Payroll systems are the Russian winter of corporate strategy

2016 USARAK Winter Games, by U.S. Army Alaska (USARAK)
2016 USARAK Winter Games.  Photo courtesy of U.S. Army Alaska.

Is there something about payroll systems that cause everyone who mucks with them to be destroyed?  It’s as if payroll systems have deep dark secrets, requiring years of study to allow people to interact with them safely.  Indiana Jones achieved a doctorate before his most epic physical quests.  How much do we need to learn about payroll systems before attempting to make improvements?

In last week’s blog post I provided a summary of the Auditor General’s report on the Government of Canada’s Phoenix payroll fiasco.  Whenever I read about the Phoenix fiasco, I shed a tear for anyone who has goals.  Payroll is supposed to be one of those things that happens automatically in the background.  The rules are clear, the numbers are known, and most of the decisions have already been made.  All that’s required is that we upgrade the software every few decades.  What could possibly go wrong?

But it is exactly that presumptuousness which is fatal.  Have you ever talked to a payroll person?  These are people who quietly persevere doing intelligent work with no glory.  They are careful, and they discourage foolish moves.  Do they know something I don’t about the risks of screwing everything up?

Payroll Systems are Like Russian Winter

I came up with Nazi Germany’s invasion of Soviet Russia as the right metaphor to describe the Phoenix payroll fiasco. It is a great allegory that demonstrates how grand plans can be ruined by a complex landscape and the blindness of arrogance.

There’s a really good article about winter combat produced by the U.S. Army.  It’s titled Fighting the Russians in Winter: Three Case Studies, by Dr. Allen F. Chew, December 1981 under the Leavenworth Papers series from the Combat Studies Institute.  It covers three major battles, the third of which is the battle between Germany and Russia in the winter of 1941-42.

With winter combat, preparing well in advance is key.  Combat engagements in the freezing winter are sensitive to whether troops have “…appropriate clothing, weapons, and transport for that harsh environment.  Acclimatization and pertinent training are also essential.”  Appropriate transport means pony carts, as the animals keep warm when busy.  For appropriate weapons, landmines malfunction when the detonator is encrusted with ice.  Burning campfires with charcoal instead of wood reduces the visibility of the plume of smoke.

The Soviets also had larger numbers of trained ski troops because they had learned from their engagement in Finland a few years earlier.  Skis are critical for covering longer distances without getting exhausted.  This lesson was available to anyone who did their homework.  For the Russians, this homework was like an overview of yesterday’s lecture.

Also, defense has the advantage.  Soldiers on the offensive must expose themselves to freezing winds in addition to oncoming gunfire.  Attackers also lose the element of surprise because sound travels better on the snow’s crust.  Those who stay-put are more likely to win.

There is a theme that you must hang back a little, and look for small tactical tips that make a big difference.  Leaders must seek out this information and reflect on what this means for efforts big and small.

The Cold Teaches You Humility in Leadership

Leadership and strategy are all about the embodiment and communication of the most suitable emotional state and mindset.  With winter combat, what is most important is having humility, knowing there is so much to learn.  There’s a traditionalist saying that we stand on the backs of giants.  Those who came before us learned their lessons the hard way, and we must heed their lessons.  Particularly if they lost.

…perhaps the most important lesson is simply the folly of ignoring the pertinent lessons. …the highest German commanders were slow to profit from Russian examples [of the past] because of their feeling of superiority, and some refused to learn until they went down in defeat. There may be a message for others in that conceit. [p. 41, emphasis added]

These lessons echo the Phoenix payroll fiasco, as Phoenix was an epic blunder of arrogance and the negation of contrary evidence.  We can interpret that the size and importance of a major project can warp a leader’s ego.  Unwieldy efforts can be intimidating, and in order to move them forward you may need some bold and reckless courage.  But that’s an emotional posture that you would need to choose, logically.  If you actually are a bold and reckless person whose courage comes from an illogical abandonment of information, then you’re in a pickle.  Instead of advancing emotional strength, you may be advancing emotions that are relatively stronger than a hobbled intellect.  And that spells trouble.

Phoenix was most significantly damaged by the failure to identify that centralizing payroll processing in Miramichi resulted in a skills and productivity dip amongst new staff.  The phenomenon was real, and incoming information that this skills dip was a material problem turned out to be something that could not be overlooked.  Executives negated the evidence, and small problems became part of a landscape that could not be overcome.

