Confronting overconfidence in talent strategy, management, and development

Many leaders we encounter insist that their talent- and people-development strategies are sound—and that their organizations are good at implementing them. Is this confidence warranted, and are companies living up to their leaders’ assertions? Could these leaders be succumbing to the same optimism bias that motivates three out of four people to imagine that they are above-average drivers? The answers to these questions matter: companies with very effective talent management enjoy higher total returns to shareholders than less effective competitors do. 1

Twenty-one best practices

The findings of a recent survey of 500 managers in the United Kingdom, part of a research project we conducted in collaboration with the Confederation of British Industry (CBI), 2 suggest that CEOs and HR leaders in particular may be taking a rose-tinted view. Asked to evaluate 21 generally accepted talent practices—in areas ranging from recruitment, employee engagement, and talent strategy to talent development and team efficiency—56 percent of survey respondents said that their organizations have adopted no fewer than 16 good practices. More than one-quarter said their companies have adopted all 21. (For more, see sidebar, “Twenty-one best practices.”)

Exhibit 1

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When we looked at the responses by role, we noticed that CEOs and HR leaders appeared more bullish than the other managers: 64 percent of both HR leaders and CEOs said their companies were high adopters (deploying 16 or more of the practices), but only 42 percent of all other respondents in our survey agreed. Similarly, CEOs and HR leaders were less likely than the others to say their companies were low adopters (Exhibit 1).

Corporate leaders also appeared optimistic about specific talent practices. CEOs, for example, were two times more likely than other respondents to say their companies excelled at “know[ing] who the best people are and put[ting] them to work on the most important business priorities.” And they were also nearly twice as likely as others to say that managers and leaders at their companies “are evaluated against their people performance, not just their business performance.”

Leaders: The limiting link?
When survey respondents admitted that their companies had difficulty implementing some of the practices, they tended to identify company leaders and management as the biggest impediments. “Our leadership does not value this practice,” for example, was cited by one-third of the non-CEOs—more than any other barrier—as a top-three reason various talent practices hadn’t been embraced (16 percent of CEOs also cited this barrier).

The talent practices where non-CEO respondents felt leaders’ lack of support was most consequential were related to ways of working, talent engagement, and talent strategy (Exhibit 2). For example, 52 percent of non-CEO respondents said that the company leadership didn’t value the use of “clear structures, roles, and responsibilities to streamline work,” while an additional 46 percent said that the company leadership didn’t see the value of performance evaluations that judged managers—and senior leaders—on their people-management skills as opposed to just business performance. About the same proportion said leadership didn’t value “help[ing] and reward[ing] those who deliver continuous improvement.”

Exhibit 2

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Idea in action:

To encourage new behavior, one UK-based multinational made 20 percent of every manager’s annual bonus contingent on scores from direct reports on a variety of leadership practices. As the quality of leadership improved, the company noticed a secondary benefit: encouraging line employees to give upward feedback made them more fluent in the practices and improved their own leadership skills, as well.

Short-term views
A closer look at the survey evidence highlights signs of short-termism in vital areas such as talent strategy, talent development, and recruitment.

For instance, when we asked respondents what prevented their companies from identifying the best people and putting them to work on the most important business priorities, 37 percent said that “this practice does not fit our culture” and one-third that “we have more important things to worry about.” This is despite evidence suggesting that when companies regularly reallocate talent to match strategic priorities they are more than twice as likely to outperform their competitors. 3

Future of Work
Read the collection
Respondents also cited “more important things to worry about” as the principal reason their companies didn’t adopt more skills-based training (41 percent), followed closely by perceptions that training was too expensive. These views are notable given the looming skill gaps expected to arise from disruptive technologies and the fact that many senior executives say their organizations are unprepared to address the skill gaps they anticipate. 4

When respondents admitted to difficulty in implementing some of the practices, they tended to identify company leaders as the biggest impediment.

Other preoccupations seem to take priority over good recruitment practices, too: 37 percent of the respondents said they have more important things to worry about than changing recruitment processes to improve workplace diversity—despite a growing body of evidence linking gender, ethnic, and cultural diversity to positive business outcomes.

Idea in action:

To encourage long-term thinking, the UK-based multinational adopted a rule requiring all senior leaders to spend three years in their roles before becoming eligible for promotions that would take them to another part of the business. This rule ensures that leaders are aware of—and own—the consequences of their decisions.

Take stock, make changes
Taken together, our findings suggest that many companies in the United Kingdom (and beyond) should take a close look at their talent practices, particularly as the more demanding and diverse millennial generation comes of age. Workers are paying attention: a 2018 survey found that poor management was the top reason UK employees weren’t happy in their current roles. 5 And British workers are hardly alone: comparable studies in the United States suggest that employee dissatisfaction with the company’s leadership is commonplace. 6

The path to improvement for companies anywhere, we find, starts with soul-searching, as well as recognizing that the view from the middle of an organization may be less sanguine than the view from the top. Leaders must be prepared to deal with what they learn from employee surveys or external benchmarking exercises. A real commitment to talent can’t be built through half measures or, worse, faked. As one survey respondent put it, if verbal messages are “not backed up by [leadership] actions . . . then you can’t expect HR to think it’s a priority. In order for a good practice to be implemented . . . the senior leadership team have to genuinely want it to succeed.”

If companies in the UK moved up just one decile in people performance relative to their peers, the resulting boost in labor productivity would be worth £110 billion.

Elevating people leadership on the management agenda often requires elevating the chief human-resources officer (CHRO) or the most senior person in charge of talent if the role goes by another name. At a minimum, the person who holds it should report to the CEO and be accountable for organization-wide talent priorities linked to tangible business objectives. The board, which often becomes involved in succession planning, can also do much more to review and advise on the organization’s talent performance.

As our colleague Dominic Barton and his coauthors noted in Talent Wins, 7 CEOs in some talent-oriented organizations insist that the CHRO and CFO be part of a core strategic inner circle that drives people strategy. Our research, highlighting a disconnect between the organization as a whole and the perceptions of CEOs and HR leaders, suggests that moving to such a model also will require a mind-set shift.

Idea in action:

The UK-based multinational’s executive committee focuses up to six hours a quarter on the development of the company’s top 150 leaders. Because the process depends on discussions from the business, it builds coalitions that support talent development more broadly, while signaling its value to employees. Even when facing a tough external environment—a “crisis” in one leader’s words—the company maintained the process throughout.


‘True Gen’: Generation Z and its implications for companies

Long before the term “influencer” was coined, young people played that social role by creating and interpreting trends. Now a new generation of influencers has come on the scene. Members of Gen Z—loosely, people born from 1995 to 2010— are true digital natives: from earliest youth, they have been exposed to the internet, to social networks, and to mobile systems. That context has produced a hypercognitive generation very comfortable with collecting and cross-referencing many sources of information and with integrating virtual and offline experiences.

As global connectivity soars, generational shifts could come to play a more important role in setting behavior than socioeconomic differences do. Young people have become a potent influence on people of all ages and incomes, as well as on the way those people consume and relate to brands. In Brazil, Gen Z already makes up 20 percent of the country’s population. McKinsey recently collaborated with Box1824, a research agency specializing in consumer trends, to conduct a survey investigating the behaviors of this new generation and its influence on consumption patterns in Brazil. 1 The survey coupled qualitative insights about Gen Z in three of the country’s major cities (Recife, Rio de Janeiro, and São Paulo) with multigenerational quantitative data that cut across socioeconomic classes. Our goal was to understand how this new generation’s views might affect the broader population, as well as consumption in general.

