected events requires an organizational culture that allows the project manager to exercise a great amount of flexibility. Here are two examples of advanced organizations that took steps to modify their cultures accordingly.

A group of 23 project managers who had come from all over NASA to participate in an advanced project management course declared mutiny. They left the class in the middle of the course, claiming that the course text, based on NASA’s standard procedures, was too restrictive for their projects and that they needed more flexibility. With the blessing of NASA’s top leadership, the class members then spent four months conducting interviews at companies outside of NASA. This led to a rewriting of numerous NASA procedures. Among other things, NASA headquarters accepted the group’s recommendation to give NASA project managers the freedom to tailor NASA’s standard procedures to the unique needs of their projects. A similar movement to enhance project managers’ flexibility occurred at Procter & Gamble, where the number of procedures for capital projects was reduced from 18 technical standards and 32 standard operating procedures to four technical standards and four standard operating procedures.

Concurrent with these changes at NASA and P&G, a heated debate emerged within the wider project management profession regarding the need for flexibility, as opposed to the traditional approach, which emphasizes that project success depends on stability. According to the traditional approach, project success can be achieved by focusing on planning and on controlling and managing risks. Although the popularity of this approach has sharply increased across industries, research covering a wide variety of projects consistently reveals poor performance. A large percentage of projects run significantly over budget and behind schedule and deliver only a fraction of their original requirements.3

The other side in this debate is best represented by a newer project management approach popular within the software industry. Called the agile method, it asserts that project success requires enormous flexibility throughout the project’s life. However, even proponents of the agile approach acknowledge that this approach is best suited to small projects and teams.4

Our studies, employing experiential data collected from more than 150 successful project managers affiliated with more than 20 organizations, indicate that today’s successful project managers cope with unexpected events by a combination of the traditional and agile approaches, assuming four roles. (See “About the Research.”) Two of the roles are intention-driven and two are event-driven, with each role assumed on its own time schedule throughout the life of the project. The first role, developing collaboration, is performed early on during the project. The second role, integrating planning and review with learning, is performed periodically. The third role, preventing major disruptions, is performed occasionally. The fourth role, maintaining forward momentum, is performed continuously.5

The Four Roles of the Project Manager

Our research found that today’s successful project managers assume four roles that help them cope with unexpected events.

The Four Roles of the Project Manager

About the Research

In recent years, many researchers have concluded that one reason for the widespread poor statistics about project results is the wide gap between research and practice.i The overall objective of our research was to develop a practice-based theory of project management.ii To this end, we used three complementary approaches to collect firsthand data on the practices of successful project managers. Believing that management is best learned by emulating exemplary role models, we focused our studies on a selective sample of the best practitioners in their respective organizations.

1. Develop Collaboration

Since project progress depends on the contribution of individuals who represent different disciplines and are affiliated with different parties, collaboration is crucial for the early detection of problems as well as the quick development and smooth implementation of solutions. The importance of collaboration can be demonstrated by the following two examples in which projects failed.

Tim Flores analyzed the causes for the different outcomes of three Mars exploration missions initiated by NASA’s Jet Propulsion Laboratory: Pathfinder, Climate Orbiter and Polar Lander. Although all three projects were conducted under the same guiding principles, were of comparable scope and shared many elements (even some of the same team members), Pathfinder was a success, whereas the other two missions failed. Flores expected to find that the Pathfinder project differed from the other projects in a variety of factors, such as resources, constraints and personnel. Although this was true to some extent, he found that the primary factor distinguishing the successful mission from the failed missions was the level of collaboration. The Pathfinder team developed trusting relationships within a culture of openness. Managers felt free to make the best decisions they could, and they knew that they weren’t going to be harshly punished for mistakes. That trust never developed in the other two projects.6

A different NASA project, the Wide-Field Infrared Explorer (WIRE) mission, was designed to study the formation and evolution of galaxies. Its telescope was so delicate it had to be sealed inside a solid hydrogen cryostat. When, shortly after launch, a digital error ejected the cryostat’s cover prematurely, hydrogen was discharged with a force that sent the Explorer craft tumbling wildly through space, and the mission was lost.

Jim Watzin, a project manager at NASA and a member of the WIRE project team, had this to say regarding the official report that NASA issued following the WIRE failure: “WIRE failed because people could not or would not communicate well with each other. … Individuals … simply were uncomfortable allowing others to see their work.” Watzin added: “The real [lesson] from this loss is that any team member that does not participate as a true team player should be excused [from the project].”7

In the next two examples, project success can be attributed to the project manager’s deliberate attempt to develop collaboration. (Note that in the discussions that follow, we use only the project managers’ first names.)