A more reasonable goal is to not be destroyed by the landscape.  You would develop this goal because you observed from experience, and from your homework, that the environment is humbling.

Maybe you, too, can adopt the chill demeanor of a payroll representative wearing wool socks by the fire when it’s winter outside.  Who wants to go outside and play?  Not me.  I think I’ll sip hot chocolate while looking out the window, watching the snowfall, ever so slowly.

Rejecting feedback a corporate ‘true crime’

Exed Formation continue à l'Ecole polytechnique. By Ecole polytechnique
Exed Formation continue à l’Ecole polytechnique. Photo courtesy of Ecole polytechnique.

What if junior staff and those far from head office knew more than their superiors?  It’s an impolite question which may offend those who have worked so hard to get to the top.  But it’s an important question to ask.

In February 2016 the Government of Canada implemented the Phoenix payroll system, and it was bungled from the start.  According to the Auditor General’s report in Spring 2018, mistakes were consistently made by three Phoenix executives that negated the input and information coming from those lower ranking than themselves, and those who did not work in their particular bunker.  Auditor’s reports make for great reading, because they are often “true crime” page-turners of corporate malfeasance.  Let’s take a closer look.

The Productivity of New Employees at the Miramichi Pay Centre

The first stage of the Phoenix project was to centralize staff working with the old software, then the new software would be brought in.  But the project team chose Miramichi, New Brunswick as the geographic location for centralization.  The previous system was staffed by people all over the country, so the move to Miramichi was a tough sell.  Many experienced pay advisors chose not to move.

Because of the move, there was a loss of experience and a drop in productivity.  A lot of staff were new.  Think to the first time you have done anything – you’re slower until you hit your stride.  It takes months to get on top of the work, after which you eliminate errors and do things faster and easier.  But there was no allowance for this ramp-up in the Phoenix schedule, and no anticipation this time was even needed.  Prior to the move, each pay advisor could handle an average workload of 184 pay files.  After the move, productivity dropped to 150 files.

This was troublesome because Public Services and Procurement Canada had expected productivity would rise to 200 files per advisor.  This gap played out on the grand scale.

…Miramichi pay advisors could handle a total of about 69,000 pay files, not the 92,000 files the Department had transferred to the Pay Centre. …outstanding pay requests were already increasing because of centralization, and pay advisors in Miramichi were already complaining of excessive workload and stress.  …Even though pay advisors were less productive than what was expected of them, Phoenix executives still expected that their productivity would more than double when they started to use Phoenix. [Paragraphs 1.71-1.72]

Some Interpretations on How to Mitigate a Tactical Blunder

If information was shared and accepted, there might have been a clear opportunity to overcome the problems at the Pay Centre.  Centralization required either the acceptance of a downshift in experience level and hence more staff would be required. Or they could allow additional time for expertise and productivity to slowly build.  As a third alternative, centralization would need to include locations where there was an established labour market.

But these are all tactical solutions to tactical problems.  The strategic issue is that powerful people were negating information that was coming from the ground.  It’s a “no complaining” mindset.  And because the tactical complaints were real, leadership decisions to negate these voices caused tactical problems to overpower strategy.

Yes, Org Charts and Internal Audits are Important

The larger and more complicated a project is, the more important internal audit becomes.  The Auditor General’s report asserts that a proper audit prior to implementation “would have given the Deputy Minister an independent source of assurance…  that could have resulted in a different implementation decision.”  There were guidelines in place for independent review, but the review was controlled by three Phoenix executives.  Those executives determined the interview questions and the list of interviewees. The interviewees chosen were all members of the Phoenix project team, who were under the thumb of those same executives.  So, watch what you say…

The project had significant problems with governance and the chain of command.  The organizational chart shows a reporting structure that bottlenecks through the three Phoenix executives who in turn reported to the Deputy Minister.  There was no direct line to the Deputy Minister that was unfiltered by those three people.  Say anything you want, and they’ll pass it along.  Or not.

The Fake Consultation Meeting

In order for a meeting to be productive, you need the right people in the room and freedom for those people to share information and opinions.  However, the key meeting prior to implementation was rigged to provide one-directional information flow.  The briefing was January 29, 2016 when 30 deputy ministers from across government were told that Phoenix was about to be implemented.  Fourteen departments and agencies provided feedback prior to the meeting that they had “significant concerns with Phoenix”.  But the people leading the project assured those in attendance that all the issues had been resolved.  Critics were cautioned that any delays would cost too much money and cause a knock-on series of additional delays.  They were going ahead.