Our study based on the survey reveals four core Gen Z behaviors, all anchored in one element: this generation’s search for truth. Gen Zers value individual expression and avoid labels. They mobilize themselves for a variety of causes. They believe profoundly in the efficacy of dialogue to solve conflicts and improve the world. Finally, they make decisions and relate to institutions in a highly analytical and pragmatic way. That is why, for us, Gen Z is “True Gen.” In contrast, the previous generation—the millennials, sometimes called the “me generation”—got its start in an era of economic prosperity and focuses on the self. Its members are more idealistic, more confrontational, and less willing to accept diverse points of view.

Such behaviors influence the way Gen Zers view consumption and their relationships with brands. Companies should be attuned to three implications for this generation: consumption as access rather than possession, consumption as an expression of individual identity, and consumption as a matter of ethical concern. Coupled with technological advances, this generational shift is transforming the consumer landscape in a way that cuts across all socioeconomic brackets and extends beyond Gen Z, permeating the whole demographic pyramid. The possibilities now emerging for companies are as transformational as they are challenging. Businesses must rethink how they deliver value to the consumer, rebalance scale and mass production against personalization, and—more than ever—practice what they preach when they address marketing issues and work ethics.

Meet True Gen
Generations are shaped by the context in which they emerged (Exhibit 1). Baby boomers, born from 1940 to 1959, were immersed in the post–World War II context and are best represented by consumption as an expression of ideology. Gen Xers (born 1960–79) consumed status, while millennials (born 1980–94) consumed experiences. For Generation Z, as we have seen, the main spur to consumption is the search for truth, in both a personal and a communal form (Exhibit 2). This generation feels comfortable not having only one way to be itself. Its search for authenticity generates greater freedom of expression and greater openness to understanding different kinds of people.

Exhibit 1

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Exhibit 2

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‘Undefined ID’: Expressing individual truth
I need to be free; I need to be myself, increasingly be myself, every day. With the internet, I feel much more free.
—Female respondent, 22, city of São Paulo

I really like things that are unisex! I think it’s absurd that stores and brands split everything into “male” and “female.” After all, fabric is genderless.
—Female respondent, 22, Goiânia

For Gen Zers, the key point is not to define themselves through only one stereotype but rather for individuals to experiment with different ways of being themselves and to shape their individual identities over time (Exhibit 3). In this respect, you might call them “identity nomads.”

Exhibit 3

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Seventy-six percent of Gen Zers say they are religious. At the same time, they are also the generation most open to a variety of themes not necessarily aligned with the broader beliefs of their declared religions. For example, 20 percent of them do not consider themselves exclusively heterosexual, as opposed to 10 percent for other generations. Sixty percent of Gen Zers think that same-sex couples should be able to adopt children—ten percentage points more than people in other generations do.

Gender fluidity may be the most telling reflection of “undefined ID,” but it isn’t the only one. Gen Zers are always connected. They constantly evaluate unprecedented amounts of information and influences. For them, the self is a place to experiment, test, and change. Seven out of ten Gen Zers say it is important to defend causes related to identity, so they are more interested than previous generations have been in human rights; in matters related to race and ethnicity; in lesbian, gay, bisexual, and transgender issues; and in feminism (Exhibit 4).

Exhibit 4

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‘Communaholic’: Connecting to different truths
We each have our own style and way of being, but what binds us is that we accept and understand everyone’s styles.
—Male respondent, 16, Recife

Gen Zers are radically inclusive. They don’t distinguish between friends they meet online and friends in the physical world. They continually flow between communities that promote their causes by exploiting the high level of mobilization technology makes possible. Gen Zers value online communities because they allow people of different economic circumstances to connect and mobilize around causes and interests. (Sixty-six percent of the Gen Zers in our survey believe that communities are created by causes and interests, not by economic backgrounds or educational levels. That percentage is well above the corresponding one for millennials, Gen Xers, and baby boomers.) Fifty-two percent of Gen Zers think it is natural for every individual to belong to different groups (compared with 45 percent of the people in other generations), and Gen Zers have no problem with moving between groups.

‘Dialoguer’: Understanding different truths
We must practice tolerance, and we must learn to listen and accept differences.
—Male respondent, 20, Gioânia

Exhibit 5

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Gen Zers believe in the importance of dialogue and accept differences of opinion with the institutions in which they participate and with their own families (Exhibit 5). They can interact with institutions that reject their personal values without abandoning those values. The fact that Gen Zers feel comfortable interacting with traditional religious institutions without abandoning personal beliefs that might not be broadly accepted by these institutions also demonstrates their pragmatism. Rather than spurn an institution altogether, Gen Zers would rather engage with it to extract whatever makes sense for them.

Members of this generation therefore tend to believe that change must come from dialogue: 57 percent of millennials, Gen Xers, and baby boomers think they would have to break with the system to change the world, compared with 49 percent of Gen Zers. Gen Z is also more willing to accommodate the failings of companies. Thirty-nine percent of the people in this generation, for example, expect companies to answer customer complaints in the same day; for the three earlier generations, the percentage is much higher—52 percent.

Gen Z’s belief in dialogue combines a high value for individual identity, the rejection of stereotypes, and a considerable degree of pragmatism. That brings us to the fourth core behavior of Gen Z.

‘Realistic’: Unveiling the truth behind all things
I don’t believe this talk of investing in the dream and all that. Work is work.
—Female respondent, 22, Salvador, state of Bahia

Gen Zers, with vast amounts of information at their disposal, are more pragmatic and analytical about their decisions than members of previous generations were. Sixty-five percent of the Gen Zers in our survey said that they particularly value knowing what is going on around them and being in control. This generation of self-learners is also more comfortable absorbing knowledge online than in traditional institutions of learning.

What’s more, Gen Z was raised at a time of global economic stress—in fact, the greatest economic downturn in Brazil’s history. These challenges made Gen Zers less idealistic than the millennials we surveyed (Exhibit 6). Many Gen Zers are keenly aware of the need to save for the future and see job stability as more important than a high salary. They already show a high preference for regular employment rather than freelance or part-time work, which may come as a surprise compared to the attitude of millennials, for example. According to the survey, 42 percent of Gen Zers from 17 to 23 years old are already gainfully employed in either full- or part-time jobs or as freelance workers—a high percentage for people so young.

Exhibit 6

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Gen Z: Consumption and implications for companies
The youthful forms of behavior we discuss here are influencing all generations and, ultimately, attitudes toward consumption as well. Three forces are emerging in a powerful confluence of technology and behavior.

Consumption re-signified: From possession to access
This more pragmatic and realistic generation of consumers expects to access and evaluate a broad range of information before purchases. Gen Zers analyze not only what they buy but also the very act of consuming. Consumption has also gained a new meaning. For Gen Z—and increasingly for older generations as well—consumption means having access to products or services, not necessarily owning them. As access becomes the new form of consumption, unlimited access to goods and services (such as car-riding services, video streaming, and subscriptions) creates value. Products become services, and services connect consumers.

As collaborative consumption gains traction, people are also starting to view it as a way to generate additional income in the “gig economy.” Another aspect of the gig economy involves consumers who take advantage of their existing relationships with companies to generate additional income by working temporarily for them. Some companies are already embracing the implications.