Allan, the payload manager for NASA’s Advanced Composition Explorer project at the Jet Propulsion Laboratory, has described how he developed trust between his team and the 20 groups of scientists developing instruments for the project, who were based at universities throughout the United States and Europe. Allan devised a three-stage plan. First, he selected team members who could operate in a university environment — people who knew when to bend or even break the rules. Second, he relocated his JPL team to a university environment (California Institute of Technology), recognizing that it might be difficult to develop an open, flexible culture at JPL. Third, he came up with an uncommon process for interacting with the scientists.8

The challenge, with regard to interaction, was getting the scientists to regard his JPL team as partners. Having dealt with NASA before, they tended to believe that someone coming from JPL would demand a lot of paperwork, lay out sets of rules to be followed and expect things to be done a certain way. In fact, many of the scientists weren’t sure they should share with Allan’s team the problems they were encountering along the way — problems that could slow down the project’s progress.

The primary role of Allan’s team was to review the development of the instruments, and Allan believed that the best way to do this was by focusing on trust and convincing the scientists that his team was there to help them solve their problems. To facilitate this, Allan and his team of five to eight members traveled to each university and stayed on site for an extended period of time. By spending days and nights with the scientists and helping them solve their problems — not as auditors but as colleagues — the JPL team gradually became accepted as partners.9

Most projects are characterized by an inherent incompatibility: The various parties to the project are loosely coupled, whereas the tasks themselves are tightly coupled. When unexpected events affect one task, many other interdependent tasks are quickly affected. Yet the direct responsibility for these tasks is distributed among various loosely coupled parties, who are unable to coordinate their actions and provide a timely response. Project success, therefore, requires both interdependence and trust among the various parties.10

However, if one of the parties believes that project planning and contractual documents provide sufficient protection from unexpected problems, developing collaboration among all the parties may require creative and bold practices.

This was the case in a large construction project that P&G launched at one of its European plants. After the contractor’s project manager, Karl, brushed off numerous team-building efforts, Pierre, the P&G project manager, finally found an opportunity to change Karl’s attitude. Three months into construction, the contractor accidentally placed a set of foundations 10 inches inside the planned periphery and poured about 600 lineal feet of striped foundation in the wrong place. Instead of forcing the contractor to fix his mistake and start over — a solution that would have damaged the contractor’s reputation and ego — Pierre chose a different approach. Through several intensive days of meetings and negotiations with the project’s users and designers, he was able to modify the interior layout of the plant, thereby minimizing damage to the users without having to tear down the misplaced foundations and hurt the project’s schedule. The financial cost of making the changes incurred by the contractor’s mistake was significant, but the loss in reputation was minimal. As a result, Karl gradually embraced Pierre’s working philosophy — namely, “If they fail, we fail.” The realization that the organizations involved in the project are all interdependent led to the development of a collaborative relationship.

2. Integrate Planning and Review With Learning

Project managers faced with unexpected events employ a “rolling wave” approach to planning. Recognizing that firm commitments cannot be made on the basis of volatile information, they develop plans in waves as the project unfolds and information becomes more reliable. With their teams, they develop detailed short-term plans with firm commitments while also preparing tentative long-term plans with fewer details. To ensure that project milestones and objectives are met, these long-term plans include redundancies, such as backup systems or human resources.11

One key difference between the traditional planning approach, in which both short- and long-term plans are prepared in great detail, and the rolling wave approach becomes evident when implementation deviates from the plan. In the traditional planning approach, the project team attempts to answer the question: Why didn’t our performance yesterday conform to the original plan? In the rolling wave approach, project managers also attempt to answer the question: What can we learn from the performance data to improve the next cycle of planning? In particular, they attempt to learn from their mistakes — to prevent an unexpected event from recurring.12

Successful project managers do not limit the learning process to the planning phase but also use it for project reviews. For example, after a review session in the midst of a project at NASA’s Goddard Space Flight Center, Marty was a frustrated project manager. The existing review process may have fulfilled upper management’s need to control its operations, but Marty felt it did not fulfill his team’s need to learn. Therefore, he modified the process to give his team the best input for identifying problems and the best advice for solving them. This meant doing away with the usual “trial court” atmosphere at NASA review sessions, where team members’ presentations were often interrupted by review board members’ skeptical comments and “probing the truth” questions. In its place, Marty developed a review process that provided feedback from independent, supportive experts and encouraged joint problem solving rather than just reporting.