The project’s leaders didn’t have to try hard to win people over.  That is because Public Services and Procurement Canada chose this particular briefing meeting because it did not have any decision-making authority.

As an information-sharing and advisory forum, the Committee could not formally challenge the information it received from Public Services and Procurement Canada or the decision to implement Phoenix. [Paragraph 1.100]

All subsequent stories were about pay advisors struggling to get out from under a backlog as their workload doubled while grappling with a new piece of software.  In the story of this project’s failure there is little discussion about the quality of the new software itself, because the project was eaten alive by the landscape.

Appropriate Leadership Styles in Information-Heavy Strategic Efforts

It’s too bad there weren’t low-level people who were free to speak their mind about how things were going.  And it’s curious how high-ranking people could develop a lifestyle where they never talk to lower-ranking people.  Why do leaders do this to themselves?  I know that democracy can be unpleasant and messy.  And egalitarianism involves a lot of extra work.  But for senior people to be so single-minded in their goals that they would bar feedback from those they are affecting goes beyond arrogance and into strategic self-harm.

It’s like reverse-provincialism.  Provincialism is the notion that there are people living in remote areas who are less sophisticated and overly concerned with their local issues, to the detriment of higher-level goals.  But what if people in the provinces and remote pockets of the hierarchy are the ones who have a better grasp of the truth?  What do we do about high-level people in head offices who know nothing about what’s happening in the field?  What do we do about people who think their big fancy plans are brilliant and best, when they are really just playing fancy board games for which the only prize is a slightly more expensive used car.

I know what we should do with these people.  We should teach them.

Bad is the new good

Iowa Loses to Wisconsin. By Phil Roeder
Iowa Loses to Wisconsin. Photo courtesy of Phil Roeder.

Several of the things that make work unpleasant are actually making you more effective.  And that bodes well for increasing your value, improving your job security, and advancing your career.

I have a confession to make.  I keep a list of things that I have failed at.  It’s on the back-page of my in-house accountability document, the “boast report” where I write down my team’s accomplishments for the year.  Only a few people have read it, contrary to the very spirit of boasting.

The document came in handy one time when my value was questioned.  My own boss simply forwarded the document to another senior leader, and that was the end of debate.  It was seven pages long… in bullet form.  I doubled-down after that and started to list efforts where I had attempted and failed.  It’s one of my favorite things to do.

Talking About Mistakes Improves Learning and Relationships

We have come a long way since feeling shame about our mistakes. And talking openly about our failures is considered a key to success.

We must now think of talking openly about mistakes as a key to success.  A New York Times article by Oset Babur from August 17, 2018 delves into the research on meaningful failures.

Babur talks with Allison Wood Brooks from Harvard Business School, who encourages people to discuss their failures.  That is because “…discussing failures can help to humanize the sharer by making them seem more approachable and relatable in the workplace.  It also generally increased levels of so-called ‘benign envy,’ which can motivate and drive employees to perform better.”

It brings to mind the principle from Brené Brown’s famous TED talk that making yourself vulnerable is the key to meaningful relationships.

By contrast, boasting about your achievements creates malicious envy.  Attempts to convey an image of perfection are “…harmful for those in leadership positions who risk coming across as disingenuous..”  It’s an in-person version of the effects of Facebook, that if everyone is portraying their best moments, it makes us collectively miserable we’re not doing as well as everyone else.  To be precise, if we are engaging with others about what is truly happening in their lives, we become more connected and happier.  But if we’re passive observers of these boasts, we become increasingly unhappy.

Babur interviews Amy Edmonston from Harvard Business School who describes different types of failures.  One failure type is called intelligent failure, which occurs “when we’re working in areas in which we don’t have expertise or experience, or in areas that are unchartered in a broad, industry-wide sense.”  Intelligent failures are a result of exploration and they generate new information.  Refusing to talk about failure prevents learning, causing a recurrence of the same mistake.  You need a safe environment where you can trust that talking about failure will be valuable.