Case Study: Your Star Salesperson Lied. Should He Get a Second Chance?

Siddhant Kapoor rarely checked Facebook. As CEO of one of the largest pharmaceutical-marketing firms in Western India, he didn’t have time for social media. But right now, he needed to log on.

He searched for the doctor’s name—Parasaran Srinivasan—and recognized the first picture that popped up. Just as he’d thought, they’d gone to university together in Mumbai.

Looking at his old classmate’s page, he groaned. The pictures of Parasaran at a recent World Cup party confirmed that one of Novacib Labs’ top salespeople had falsified his sales report. Now he had to decide what to do about it.

Surprising News
Everyone at Novacib knew Siddhant hated getting emails with that little red exclamation mark. So when he saw both the red mark and the word “URGENT” in his in-box, his stomach dropped. The email was from Shraddha Pillai, Novacib’s regional sales manager in the Mumbai office. She’d kept her message short:

“Need your advice on a potential ethical breach.”

Siddhant canceled his next meeting and called her mobile.

“Tell me what’s going on,” he said when she picked up.

“I’m afraid we have an issue with one of our sales reports,” Shraddha said carefully.

“What kind of issue?”

“It seems that Uday may have intentionally falsified some information about his customer calls.”

“Uday?” Siddhant made no attempt to hide his surprise. Uday Madhav was one of Novacib’s best salespeople. He routinely exceeded his targets by 10% to 20% and had earned the company’s top commission prize three times in the past five years. And he was a generous colleague. He often took new salespeople under his wing, sharing sales tactics and handing off easy customers.

There was no doubt that the company’s targets were ambitious.1 Sales reps were required to meet with a minimum of 10 physicians and four retail pharmacies a day, allocating that time according to the potential of the target: 50% to platinum-class customers, 30% to gold, and 20% to silver. The regional sales managers worked closely with the reps to coach and support them—but Uday rarely needed Shraddha’s help. In fact, he often served as a mentor to his more junior colleagues.

1Research from the University of Arizona shows that sales goals can cause tunnel vision, leading people to make unethical choices to achieve their targets.
“Could there be some mistake?” Siddhant asked.

“It’s possible. But I know how seriously you take ethical issues. I wanted to bring this to your attention right away.”

Five years earlier, when Siddhant had taken the helm at Novacib Labs, its founder and outgoing CEO had given him a mandate: grow the company by 40% and ensure that it remains the market leader. New competitors were popping up every day, vying to capitalize on the explosive growth in the Indian pharma industry.2 Siddhant knew that to accomplish his goals, he needed to be laser-focused on strategy. And by all accounts, he’d been successful. During his tenure, the company’s portfolio had grown from 22 brands to 46, and from 10 sales territories to most of Western India.

2From 2007 to 2012 the Indian pharmaceutical industry grew at a compounded annual growth rate of 15%. The rate then slowed for several years but was back up to 9.4% in 2018.
That success, he believed, rested on Novacib’s new positioning—to customers and employees—as “the ethical pharmaceutical-marketing company.” Amid growing concerns that similar firms were bribing customers or overstating products’ benefits, this stance distinguished Novacib.3 Siddhant and his leadership team had even changed the firm’s tagline from “Health for everyone” to “Health with integrity.” Behaving ethically became part of Novacib’s story, and all employees were encouraged to share it, especially during sales calls. And the tagline was more than a marketing slogan to Siddhant. He’d always prided himself on leading a principled life.

3Harvard Business School professor Stephen A. Greyser advises that brand identities be straightforward, authentic, and timeless.
Shraddha was absolutely right that he would be concerned about false reports. To protect its reputation, Novacib had a zero-tolerance policy for ethics violations. But would sacking Uday really be in the best interest of the firm, Siddhant couldn’t help but wonder? He had always made or exceeded his numbers—and boosted the performance of his colleagues as well.

“Siddhant?” Shraddha asked.

“I’m still here,” he said. “Tell me exactly what happened.”
“Something Doesn’t Feel Right”
Shraddha recounted what she’d discovered the evening before.

“I was leaving the office last night,” she began, “when I got a text from Uday that said, Baby still sick. Need to give wife a reprieve. I’ll make up the visits next week. Of course, I felt for him. I’d been in his shoes. The baby is just a few weeks old, and neither he nor his wife have slept much. He’s still been hitting his quotas, but he looks exhausted.

“I decided to stay at the office to finish up my reports in case I had to cover his sales calls. And as I was looking over his activity, one date stood out: June 21. That was the day Argentina lost to Croatia in the World Cup.

“I remember it well, because I had followed the match online. Dates don’t typically stick in my mind, but that day was depressingly memorable, not just because my team lost but also because I watched the game by myself. My family—like most of Mumbai—had skipped work to watch together. I hadn’t wanted to get behind, so I spent the day alone in the office.

“I had spoken with Uday the morning of the game, and he mentioned that he was going to watch it. And yet his daily report listed the names of three doctors that he supposedly saw that afternoon. I texted him about the discrepancy—something like Sorry to bother you with baby sick. Can you resend your activity report for the week of June 18? Ten minutes later he emailed me the same information, so I texted again: Are you sure that’s accurate? He sent back a thumbs-up emoji.”

She paused. “Go on,” Siddhant said grimly.

“I’m not in the habit of tracking our salespeople’s whereabouts, especially in the case of Uday, who has always been a star performer.4 Normally, I’d give him the benefit of the doubt, but something didn’t feel right. I looked him up on Twitter5 and scrolled back to his tweets from June 21. He’d clearly been watching the game—at home. Then I tried one of the doctors on Uday’s report. Same thing: He’d been watching the game, too, not meeting with Uday. That’s when I started to panic.”

4Should Shraddha have kept a closer eye on her top performer?
5What are the ethical implications of checking up on employees by tracking their activity on social media?
Siddhant was starting to panic as well. Trust was essential to the company’s mission, and Uday’s actions were exactly the kind of thing that could undercut Novacib’s culture and reputation and breed resentment among employees. Siddhant recognized that Novacib was bound to encounter less-than-honest salespeople, but he was still having trouble believing that Uday would be the one to get into trouble first. At the same time, there was no denying his outsize contribution to the success of the firm—and how hard it would be to replace him.

Shocked and angry, Siddhant wondered to himself, How could Uday have done this?

Now What?
The next day, Siddhant met with Bhavna Batra, Novacib’s HR director, in his office. They dialed in Shraddha on speakerphone.

“This is bad,” Siddhant began. “Last night, I confirmed another doctor listed on the report whom Uday couldn’t have met with that afternoon.”

“Shraddha and I had a conference call with him after she spoke with you,” Bhavna said. “We asked him about the report, and he said he had met with the doctors he listed—but not on June 21. He all but admitted that he lied. I’m not seeing any option other than letting him go.”

“I don’t understand why he didn’t tell anyone he was struggling,” said Siddhant. “He’s the first one to help his colleagues out; people would have jumped at the chance to return the favor.”

“It’s definitely out of character for him,” Shraddha. “That’s why I feel strongly that we should issue a warning—especially with his being a new father. After all, he did meet with everyone he said he had. He wasn’t fabricating that.”6

6Numerous studies show that people have an ethical “blind spot” when it comes to their own behavior.
“But he was altering the dates to meet his daily targets,” Bhavna countered, leaning toward the speakerphone. “That’s a serious breach, and we have to consider the broader impact of merely giving him a slap on the wrist.”