The first thing Marty did was unilaterally specify the composition of the review panel to fit the unique needs of his project, making sure that the panel members agreed with his concept of an effective review process. The second thing he did was change the structure of the sessions, devoting the first day to his team’s presentations and the second day to one-on-one, in-depth discussions between the panel and the team members to come up with possible solutions to the problems identified on the first day. This modified process enabled Marty to create a working climate based on trust and respect, in which his team members could safely share their doubts and concerns. At the end of the second day, the entire panel held a summary meeting. It was agreed that the review session had been a big success. In fact, other NASA project managers quickly adopted Marty’s process, including it in their managerial tool kits.13

Successful managers of more traditional projects, such as designing and building manufacturing facilities, also practice learning-based project reviews. P&G has replaced review panels composed of external experts or senior managers with peer-review panels. These last four to eight hours and follow a simple protocol: First, the project team concisely communicates its technical and execution strategies, and then the floor is opened to all the invited peers for comments, critique and clarifying questions. Out of the numerous notes documented throughout the review process, five to 10 “nuggets” usually emerge that the project team uses to improve the technical, cost and scheduling aspects of the project. Sometimes, the invited peers even take one or two of the “nuggets” back to their own projects.14

3. Prevent Major Disruptions

In their book Great by Choice, Jim Collins and Morten T. Hansen describe one of the core behaviors of great leaders as “productive paranoia.” Even in calm periods, these leaders are considering the possibility that events could turn against them at any moment and are preparing to react.15 Similarly, successful project managers never stop expecting surprises, even though they may effect major remedial changes only a few times during a project. They’re constantly anticipating disruptions and maintaining the flexibility to respond proactively.16 The following two examples illustrate that, when convinced that a change is unavoidable, a successful project manager acts as early as possible, since it is easier to tackle a threat before it reaches a full-blown state.

NASA’s Advanced Composition Explorer project, discussed earlier, was plagued from the start with severe financial problems arising from internal and external sources. Internally, the development of the nine scientific instruments led very quickly to a $22 million cost overrun. Externally, the project, which was part of a larger NASA program, inherited part of a budget overrun in an earlier project. As a result of these internal and external factors, the ACE project experienced frequent work stoppages, forcing the manager to constantly change his contractors’ and scientists’ work priorities.

Don, the project manager, believed that without immediate changes the project would continue down the same bumpy road, with the likely result that cost and time objectives would not be met. To prevent this, he made an extremely unpopular decision: He stopped the development of the instruments, calling on every science team to revisit its original technical requirements to see how they could be reduced. In every area — instruments, spacecraft, ground operation, integration and testing — scientists had to go back and ask such questions as: How much can I save if I take out a circuit board — and how much performance will I lose if I do take it out?

At the same time, Don negotiated a new agreement with NASA headquarters to secure stable funding. To seal the agreement, he assured them that, by using descoping tactics, the project would not go over budget. With the newly stable budget and the project team’s willingness to rethink its technical requirements, the ACE project gradually overcame its technical and organizational problems. Completed early and below budget, the spacecraft has provided excellent scientific data ever since.

The second example of preventing a major disruption from occurring took place during the Joint Air-to-Surface Standoff Missile, or JASSM, project. In this case, the Pentagon had decided to make another attempt to develop JASSM after the first attempt was aborted due to a cost overrun of more than $2 billion. The original project manager for the second attempt was dismissed in midcourse due to poor performance, and a new project manager, Terry, replaced him.

To keep costs under control, Terry decided to have two contractors compete for the final contract. Terry quickly realized that both contractors were approaching the development too conservatively and that unless he took a more radical approach, the project would be canceled again. Therefore, he told the contractors to completely disregard the military standards and adhere to only three key performance parameters. One of the contractors, Lockheed Martin, took this directive seriously and changed its approach dramatically. It decided to build the missile fuselage not out of metal but out of composites. And to accomplish this, it found a company that made baseball bats and golf club shafts. The company had never built a military product, but it knew how to weave carbon fiber and was open-minded. Following trials with several prototypes, this company was able to manufacture a product of the highest quality. Lockheed Martin transformed this small company from a baseball bat provider to a cruise missile supplier, which led to Lockheed Martin winning the contract — as well as to remarkable cost reductions.