Constructive Friction – How Jerks Make You More Effective

But you don’t want to be too safe.  It’s also helpful talking to people you disagree with. To summarize, jerks make you more productive.  An August 2018 Linkedin article by Michael Arena reports on research from Stanford University’s Bob Sutton and Huggy Rao when describing feedback on ideas produced in-house:

…constructive friction is essential to scaling ideas because the resistance to the initial concept creates a pressure-testing effect that encourages iteration and co-creation. …when ideas and concepts are modified in response to friction from another team, their perspective is incorporated, therefore enhancing the likelihood of broader organizational endorsement. Internal friction, creates organizational lift—much the way headwinds assist with an aircraft’s takeoff.

Arena notes that there is a distinction between constructive friction and destructive friction.  Yes, there are jerks who are just dragging things down and poisoning the organizational culture.  The positive force is constructive colleagues on rival teams that provide brutal-yet-accurate feedback that your first and second drafts are not going to fly.  It’s as if we need a companion course for respectful workplace workshops, that if you truly love your colleagues you must give powerful feedback.

Is there anyone in your workplace who cares for you in this way?  I hope so.  Sometimes you need friends who always take your side.  But other friends keep you guessing.  And it’s the ones that keep you guessing that are helping you grow.

Instability and Uncertainty Cause Your Brain to Learn

In an Inc.com article from August 2018 Jessica Stillman shares research that you only learn when you are uncertain about the outcome.  The research comes from Yale’s Daeyeol Lee who did research on monkeys.

…scientists taught a group of monkeys to hit various targets for a reward of tasty juice. Sometimes the odds of a particular target producing a sweet treat were fixed … Sometimes the target was more unpredictable… If the monkeys could predict how often a target would pay off, brain regions associated with learning basically shut down. When the monkeys couldn’t guess what would happen, their learning centers lit up.

Once you have figured out the best way of doing something, such as your commute home, you stop thinking about it and don’t try to improve the outcome.  “For this reason, stability kills learning.”

Stillman recommends that in order to keep learning, you need to seek the unpredictable and bring “strategic instability” into your life.  She recommends travel, change of routine, new projects, and seeking unusual perspectives, including a list that she got from Stripe co-founder Patrick Collison.

The Best Workplace Culture is Not Too Cozy

You may have thought that if you achieved success, you might get to live a life that is easier.  You won’t have to deal with jerks, things will finally become settled and comfortable, and you will only have to talk about success.  But the opposite is true.  To be a winner you must expose yourself to constant disruption, seek out the jerks, and talk openly about your failures.  You can’t climb to the top and rest, because that pile of people below you is still moving.  You must always be in play, always strive to break even and get ahead.  Excellence is in the striving, not in being there.

Talking about failure without punishment depends on the trust level in the organization.  The high-productivity learning organization needs a workplace culture that nurtures, provides support, and fosters trust.  Only then can we get that savage feedback we desperately need.  Only then can we stay constantly on-edge with new changes that keep us learning every day.

You can slip into bed at night knowing that on average, the world is just.  These uncomfortable moments feel good when they end.  To sleep, perchance to fail.

“I’m busy” is the call of the meek (and they shall not inherit the earth)

It's All in the Eyes. By Chris Gilmore
It’s All in the Eyes. Photo courtesy of Chris Gilmore.

Have you ever been stressed and overwhelmed by your workload, but then got the satisfaction of getting a grip of your to-do list?  I manage this several times a month, and I find it empowering and calming.

My favorite part is when I write a fresh list without dragging over the crossed-out items from the prior list. Then I write next to each task the priority number in which I would like to approach them.  After that, I write an new fresh list, prioritized in the order I had chosen.

It turns out I was onto something.  Having a clear sense of purpose and direction is the thing that makes us productive.  And that’s totally different from being busy.

Instead of resorting to the “I’m busy,” proclamation, simply organize your obligations and commitments.  You’ll realize it’s a good thing.

But once things are under control, you lose your bragging rights about being busy.  That’s a bad thing.

“I’m Busy” is a Humblebrag

In an article by Jessica Stillman in Inc.com from 2016, she shares research showing that people who say they are busy are perceived to be more important.  People know the “I’m busy” humblebrag is compelling and they use it liberally.  I think people only say “I’m busy” because others are saying it too.  Kind of like straight people drawing attention to the fact they’re straight, or women’s right activists saying they don’t call themselves feminists.  If there weren’t these crowd-sourced self-impositions to look busy and conform to norms, would we still be grabbing for labels that allow us to fit in and be validated?  Surely it would be easier to bring our best to the workplace and be our usual, weird selves.