She looked up at Siddhant. “When you brought me in after the rebranding, you asked me to help you build a culture of ethics and honesty. I’d be failing at my job if I advised you to let a transgression like this go. I recognize the value of Uday to our team, but our motto isn’t ‘Health with occasional integrity.’ We have to always do the right thing.”7

7How often do zero-tolerance policies result in bad outcomes? Do they force leaders to take action when a better solution could be found?
“I agree,” Siddhant said. “Integrity is our promise to every employee and every customer we interact with. If our people knew we tolerated this behavior after all the ethics training we’ve put them through, we’d look like hypocrites. We’d be hypocrites. And if this ever got out to our customers or the press, it could destroy our reputation.”

“But how are we going to look to the rest of the team when we sack their beloved colleague with a newborn at home?” Shraddha asked. “And he’s such a strong performer! Think of the revenue hit we’d take. Are people actually going to care about three names listed for the wrong day on one weekly report?8 It’s not as if those call targets are tied to his compensation.”

8Small offenses may seem harmless, but research shows that they can breed problems by desensitizing our brains to the negative emotions related to unethical behavior.
“It’s the principle of the thing,” Bhavna retorted. “And how do we know if this is the first time he’s fudged his reports? How can we trust him going forward? Are you going to check with his customers every week to confirm his reports?”

Shraddha was silent on the line. Siddhant closed his eyes briefly. He knew she was right that the company would suffer if they fired Uday. He brought in over $250,000 a year, and he had built strong customer relationships that Novacib stood to lose if they sacked him.9 But Siddhant couldn’t shake his disappointment in Uday. Bhavna broke the silence.

9What options should Siddhant consider besides firing Uday or overlooking the infraction?
“You’ve addressed this issue repeatedly in our sales offsites,” she said. “You’ve stated in no uncertain terms that you’d rather salespeople not meet their targets than fake their numbers. If you don’t take action, you’ll damage your credibility. I know it’s painful, but I think it’s time to put your money where your mouth is.”

A Second Chance?
“Thank you so much for the baby gift. Did you get the thank-you note my wife sent?” Uday’s voice sounded tentative on the phone, the small talk forced.

Siddhant had dreaded making the call, but before he reached a decision, he wanted to talk with Uday himself.

“I did. Listen, Uday, I don’t want to make this any more awkward than it needs to be. I just want to hear your side of the story.”

Uday repeated what he’d told Shraddha: that he had met with those doctors, just on different dates. That he shouldn’t have submitted the false report. “I made a big mistake, and I’m sorry. I was feeling the pressure with the new baby. I knew I wasn’t going to hit my targets, and I didn’t want to disappoint anyone.”

Siddhant hated to hear Uday sound so dejected. But part of him still felt betrayed. He reminded himself that Uday could easily find another job, especially since Novacib had no intention of going public with the circumstances if they let him go. But Uday would be devastated nonetheless. “We need accurate data to grow this business, and we’ve been very clear about our ethics policy,” Siddhant said. “I wish you’d talked to Shraddha about the pressure.”

“I know, and I’d understand if you have to make an example of me. But please believe me that it has never happened before and won’t happen again. Don’t people deserve a second chance?”

Question: Should Siddhant fire Uday? The Experts Respond
Faiza Hughell is the vice president of sales at RingCentral.
UNFORTUNATELY, LEADERS MUST sometimes fire employees who cheat. In my 24 years of leading sales teams, I’ve seen plenty of people cheat to meet their targets. And I’ve had to fire people—even top performers like Uday—who were behaving dishonestly.

In this case, Siddhant and Shraddha appear to have fallen into a common trap: When someone is performing well, you don’t always look under the hood. I tell my sales managers that they need to “trust but verify.” This means double-checking reports and looking into any outliers. In a previous company I worked at, I had a sales rep who was knocking it out of the park. He was compensated on “meaningful interactions” with customers, which meant long calls. His phone log showed steady activity, but I noticed that he’d been taking a lot of breaks. I went by his desk to check in with him. He wasn’t there, but his phone was off the hook, and when I picked it up, I realized he had called roadside assistance and been on hold for close to two hours to boost his talk time. I let him go immediately even though it was hard to lose a high performer. That kind of blatant dishonesty can’t be tolerated.

Siddhant’s dilemma is complicated by Uday’s family situation, but it shouldn’t be a consideration in his decision. I’m a mom, and my heart goes out to Uday, but a CEO’s job is to protect the company. Siddhant can’t let his emotions prevent him from doing his duty. That said, I would urge him to take a tempered approach and issue a formal written warning—not because it’s best for Uday but because it’s best for Novacib. There are two key factors he should take into account.

First, Uday’s lie didn’t affect his compensation. Had he earned a commission or bonus based on the false report, that would warrant termination. That is not the case here. Second, if Siddhant were to fire Uday, he might put the company at risk. Uday could pursue legal action, claiming that the company invaded his privacy by checking his social media accounts. A wrongful-termination lawsuit would damage the company’s brand more than Uday’s infraction could.

In my current role at RingCentral, I focus on building trust with our people. They know we have their backs, and we trust that they’ll do what’s in the best interest of the company. But I also do my homework. Even at my level, I block out an hour a week to look at the numbers, and if something stands out, I dig deeper.

Siddhant and Shraddha need to take a lesson from this as much as Uday does. You want to trust people and hope they’ll do the right thing, but hope is not a management strategy.

Mohammed Isaquddin Kureshi is the managing director of Maha Research Labs.
UDAY DOES DESERVE a second chance. Siddhant shouldn’t tolerate unethical behavior, but because Uday has acknowledged his wrongdoing and is an excellent performer, I think there is room for a compromise: a strong warning and the understanding that any more missteps—even minor ones—will be cause for dismissal.

This case is based on my experience at Maha Research Labs, where an employee deliberately included misinformation on a sales report. At the time, I was torn about how to handle the situation. He was one of our top performers and was about to have his first child. I knew firing him would have a devastating effect on his personal life.

To better inform my decision, I called a meeting with seven regional managers and two managers from HR. I presented the case as a hypothetical and asked them what they would do.

Four of the nine said that they would sack the person with three months’ severance. They felt it was essential to demonstrate that the company took ethical violations seriously. They worried that keeping the person despite the infraction would set the wrong precedent and leave the door open for this salesperson—or others—to behave unethically.

The other five managers were concerned about the impact on the company of losing a top performer. They thought the best course of action would be to give him a warning and cancel his sales incentives for six months as a punishment. They suggested crafting a legal agreement stating that if he had any further infractions, he’d lose his job, his bonus, and his retirement benefits. They also wanted to take advantage of the opportunity to ask him to sign a two-year employment contract against the risk that he might join a competitor, taking his customer relationships with him.

In the end, I went with the majority, and we issued a punishment and a written warning. In a different situation, I might have fired the person, but here I followed my heart, and I think I made the right decision. He was very grateful for the second chance and appreciated our not making an example of him. He assured me that he would be loyal to Maha Research Labs and promised to repay our faith in him during this crucial time in his life. And his performance over the past year has proved his commitment. He achieved 107% of his targets—a growth of 19% over the previous year. He has consistently ranked among the top 10 performers, and I’m planning to promote him in January.