4. Maintain Forward Momentum

As noted earlier, when unexpected events affect one task, many other interdependent tasks may also be quickly impacted. Thus, solving problems as soon as they emerge is vital for maintaining work progress. As Leonard R. Sayles and Margaret K. Chandler wrote in their 1971 book Managing Large Systems, “In working to maintain a forward momentum, the manager seeks to avoid stalemates. … Another penalty for waiting is that in a good many situations, corrective action is possible only during a brief ‘window.’ … The heart of the matter is quickness of response.” In a study of project managers on construction sites, it was found that they addressed (not necessarily solved) 95 percent of the problems during the first seven minutes following problem detection.17

In a recent knowledge development meeting, a group of 20 project managers at The Boldt Company, a construction services company based in Appleton, Wisconsin, focused on how best to cope with unexpected events. It became evident that most of the managers employed three complementary practices: hands-on engagement; frequent face-to-face communication; and frequent moving about.

Regarding hands-on engagement, one project manager, Charlie, said that to solve problems he often engaged in activities such as making phone calls, convening urgent meetings and taking trips to local retail stores to purchase missing parts. Documenting the time it took him to resolve 10 recent problems, Charlie reported that three were resolved within 30 minutes, three within 60 minutes, and three in less than one day; one problem took two days until it was resolved. Charlie also said that, because of his quick responses, he made one mistake. However, he was able to quickly repair its damage the following day. The entire group at Boldt agreed that maintaining forward momentum was more important than always being right.18

The second practice, frequent face-to-face communication, was described by Matt, one of the project managers, in terms of “daily 10-minute huddles” with all the on-site team members (the superintendent, field engineers, project coordinator and safety officer). Matt used these informal morning meetings to share the latest instructions from the client and to ensure that team members understood one another’s current workloads and constraints and understood how they could help one another. Very often, the meetings enabled the team to identify and resolve conflicting priorities before they became problems. Matt noted that, while the primary purpose of the huddle was to update everyone, it also reinforced a spirit of camaraderie and a sense of shared purpose. As a result, these meetings turned out to be very valuable for sustaining teamwork.19

As for the third practice, frequent moving about, one project manager, Tony, described the three primary outcomes of spending 30 minutes a day roaming around the project site. First, he was able to develop rich and open communication with his team members. Tony explained that while many workers did not feel safe asking him questions during various formal meetings, they felt very comfortable interacting with him freely during his on-site visits, which had a great impact on their motivation. Second, receiving immediate information, and in particular a greater range of information, enabled him to identify problems early on. At times, he was able to detect conflicts before they actually became an issue. Third, Tony developed a much better understanding of where the project was with respect to the schedule, rather than having to take someone’s word for it. He found that coming to the weekly and monthly planning and scheduling meetings equipped with firsthand, undistorted information allowed him to address questions and solve problems much better. The Boldt project managers did not agree on the preferred timing for moving about and, in particular, whether one should schedule the visits, as Tony did, or leave their timing flexible. However, they all agreed that moving about is a most effective practice that should be applied as often as possible.20

These three practices are not limited to construction projects. For example, in the previously mentioned JASSM project, which was geographically dispersed, all three practices necessary to maintain forward momentum were employed by the various project managers at each production site. Additionally, Terry, the customer’s project manager, spent much of his time moving about between all the different production sites.

Implications for Senior Managers

Although every project manager tries to minimize the frequency and negative impact of unexpected events, in today’s dynamic environment such events will still occur. Acknowledging the emergence of a problem is a necessary first step, allowing the project manager to respond quickly and effectively. Some organizations assume that almost all problems can be prevented if the project manager is competent enough — resulting in project managers who are hesitant to admit that they are facing an emerging problem. In fact, a recent study indicates that project managers submit biased reports as often as 60 percent of the time.21 When upper management fosters an organizational climate that embraces problems as an inherent part of a project’s progression, project managers are able to detect and resolve problems more successfully.

Management scholar Henry Mintzberg argues that today’s managers must be people-oriented, information-oriented and action-oriented. In contrast, the two prevailing project management approaches, the traditional approach and the agile approach, do not require project managers to encompass all three orientations. The traditional approach (primarily intention-driven) stresses information, whereas the agile approach (primarily event-driven) stresses people and action.

By assuming the four roles discussed in this article, the successful project managers we studied are both intention- and event-driven and embrace all three orientations. Developing collaboration requires them to be people-oriented. Integrating planning and review with learning requires them to be information-oriented. Preventing major disruptions requires them to be action-oriented. Finally, maintaining forward momentum, which is pursued throughout a project, requires them to adopt all three orientations. Senior managers must ensure that all three orientations are considered when selecting project managers and developing project management methodologies.22

-courtesy of MIT Sloan Management Review

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