As people increasingly say they are busy, the evidence suggests otherwise.  In another article by Stillman she reports data from the U.S. that people are sleeping more and finding more time to watch television compared to a decade ago.  This article was from two years ago when people were still watching televisions instead of being addicted to their phones. On average, people are not more busy.  “It’s not entirely surprising that we fit in all [that]… leisure — the average full-time workweek is a moderate 42 hours.”

Busy People Are Not Always Giving Their Best

In those cases where people are truly busy, it’s not a good thing.  Beyond a certain point people suffer cognitive overload.  In an article in Inc.com from June 2018, Wanda Thibodeaux interviews Fouad ElNaggar, the chief executive of an employee experience portal called Sapho.  ElNaggar cites oft-quoted research that people “…check email 47 times a day… And it takes an average of 25 minutes to get back on task after being interrupted.  They experience an endless tidal wave of beeps that require an acknowledgement or response and with mobility.”

ElNaggar references research that people compensate for the barrage of interruptions by working faster.  This leaves people stressed-out “…and subsequently, focus, concentration, and creativity – all tank.”  These are not the people who have got into the zone and got a lot of work done exceptionally well.  These are people who are controlled by clients, superiors, Facebook friends, and advertising algorithms coming out of the Silicon Valley.  These are people who have become unimportant.

He asserts responsibility for this problem sits with leadership, but notes individual employees need to share some blame.  He encourages individuals to take control of their calendar and decline meaningless meetings, assign narrow windows to handle email (i.e. not all day long), and keep the cell phone out of the bedroom.

However, this opens two controversial opinions.  One, he presumes we have enough control over our work-day to make these trade-offs.  Only leaders that give employees autonomy can expect employees to improve their work pace for the better. The second is that ElNaggar’s remedies imply you can become more effective by being less busy.

How Productive People Differ from Busy People

In an article from February of 2018, Larry Kim asserts productive people have a mission in their lives, have few priorities, and focus on clarity before action.  “Busy” people want to look like they have a mission, have many priorities, and focus on action regardless of clarity.

Productive people want others to be effective, and busy people want others to be busy.  The list of behaviours and attitudes are not mutually exclusive, but you get a sense of two different styles.

Described in this manner, people who say “I’m busy” are not actually drawing attention to their importance.  Rather, they are broadcasting that they lack focus, have no control, and are short on self-management.  “I’m busy” is a malfunctioning humblebrag, as it serves a backhanded compliment that insults the self.

But it might be early days for this realization.  You might have superiors and influential colleagues who have that busy buzz to them.  If this polarity between productivity and busyness comes into public view, it’s not going to look good for the busy-bees.

The biggest revelation from Kim’s article is that “Productive people make time for what is important.”  Productive people are all about mission, priorities, and focus, and they are allowed to target their time and effort.  If you have ten minutes to spare to get “important” work done, that important work is to consider your values and your mission, and create a fresh draft of your priorities that put everything into perspective.

People might not see you breaking a sweat, but with time you will deliver better results.  But remember, it looks way better when there’s no boasting.  And that will go a lot further after we’ve outed the “I’m busy” call of the meek.

Pay Equity need not be a beast of burden

IMG_2876 - Copy

I sometimes get self-conscious about being more supportive of feminism than some of my women colleagues.  Sure, I have lots of tools at my disposal to help make a difference.  And yes, it is part of my job in Human Resources to make things fair and reasonable.  But is this really my fight?  Should I really be getting excited about it?  I’ll give an example.

In April 2018, Tracey Smith from Numerical Insights blogged that the Gender Pay Gap is NOT the Same as Pay Equity.  It’s an interesting read because there is some truth to it, but the devil is in the details.  I have worked on a several efforts to equalize pay between men and women, and I can confirm the pay equity exercise is narrow in scope and changes salaries far less than some would hope.

The problem is branding.  It’s too popular.  It has become the yoke that carries all the hopes and dreams of the broader equality conversation. We need to expect less of this one solution, and allow for some levity. We need to give pay equity permission to wear sweatpants to the convenience store and grab a slushie, without paparazzi snapping photos for Stars Without Makeup.