That was not an easy decision to make, and I feel for Siddhant. He should consider consulting with other managers in the company, without divulging details about the situation. They might bring new insights to bear, and when he makes a decision—in this or future cases—he’ll have their buy-in.

Perhaps more important, Siddhant should reflect on whether he’s doing all he can to encourage ethical behavior. Does he include an ethics statement in job offer letters and in the employee handbook? Could he hold further trainings on ethical sales practices? And could he ask Uday to lead those? There is no doubt that Uday violated trust here, and he has to take responsibility for his actions. But Siddhant also needs to do better at setting a high ethical standard and holding people to it.

Feelings Belong In The Workplace, In This Age Of Personalization

Last week I talked about how we need to learn how to see each other as human and put systems in place to break our patterns of tribalism in the workplace.

We’re so locked into old ideas about how we need everyone on our teams to fit into our corporate culture, that we filter out any possibility for new thinking or new perspectives. We stifle our ability to innovate as leaders, as teams and as organizations, because while we say we want diversity of thought we actually hire and reward conformity of thought.

This is a remnant from the age of standardization, when the business defined the individual and functioned best when we all just did what we were told in the box we were given. But that’s no longer a good strategy in our current age of personalization.

As I’ve said before, I have been part of and worked with some of the largest organizations in the world across almost every industry from health care to automotive from big-box retail to banking. I have heard what people are thinking but not saying to their leaders: we have been conditioned to operate in environments that standardized our identities and now we want those identities back. But corporate values and mission statements never account for the mass variations of this need for individuality and inclusion

To turn that around, recognize this profound truth:

“We are not thinking machines that feel, we are feeling machines that think.”

That’s a quote from Thomas Damasio, a neuroscientist, and it exactly explains the difference between leadership in the age of standardization and leadership in the age of personalization. In the standardization mindset, we’re actually working against our nature: we become thinking machines, conditioned to hide our emotions and personal feelings.

When we do speak up individually—in big or small ways—we often get shut down and don’t feel safe to do so again. Who among us has not felt beaten down by work and life—and hid that from the boss for fear of being judged, appearing weak, or getting fired?

In the age of personalization, we understand that our emotions and the feelings they produce rule our behavior and are what make us human beings. And their value is getting harder to deny.

I often read stories about companies looking for people who have what we often call “soft” skills. People who know the value of a handshake—one of the most important ways to establish trust between people. People who care about their relationships with their customers and can talk with others both casually and about matters of importance—not just focus on the transaction. People who can look at data and analytics from all sides and different perspectives—and be curious.

Most of us have been trained for the opposite of those things: “hard” skills that are specific, teachable, and measurable. Soft skills are more variable, especially those human skills that create feelings in others and draw them in. They are difficult to teach, control, automate, assimilate, and measure. Thus, they are misunderstood and often devalued.

But know this: Our feelings are powerful and hard to ignore. They can inspire us to collective and collaborative action that crosses all boundaries and allows us to let go of the status quo—or they can make us hold on tighter.

Emotions can also be manipulated to divide us as much as they unite us. It’s not news to say that politicians, pundits, and anyone else who sways our emotions can manipulate our feelings and thus dictate our actions and beliefs.

On the one hand, it’s nice to feel inspired by leaders who make us feel good about who we are and what we’re doing. On the other hand, when those leaders make us feel that others are the source of our problems and threaten our safety, status, beliefs, and identities, this becomes a problem. When that happens, instead of accepting responsibility in whole or in part for our circumstances and actions, or allowing for different perspectives, we unite with others who share the same points of view and reject, blame, and/or attack others.

We call this tribal behavior or tribalism: the exclusion of—and often contempt for—others who do not conform to the tribe and the way “we” identify. And if you think that sounds a lot like leadership in the age of standardization, in which the business, its brand, and mission define the individual, you’re right.

Today’s political landscape and America itself seem to be locked in a fierce tribalism of identity politics, in a search to reinforce or reclaim status that comes from a scarcity mindset (nothing is ever enough, so for me to win, you have to lose).

This has perpetuated a rush to take sides, judge each other, and intentionally to provoke blame and hatred, things at the very core of treating others as less than human. Business leaders can and must act differently, even if our politicians cannot. Leaders can have an abundance mindset that is win-win for all. But not if they remain siloed and status driven.

Finding “your people” can be a good thing. I understand the impulse for people to find the influence they’ve been denied by uniting around an identity, whether internally (through an employee resource group) or externally (founding an all-woman tech firm, an all-black dance troupe, or an all-Hispanic investment firm).

But that doesn’t mean they are immune to the mistakes of tribal thinking or that their efforts lead to inclusion. They’ve just removed one factor. They can still lack inclusivity and create the tribal behavior that undermines leadership in the age of personalization—no matter how strong or well-meaning an initiative is. The question for them and for all of us is: Where do the tribal lines stop being drawn and the human connections to all people start again? When do we stop making others check boxes?

Tribal thinking tends to get smaller and smaller—sometimes right down to a single issue that is so important we discount anything about it that bothers us. We see this in politics all the time: People vote for candidates whose position on a polarizing issue aligns with theirs and ignore broader character or even criminal issues. People are willing to believe the worst stories about a candidate on the other side—often through negative stories that have no foundation in fact—because that person does not conform to their norm.

We also see this with customers and brands in business. According to a Cone Communications CSR Study, 78 percent of Americans want companies to address important social justice issues, and 87 percent will purchase a product because a company advocates for an issue they care about. But does that mean you should only patronize brands that share your values, regardless of what they sell? Should gun rights advocates who love tents boycott Dick’s Sporting Goods because the chain pulled guns from some store shelves? Should LGBTQ people who love a chicken sandwich boycott Chick-fil-A because of the company’s stance on gay marriage? Should women not watch CBS after hearing about allegations against Les Moonves?

I can’t answer that.

What I can ask is: Whose values are you living: yours as an individual, or yours as defined by your tribe? And how are you seeing and treating those on the other side, or who work for the brands that don’t represent your values? Sure, a boycott can impact the bottom line, but what about a relationship that might change minds stuck on the other side of the story?

I’ll repeat it one more time: Where do we stop drawing that tribal line?

How do we pull ourselves out of this standardization trap and let go? We acknowledge our own feelings and the feelings of others.

Start by asking yourself: who do you have a reflexively negative reaction to? It doesn’t have to be a specific person, it can be a broad category: leadership, line employees, finance, HR, liberals, conservatives. You get the idea.

Now, do you actively engage with anyone from that group? Or do you avoid people from that group whenever possible? Take an honest inventory of your own habits and actions. If I went to the people you lead and asked them if they noticed whether you have a reflexive negative reaction to any group of people, what would they say? You may think you hide it well, but you probably don’t.

Consider whether this reflexive reaction on your part, and the possibility that it is obvious to others, has affected how other people act around you or their willingness to speak up and share ideas and even just be themselves.

If everyone took an honest look at themselves in this way, that would be a huge step toward leading in the age of personalization. Take the following assessment to identify how prepared you are to lead in the age of personalization.

Next week I’ll talk about one such broad category that seems to be universally mocked and dismissed: Millennials and Gen Z.


13 Guiding Principles For Courageous Conversations

Although many leaders might avoid tough conversations, it’s critical to provide feedback, both positive and negative, to help your employees learn and grow. A courageous conversation is when a leader takes control of a situation by confidently and courageously embracing a difficult conversation.

