Yesterday I wrote about the simple rules that underlie complex systems.
Below is a simple rule to defeat COVID-19. If everyone did this for 2 weeks, the pandemic would be over.
Two. Weeks.
There are similar complex problems in our organizations today that have a simple solution. And they persist because no one is willing to suffer a little bit now and make thing better forever thereafter.
We don’t really want to make things better.
I am currently reading Systems Thinking Made Simple, which convincingly demonstrates that simplicity underlies complexity. In fact, it drives it.
Therefore, when faced with a complex problem, an important approach to finding a solution is to discover the simplicity underneath. What are the simple rules driving your compliance problem today?
Similarly, when building a compliance program, which ought to be complex, remember that it must rest on simple rules. Identify those rules at the outset. Write them down. Display them for all to see. Make sure every element of your system obeys those rules. If everyone interacting with the system understands the simple rules, they will not be overwhelmed by the complexity that emerges.
In a recent post, Linda Henman suggested a list of questions that we can ask ourselves when trying to determine if someone is a strong decision-maker. Among them was the following: “How does chaos affect this person?”
My organization is currently navigating an intense period of change. Not only are we integrating a recently-acquired company of 30,000 employees, we are also preparing for the spinoff of two business units counting more than 100,000 employees. These complex initiatives require an extraordinary amount of delegation, thus a need for strong decision-makers.
We are embracing these changes because of the opportunities they present. At the same time, we are focusing intensely on the additional risks that chaos generates, including ethical risks. One of our countermeasures is an all-employee training entitled “Leading Ethically Through Change”, in which we explain how the pressures of VUCA* can affect decision-making. We believe that the first step in navigating chaos is to understand how chaos affects us.
To improve her organization, the ethical leader should develop strong decision-makers who can ride the waves of chaos when they swell.
*Volatility, uncertainty, complexity, ambiguity
Some things are complex. Flying an airplane, building a house, or performing surgery are no simple matters. Making an error while engaged in these activities can have disastrous effects. This is why the pilot, builder and surgeon all have a checklist and a process to follow. They have a system to ensure that no mistakes are made.
Creating the right culture in our organization is no simple matter either. Yet, many of us have no system in place to guide us through the complexity. We leave it to chance – to the tens or hundreds or thousands of supervisors to behave in the perfectly coordinated way that will lead to an ethical culture of compliance. We act as if each will magically know how to hire, onboard, compensate, promote and discipline their employees.
When surgeons were first required to write their name on the limb they were about to operate on (while the patient is still awake), their egos were affected. But the practice was soon praised by all for eliminating mistakes.
Perhaps it’s time for corporate executives to create systems leading to a better culture.
Even at the risk of bruising some egos early in the process.
Hat tip to The Checklist Manifesto and Seth Godin
The ethics and compliance professional will often face complex situations with no ideal solution.
Imagine writing a gift policy to prevent corrupt behavior. Or determining the discipline for an employee who should have known better. Or deciding whether to eliminate a long-standing employee program.
We can get paralyzed if we aim for perfection. We can waste precious time if we reach for almost-perfect. It is often best to simply proceed with all due speed towards a solution that matches our positive intent. We rarely go wrong when our intent is good.
How do we know that our intent is good? When we can articulate it openly to all the stakeholders.
The world is complex but out of that complexity our brains can identify patterns.
This is how, and why, rules are born. Rules simplify and protect our world to help us accomplish more by ignoring the noise.
But the noise doesn’t go away. It simply becomes the exception created by the rule. Those who don’t understand or agree with the rule learn to hide in the noise. And so we create more rules to make the noise quieter. Of course, no amount of rules will ever create a world without exceptions.
This is where values come in. Values help us make decisions when rules are conflicting, unclear, or nonexistent. Where rules simplify the world, values simplify the world of rules.
Rules are important but can accomplish just so much. Values are the magical ingredient to harmonize even the noise.
There are two types of performance: tactical performance, or the ability to execute a plan, and adaptive performance, or the ability to diverge from plan.
Today, when organizations measure performance, they typically measure only tactical performance, mostly because adaptive performance is very difficult, sometimes impossible, to measure. But only measuring tactical performance is an incomplete measure of performance.
When the work requires only tactical performance (e.g. placing an item in a box on an assembly line), the presence of indirect motives may not decrease performance, and may in fact increase it. Assembly line workers who have been boxing an average of 10 items per minute without a financial incentive may actually box a few more if you offer a bonus for every additional item they box over 10.
Work that requires only tactical performance is rare. Most work is subject to some volatility, uncertainty, complexity, and ambiguity (known as “VUCA” in the military). VUCA demands that workers diverge from the plan, that they adapt. They need adaptive performance, which is negatively affected by indirect motives, as demonstrated by the distraction, cancellation, and cobra effect.
Distraction effect – Hundreds of studies have demonstrated that emotional and economic distractions reduce overall performance. If you ask math students to complete a series of problems as quickly as they can while sitting alone in different booths, they will perform better than if you place them all in the same room, standing up at the same board, and asking them to sit when they are done. The last ones standing are often unable to solve the last problems as everyone else is looking on; the emotional pressure is too high. Similarly, if you offer these students a large sum of money (hundreds of dollars) to complete as many problems as possible within a given time, they will solve fewer than when a small reward (or no reward) is offered. In both cases, the students have two things to focus on: solving problems and looking smart/making money. The more distracted they are, the more performance suffers.
Cancellation effect – Studies have shown that rewards cancel out the natural sense of play – that part of us that does the work for the pure joy of it, and the strongest of direct motives. Experiments have shown that workers who are naturally helpful (i.e. helpful without promise of a reward) cease to be helpful when a reward is introduced and later withdrawn. Additionally, when you reward one thing you often create a trade-off. Rewarding quantity often affects quality. A focus on near-term can affect long-term results. And so on.
Cobra effect – When India was a British colony, the Brits tried to reduce the number of cobras roaming the streets by offering a reward for every dead one brought in. It didn’t take long for someone to build a cobra farm. That’s when the Brits realized that they didn’t want more dead cobras, they wanted fewer live ones. But dead cobras are much easier to count, so that’s what they measured. Every job creates the opportunity for maladaptive performance. When motivation is low enough (i.e. when levels of emotional and/or economic pressure are high), people find the easiest way to relieve that pressure (think fraud triangle). Call center workers hang up in the middle of a call to get on the next one simply to meet their duration or volume goals. Sales people kill the margin at the end of the quarter to meet revenue goals. When cobra farms are discovered, organizations can either eliminate the indirect motive and build a better culture; or they can keep the reward system in place and add controls. Most organizations choose the second option because it is easier to create. They also assume that nothing is wrong with their culture and that the wrongdoers, however numerous, are simply bad apples.
These three effects reduce adaptive performance until it produces maladaptive performance. Meanwhile, tactical performance can remain high (the sales person will shift all of her attention to selling and stop being helpful to colleagues – individuality/teamwork trade-off). Those who only measure tactical performance don’t notice the crippling effects on adaptive performance, and ToMo goes down “inexplicably”. We should be alarmed because adaptive performance is the secret sauce behind innovation, creativity, great customer service, distinctive salesmanship, etc.
The Ethical Leader 