Some Problems Are Not Solved by Pay Equity Alone

Smith references the predominance of males in some professions:

Certain STEM-based professions (Science, Technology, Engineering and Math) are naturally male-dominated because the graduating classes are male-dominated. That’s the hiring pool, so through no fault of any company, these STEM companies will be “more male” in the specialized jobs.

She also notes it is common for fewer women to apply for management jobs, implying women are self-selecting away from these roles in child-bearing years.  As a result of men self-selecting into higher-paid professions and higher-ranking roles, this creates average salaries for men that are higher.  Smith asserts that this is not a measure of pay equity, and that’s true.  The smaller number of women in these roles might be paid equal to their male counterparts, so pay equity might have been achieved already.

But let’s step back, consider the larger picture, and match problems with reasonable solutions.  If there’s a shortage of women graduates from STEM disciplines, we should consider reserving an equitable number of college and university spaces for women in these fields.  If women are less likely to put themselves forward for management openings, workplaces can cultivate leadership styles that are less critical, are more encouraging, and are time-structured to get people home at a reasonable hour.  If the problem is career growth during childbearing years, a suitable remedy is maternity leave provisions and government-funded child care.

Which tools should we consider if we want to achieve broader equality between the sexes?  My favourite tool is, “all of them, now.”  Does that sound better?  It makes far more sense that ridiculing pay equity for its shortcomings.

Battles Over Pay Equity Legislation Are More Than Meets the Eye

Smith also noted that the United States recently cancelled legislation to require the reporting of average salaries by sex.  The government expressed concerns that the reporting obligation would “lack practical utility, …[be] unnecessarily burdensome, and …not adequately address privacy and confidentiality issues.”  There was something fishy about this quote, so I cut-and-pasted it into a Google search and got something totally different.

In a Washington Post article, reporter Danielle Paquette described this cancelling-of-legislation as the Trump administration reversing an Obama-era rule to shrink the gender wage gap.  That article notes Ivanka Trump originally supported the Obama-era measure, but after she consulted experts, “worried that it wouldn’t work as intended.”  We have since learned that the only expert consulted at the White House is the President himself.  The Obama-era official who brought in the rule and leaders of women’s equality organizations panned the decision.

The Post article quoted Nancy Hammer, who spoke on behalf of the Society for Human Resource Management:

She recommends that employees go to their human resources department if they’re concerned about their paycheck, giving their employer a chance to explain or fix the issue.  Otherwise, Hammer said, “to really do it, you’d need to practically report on every single employee.  That’s not a practical way at looking at this issue nationwide.”

It’s ironic that she thinks it’s impractical to report on every single employee. Moreover, she asserts that for women, as individuals, to approach their human resources department to fix unequal pay without government or union backup, is totally practical. I would note that Nancy Hammer is a lawyer speaking on behalf of HR generalists.  The correct professionals to consult about this work in Compensation, and in North America their profession is represented by WorldatWork.  Also, employees are legally allowed to talk to each other about their pay, despite of the fact that HR often discourages such talk.

Pay Equity Analysis is Not Onerous

Under conventional pay equity plans, employers do in fact report on every single employee, bundled by job classification.  This data-bundling includes average pay and headcount indicators of whether a classification is predominantly made up of men or women.  This data, combined with other sources, allow employers to do a simple statistical analysis to measure pay inequality and take appropriate action.

The analysis is done either by consultants or in-house by HR departments.  The analysis is made available to regulators, union representatives, and litigants alike, under appropriate confidentiality protections.  The process involves slightly more work than creating a new pay structure in the first place.  It’s not practical to do it this way nationwide, because it is done at the organizational level as is normal for pay structure design.  The cancelled legislation obliged employers to report simplified data that was consistent with this approach.

Activist Campaigns Even the Score with the Trump Family

Let’s go back to Ivanka Trump speaking against this legislation.  In July of 2018, Ivanka Trump closed shop on her fashion brand.  Sales were flagging.  In particular, sales were way down at Nordstrom and Hudson’s Bay Company, two of the companies targeted by #grabyourwallet.  For those unfamiliar, #grabyourwallet is a consumer activist campaign that calls on people to refuse to give money to the Trump family.  The campaign was a response to the Access Hollywood tape revealing that Donald Trump thought he could accost women sexually, in public, without recourse, because he was rich and famous.  Some women felt otherwise, hence the campaign.

Let’s return to how women advance their own careers.  If women are reluctant to advance themselves into situations that make them vulnerable because the environment makes them unsafe, maybe the best remedy is to foster and support an activist base that keeps men on their toes about abuses of power.