If these discussions were simple, they would not be labeled by leaders as “hard conversations.” True success and teamwork can only be achieved through the art of a courageous conversation. Below are my tips on how to get started:

1. Know why you are considering a courageous conversation.

In every action, you must understand the impetus for progress or impediments to success. Ask yourself the following questions to build an objective foundation for the discussion:

• What result is driving the need for improvement?

• What exactly is the behavior causing a problem?

• What is the impact the behavior is having?

• Was the expectation made explicitly clear?

• Where is the shortfall in performance?

• Does the individual clearly understand what’s expected of them?

• Did the individual make an incorrect decision?

• Was the individual properly trained?

2. Choose whether to have a courageous conversation.

When considering a courageous conversation, a leader must define the bias for action — or accept the results of inaction. To do this, you must first consider:

• The consequences of not having a courageous conversation.

• If you are willing to own that your leadership inaction contributed to the resulting outcome.

3. Understand the objective of the courageous conversation

Like a military operation, success must be defined before undertaking action. Simply answer two questions:

• What are you trying to achieve?

• What is a successful outcome?

This way, you know exactly what your goal is before heading into the discussion.

4. Consider the situation from the other’s shoes.

As in most aspects of leadership, empathy is critical in courageous conversations — it helps build trust. If your employees don’t trust you, you are merely their manager — and not their leader. To emerge closer as a team, you must care about understanding why the person is acting a certain way. To do this, ask yourself how you as a leader contributed to the situation? How did your organization fail to empower them for success?

5. Choose your emotions.

Each person and situation are unique. As a leader, you are a coach who must embrace each employee and equip them with the necessary tools and techniques to be successful. Deliberately think about the emotional mindset you need to lead a calm, productive conversation. Realize that emotions manifest not only in your words but also in the tone of your voice, the expressions on your face and the language of your body.

6. Know how to open.

The tone of any interaction is set in the opening seconds. Rehearse opening movements so they naturally flow. Pick a location appropriate to the situation. Let the individual know your intention so they don’t feel blindsided, which drives defensiveness and anger. The more prepared you are for the conversation, the smoother it will flow.

7. Know your individual.

As a leader, it’s important to know your team. This might mean knowing childrens’ names for some or that others enjoy flying. Let your team know you care by showing an interest in them as individuals, including their performance, life, dreams and potential.

8. Have an inquiry mindset.

Reflect on your attitude toward the person involved and the situation itself, as your mindset will drive your demeanor and reactions. Ask open-ended questions during the discussion, and reserve final judgment until after you have all the facts. Throughout the conversation, ensure your demeanor encourages discussion, not an interrogation. Remember, you are working toward a solution together, so concentrate and reflect on the way the person feels.

9. Be consistent in your leadership.

Consistently lead your team. This means holding high- and low-performers to the same standards. Consistency allows for factual measurement, creates accountability, maintains your message and establishes your reputation. Don’t bend standards to avoid a courageous conversation.

10. Use facts.

When presenting details of the behavior or performance in question, use factual data to avoid disagreements, and set clear, measurable and achievable goals to guide future behavior. These goals represent a picture of success that can help determine a corrective path. While as a leader you should discourage excuses, it is critical to understand explanations along the path to performance. These explanations often pave the path to how you ended up where you are and will create a course for improvement.

11. Be positive.

Regardless of the negative topic, always set an optimistic and positive tone for the interaction. Negative approaches are often met with defensive and argumentative responses. It is your task to not only address negative behavior but also pave a path of development with the tools and resources they can use to improve. Make the conversation an open dialogue, not a one-sided presentation. Ultimately, your goal is for them to walk away motivated to improve, not scared of retribution.

12. Follow up.

After the initial conversation is over, ensure you readdress with the individual after the right amount of time has passed. Follow up on the emotional aspect of the conversation within the next few days, then readdress the resulting improvement in actions or results within the next month. Offer a pat on the back for improvement or a reaffirmation of the original issue. If a situation required an initial hard conversation, it deserves closure.

13. Preserve the relationship.

An emotionally intelligent leader should be mindful to limit any damage to a relationship. If not careful, you can destroy in minutes what took years to build. Always be aware of the growth a conversation can enable, as well as the walls a poorly held conversation could construct.

Leadership means you are responsible for the livelihoods of those entrusted to your care. You are accountable for successes, failures, growth and performance plateaus. Every action, reaction and inaction will define your leadership presence. Be invested in employees’ success, even when a courageous conversation is required, and they will respect you more for the care and attention you devote to them.


Why Mentoring & Sponsoring Are Important, Particularly for Women

Women must advocate for themselves if they want to move their careers forward. But to succeed, they can’t go it alone. All successful leaders need a network of champions — including mentors and sponsors.

“The people around us have the ability to either support or hinder our growth toward the leaders we can be,” says CCL’s Jennifer Martineau, co-author of Kick Some Glass: 10 Ways Women Succeed at Work on Their Own Terms.

“If people don’t have access to the relationships important to leadership success, they’re missing out.”

And in fact, women are missing out.

Women outnumber men at almost every educational level and are about half the workforce in most countries, but:

Women hold just 24% of senior management roles.
Women make up a mere 3% of Fortune 500 CEOs.
Only 1 in 18 women earns a 6-figure salary in the US—versus 1 in 7 men.
For women of color, this wage and leadership gap is even wider.
Progress has been slow or stagnant in the percentages of women reaching senior, top, and director-level positions in all countries in which benchmarking studies have been conducted.
Yet the business case for advancing women leaders is compelling. In addition to doubling a company’s talent pool, recruiting women increases financial performance:

Fortune 500 companies with the highest representation of women on boards financially outperform those with the fewest female board members.
A recent Gallup study found that gender-diverse business units have higher average revenue than less diverse business units.
Having larger percentages of women in an organization also predicts greater job satisfaction, higher levels of employee engagement, and decreased rates of burnout — for all workers, regardless of gender, age, ethnicity, or leadership level.
In short, having more women in the workplace is associated with positive outcomes for both women and men.

So, how can women advance their careers, and how can organizations ensure they’re making the most of all their talent?

A key strategy is to prioritize the mentoring and sponsorship of women — particularly by influential (often male) leaders.

Both mentors and sponsors are critical to helping aspiring women leaders gain the perspective and connections they need to take on larger roles and advance their careers.

What’s the Difference Between a Mentor and a Sponsor?
By the time they reach mid-career, most leaders can name a handful of advisors — bosses, coaches, colleagues, and friends — who’ve helped them build confidence and develop needed skills. These advisors may be mentors and/or sponsors.

While both guide professional development, there are important differences between mentors and sponsors:

Role Experienced person at any level Senior leader in the organization
Goal Provide guidance for career choices and decisions Use influence to help employee obtain high-visibility assignments
Who drives the relationship? Both mentee and mentor; requires mentor to be responsive to the needs of the “mentee” The sponsor, who chooses to advocate for “sponsoree,” including behind closed doors with other leaders
Actions Helps mentee determine paths to meet specific career goals Advocates for sponsoree’s advancement; champions her potential
Mentors vs. Sponsors
Mentors provide guidance and support, whether around a specific need or for ongoing development. They listen to their mentees’ experiences and give constructive, direct, and honest feedback.

Our research with the Leaders’ Counsel found that people who are mentored:

Are better prepared for promotions and have higher success rates;
Stay with their organizations longer;
Feel more satisfied with their jobs and careers; and
Rate higher on performance measures.
We also found that “mentees” have greater impact in their organizations, are perceived as being more innovative and creative, show higher resilience to setbacks, and have stronger networks.

A mentor may also be a sponsor — but not necessarily. A sponsor is a specific type of mentor who goes above and beyond giving advice.

Sponsors are advocates who actively work to advance the career of their “sponsoree,” touting their accomplishments and potential, connecting them to others in their network, and recommending them for bigger roles. A sponsor pushes their “sponsoree” to take on challenging assignments and actively advances their career progression — including in off-the-record or closed-door meetings with other leaders.

Since the people who can advocate and create opportunities for others have some level of authority in an organization, they are likely upper-level leaders — people in power. And as the statistics above noted, in most organizations, that pool of influencers is still primarily male.

So “while sponsors are important for men, they are critical for women,” says Martineau. “Yet men are more likely than women to have sponsors.”

Mentoring at all career stages is important, but without sponsors who take that next step to advocate on their behalf, women — especially women of color — are at a disadvantage.

Why Is There an Imbalance in Sponsorship Between Men & Women?
There are several reasons why more men are sponsors and more men are sponsored.

Like attracts like.
Since people naturally tend to gravitate to other people who are like them, male leaders may unconsciously be inclined to mentor and champion other men.

Similarly, women may not feel comfortable asking somebody several levels up—especially someone who doesn’t look like them—for advice or sponsorship. So even with no other factors at play, more men than women are sponsored, and leadership power structures remain largely unchanged.

Unconscious bias also plays a role.
“Historically, images and ideals of leadership have been associated with stereotypically ‘male’ qualities, and so because of that, women are less likely to be perceived as ‘leadership material,’ as compared to men,” notes senior CCL researcher Cathleen Clerkin.

Research shows that women face a double bind of being seen as competent or likable — but not both.

Research has also found that women receive fewer stretch assignments and more vague, personal, and unhelpful feedback than men — preventing them from getting clear information about their performance that would push them to learn, grow, and improve.

Assumptions are problematic.
“Often, women have the right qualifications and the personal readiness but are not considered for a promotion or critical assignment,” says Laura Santana, who works closely with female leaders in CCL’s Women’s Leadership Experience and other leadership development programs.

“People make assumptions about women’s capabilities and interests and then make decisions for them:

She’s too nice; she wouldn’t want this job…
She has young children; the travel schedule will be too demanding…
She won’t want this promotion; she’d have to relocate her family…
She hasn’t done this before; she won’t feel up for the challenge…
“These assumptions may not be conscious or spoken, but they cause women to be overlooked for roles they would be great at.”

“Queen Bee Syndrome” contributes, too.
The few women who have broken through the glass ceiling often still find themselves feeling stuck because of gender bias. While many women do sponsor, promote, or support the career advancement of other women, those who don’t are sometimes called “queen bees” and are considered unsupportive of other women.

But our research has found that when women executives do advocate for diversity and promote other women, they receive lower competency and performance ratings. So it’s understandable that senior women may hesitate to advance the careers of more junior women — it may feel as if it comes at too great a personal cost. Men who sponsor or promote women are not similarly penalized — and may even be rewarded for supporting diversity.

To mitigate power and bias, both men and women in positions of power should mentor and sponsor talent — regardless of gender. With awareness of the reality of power and bias in everyday actions, leaders should check their thinking, adjust as needed, and call out bias whenever they see it.

Aspiring Women Leaders: Don’t Go It Alone
Think you might need a mentor or sponsor? If you don’t already have one, the answer is yes.

“You absolutely need mentors and sponsors! You just need them for different things at different times,” says Kelly Simmons, who developed CCL’s Advancing Technical Women program.

“In new roles, you need to learn new skills, find out what you don’t know, and learn. If you’re not moving ahead or are feeling stuck or confused about your situation, get help — it’s not all on you. Don’t put all the responsibility on yourself to advance in your career or succeed in a new role.”

You might be thinking:

“If I do a good job, people will notice. If I do just a little more, work a little harder, it will happen. I don’t need a mentor or sponsor.”
Or, “I want to earn that promotion myself; it feels like cheating or pulling rank if I have a senior decision-maker on my side.”
Or, “The timing isn’t right, right now; I’ll go for the next opportunity.”
Many women wrestle with these same concerns.

But without access to the people who can set you up for the experiences you need — and support you through the inevitable challenges — your career progress is likely to stall, leading to short-term frustration and long-term consequences.

Better Ways to Predict Who’s Going to Quit

It’s the next step in digital HR management – AI-powered employee flight-risk prediction. And yes, it’s available to regular schmoes too…

Ask any HR manager and they’ll tell you: Replacing employees is a hugely expensive, time consuming process.

But what if there was a better way? There is, says IBM. Using Watson, AI and its HR-centric suite of employee management products, HR managers can now predict which employees are likely to hand in their resignations – and receive advice on what to do about it.

That’s the takeaway from a recent interview with IBM CEO Ginni Rometty who says that, thanks to IBM’s Watson-developed ‘predictive attrition program’, the company can now predict which employees would leave employment in the next six months without intervention and can do so within a 95 percent range.

“A business can better hear its employees through AI, both for better listening and for augmenting people’s ability to accomplish tasks.”

According to Rometty, not only can IBM’s AI detect that an employee may be looking to leave a position, the ‘proactive retention’ system can generate case-specific, early-intervention suggestions for managers so they can intervene – before leaving even “enters [the employee’s] mind”.

IBM uses the system itself of course, and says that, so far, the program has saved the tech giant almost US$300 million by addressing staff attrition. (We note too that the company has also recently slashed its global HR departments by around 30 percent).

Simply put, AI-equipt managers are better at assessing employee strengths, weaknesses – and flight risk – than those using traditional methods alone.

“We found manager surveys were not accurate,” says Rometty. “Managers are subjective in ratings. We can infer and be more accurate from data.”

IBM has now patented its predictive attrition program and is offering the technology to clients. While the company is keeping hush about the inner workings of the tech, its part of a larger push by IBM to redesign human resources in general. The company has also launched My Career Advisor, an AI virtual assistant that provides employees with upskilling recommendations and training advice, and Blue Match, which assess employee skills and pairs them with matching job openings.

“AI can take all the data – structured and unstructured – and generate hypotheses, reasoned arguments and recommendations,” says IBM.

“Advances in artificial intelligence are already improving how businesses understand what their employees are telling them through their conversations, sentiments and actions… A business can better hear its employees through AI, both for better listening and for augmenting people’s ability to accomplish tasks.”

But for those still weighing up their next investment in AI, HR, or both, what’s the quick fix to better retain staff?

A recent research paper from Stanford might hold the answer. The study, More Money, More Problems: Expectations, Wage Hikes, and Worker Voice, finds that simply supplying employees with an opportunity to communicate their satisfaction levels – both positive and negative – can reduce turnover and absenteeism, even for the most embittered employees.

The researchers partnered with manufacturing firms in India. In the face of a disappointing wage increase, employees were interviewed twice, first to gauge their frustration levels at the low wage bump and secondly to record their general employment satisfaction (or lack thereof). That ‘voice’ data was then mapped onto attendance and resignation data over the following months.

The research revealed that those who took the opportunity to speak about job dissatisfaction had a 20 percent lower resignation rate than those who didn’t.

“A worker’s utility increases when she is able to communicate her dissatisfaction to her employer,” says the report.

“And the ability to lodge complaints effectively may generate positive changes in the employment relationship… Through these two channels, voice essentially functions as non-wage compensation.

“As a result, turnover should decrease when workers can – either individually or collectively – meaningfully communicate their dissatisfaction with their employer.”

Source :

Building agile capabilities: The fuel to power your agile ‘body’

To move your organization from targeted experimentation to driving agility at scale, it’s crucial to focus on agile capability building.

The payoff is real. Organizations across sectors from banking to pharmaceuticals, from energy to the public sector, are realizing the immense value that agility can bring: faster, higher-quality decision making, better-quality products, faster delivery, and stronger employee engagement.

Much has been written about agile operating models: the vision, organization structure, tools, methodologies, and rhythms that comprise the agile “body.” However, many organizations still struggle with developing the people who will power this body and deliver better results. They lack talent that is either equipped with the right set of capabilities (mind-sets, behaviors, and skills) or empowered to make decisions rooted in customer centricity, crossfunctional collaboration, experimentation, and speed. Without both capability building and empowerment, the body cannot function.

How can organizations develop and sustain the capability-building infrastructure to enable their people to drive transformation and achieve their personal growth aspirations?

The people challenge affects everyone from the board room to the shop floor: senior leaders must show up differently to set a compelling vision and inspire change, core agile practitioners must lead teams to deliver innovative products and services meeting evolving customer tastes, and all employees must believe in the shift toward agility and feel vested in new ways of working (exhibit).


The caste is alive and kicking in corporate India

The importance of caste as a centerpiece of Indian social life comes alive during elections, when we witness the dramatic spectacle of political parties jostling for the support of different caste groups. Nevertheless, many urban Indians assume that the obsession of caste is a domain of the rural and semi-urban areas. As individuals who grew up in a big cosmopolitan city, when we observed in our research that caste and its influence is alive and kicking even in elite corporate India, we too were surprised.
In a paper titled `Firms of a Feather Merge Together: Cultural Proximity and Firms Outcome’, that we wrote with Michelle Zemel and Teja Konduri, we found that a large percentage of mergers and acquisitions (M&As) in India occur between businesses whose directors belong to the same caste group. We considered a sample of over twelve hundred M&A deals during 2000-2017 and found that of all deals where Brahmins had the maximum representation on acquirer firms’ boards, nearly 50% were with target firms whose boards were also dominated by Brahmins. The corresponding percentage was even larger for Vaishyas, at 55%. Similarly, we found that Kshatriya and Shudra dominated firms acquired targets with boards dominated by the same Varnas. The same pattern held if we instead considered Jati – a narrower caste construct. For example, firms whose boards were dominated by Agarwals predominantly acquired other firms with Agarwal directors, Maheshwari dominated firms predominantly acquired Maheshwari dominated firms, and so on. Careful analysis revealed that this is far from coincidental; firms systematically seek out targets whose directors share caste identities with their own directors.

What’s more unsettling is that businesses are harmed by such deals. We find that stock markets penalize mergers between firms of the same caste; the values generated for both acquirer and target in same-caste deals are lower than in other deals. Aspects of negotiation between the firms, such as the premium on the target firms’ book values that acquirers pay, or the time they take to complete the deal, also do not improve. Further, if we look at the merged firms’ performance one or two years after the deal, we find that in fact they do slightly worse than firms that did not do same-caste deals.
Yet, such deals are rampant in corporate India. It is fair to ask then: why are they still happening and who is benefitting from them? It turns out that directors who belong to the dominant castes of the acquirer boards in such deals enjoy whopping jumps in their compensation post the deal – upwards of 400% increases, on average. This increase is disproportionate in comparison to the near doubling of compensations enjoyed by retained directors not of the same caste. A larger fraction of them are also able to retain their enviable director positions. This suggests that directors who care about caste tend to engage in M&A deals with other firms whose directors share their caste identities, to the detriment of the firm, but to their own private advantage.
One would expect that those Indians who rise to the level of directors of large corporations would be able to shed the biases of caste. Unfortunately, that doesn’t seem to be true. While our research doesn’t point to any caste-based discrimination, it suggests a bias for the familiar. Corporate interactions, knowingly or unknowingly, tend to concentrate toward people of the similar caste groups.
We hope, however, that things will improve with time. Even if implicit bias in favor of associating with people of similar castes continues, perhaps cut-throat competition in the corporate world would force companies to mend their ways. After all, same caste mergers lead to loss of shareholder value and loss of firm competitiveness. Therefore, firms that take active steps to reduce this bias are going to have a leg up against the competition; efficiency of the market should win eventually. How long this might take, though, is anybody’s guess. Maybe the firms are either not aware of this implicit bias or just refuse to accept the facts?
We are hopeful that this implicit bias will reduce over the years as we go through a generational change in the boardrooms. Younger Indians are more likely to have grown up in multicultural settings. As this new breed comes of age and enters India’s boardrooms, we can hope for lesser bias for caste and more for efficiency.
The lessons from this study are simple, yet profound. All of us have implicit biases that affect our decisions. When those decisions happen to be the ones made in boardrooms, they have real implications for the performance of firm and hence the economy. Therefore, it is imperative for firms to actively look for existence of those biases and to try to negate them. As the Indian corporate sector gets more integrated with the world, it should actively counter the biases that come from a caste based society.


How internal promotions can negatively affect trust in teams

You’re being considered for a promotion. You’ve worked hard, acquiring skills and experience, and you have a good, trusting relationship with your team. But the promotion goes to a colleague, and whereas once you were on equal footing with this person, now you feel you’ve lost status.

What will probably happen next, according to new research by Sebastien Brion, associate professor of Managing People in Organisations at IESE Business School, is that you’ll become less trusting of your teammates. The research identifies how changes in power dynamics, perhaps due to a teammate’s promotion, affects trust. Understanding the fluid influences of status and power is key for savvier management.

In praise of trust
Trust is a key feature of effective people, teams and organizations. It has been shown to promote information-sharing, collaboration, job performance, and all-round commitment. At its heart, trust means being accepting of vulnerability on the assumption that others intend to treat you well.

Following a nine-month study of individuals working in teams, Brion and his co-authors Ruo Mo and Robert B. Lount Jr., concluded that when employees’ level of power changes, their levels of trust change, too. A perceived loss of power introduces social uncertainty, insecurity and even paranoia into relationships. It also causes those who feel disenfranchised to give more credence to negative information about others.

Breaking trustworthiness down
Previous research has identified three components of trustworthiness: perceived ability (having relevant competencies), benevolence (wishing to do good) and integrity (adhering to acceptable principles). Changes in power seem to affect the second component, perceived benevolence, as those who lose power become more suspicious of others’ intentions.

Put simply, the more power you feel you have, the more you trust other people, and a downturn in your fortunes at work may make you paranoid about the intentions of those around you. A key insight here is that trust is not static, it’s dynamic, changing along with the conditions that lead to it.

This can have important implications for managers. Consider that high-performing teams may see relatively little hierarchy change, allowing the conditions for trust to really settle in. Meanwhile, those that are less effective may get reshuffled more frequently, eroding trust when it’s most needed.

More generally, managers should be aware that any change in a team’s hierarchy may cause loss of trust in employees, and be vigilant against downward spirals in morale and performance.