And if a company is openly unsupportive of women’s equality, one possible remedy is for an activist base to reduce it to rubble.

But don’t try to do this alone.  Team up with others to bring more than one solution.  Pull your car into the convenience store and pick up your old friend in the sweatpants.  As she hands you your own slushie she smiles and says “I found your wallet.”  And drive onward to the next adventure.

The Thank-You Note – The Gift That Keeps On Giving

Pelikan Fountain Pen, by David Blackwell (=)
Pelikan Fountain Pen.  Photo courtesy of David Blackwell.

Do you remember the last time you received a thank-you note?  It felt special, didn’t it?  Strangely, we feel nervous about sending these kinds of notes.  Do thank-you notes actually accomplish anything? Aren’t we supposed to focus on getting real work done?

I pride myself on making a productive contribution to my workplace.  One of the most powerful impacts I have is when I find people who want to use Excel better.  I give them a few tutorials to upgrade their skills, and send them off as a more productive player.  I want more people in our human resources office to open spreadsheets and crank out the numbers themselves.  It lessens the burden on me, and creates an environment where everyone talks freely about the numbers.  And voila, we have the research-influenced workplace.

What is baffling is when people send me thank-you notes and Starbucks gift cards for devoting my precious time to help develop their skills.  Don’t they understand that I am manipulating them to achieve my own selfish goals?  Don’t they understand that I’m an economist?  Who are these social workers and coaches and creatives types, to think they can bring me into their magical world with nothing more than a few words of gratitude?  My cunning plan has gone horribly awry.

What Exactly Are the Rules of Gift Exchange?

Generosity and gratitude are a common source of misunderstanding.  I once got really curious about gift exchange.  It started out as an attempt to understand social norms, but I ended up reading anthropological research about gift-giving in archaic societies. (Of course I did).  I read a couple of books on the topic, including Marcel Mauss’ The Gift (W.W. Norton & Company Inc, 1990).  This “gift economy,” just to introduce the Wikipedia page on the topic, makes huge distinctions between the market behaviours of commercial transactions and non-market gift exchange.  This is important to understand, because showing up at work every day is a market activity.  But if it’s a good workplace, colleagues act like they are in the same tribe.

Gift exchange has many subtle rules that are similar across cultures and across time.  There is usually a time lag between gift-giving moments.  The giving of a gift places the other person in debt, and the gift must be repaid for fear the relationship could be severed.  There is a tendency towards reciprocity and balance, and attempts to profit from the exchange are mostly taboo.  The dynamic fosters qualitative relationships, as opposed to the quantitative relationships of market trade.

Also, those who are obliged to accept charitable gifts feel a sense of being poisoned and stigmatized, as they are unable to keep things even.  You can subjugate vulnerable populations by staying one-up on them with gift-giving.  Who says anthropologists can’t learn a trick or two from economists?

Thank-You Notes are Undervalued

I see thank-you notes as a key part of gift exchange.  The notes acknowledge an exchange of good-will.  They place, in writing, that gratitude has been established.  There is the implication that a favour might be returned one day, or paid-forward to a third party.  Thank-you notes formalize that an emotional thread has been established between giver and recipient.  Society is a web of such threads, and we weave ourselves into this web as it entangles us in obligations, for better or worse.

In an article at the British Psychological Society, Christian Jarrett reviews research conducted by Amit Kumar and Nicholas Elpey on expressions of gratitude.  The researchers asked participants to send thank-you notes to people who had contributed to their lives in a meaningful way.  The researchers then followed-up with the recipients to ask how they felt.

“The senders of the thank-you letters consistentlyunderestimated how positive the recipients felt about receiving the letters and how surprised they were by the content. The senders also overestimated how awkward the recipients felt; and they underestimated how warm, and especially how competent, the recipients perceived them to be.” (Emphasis added)

These misjudgments discouraged people from sending the thank-you notes in the first place.  The authors note that withholding this gratitude is to refrain from “a powerful act of civility.”  The notes benefit both the recipient and the sender, as the sender is perceived to be more competent.

Is Formal Recognition a Meaningful Workplace Practice?

In addition to hand-written notes and kudos emails, some workplaces have formalized recognition programs that distribute points between employees.  All employees are given points to distribute to someone other than themselves (just to be clear), and there’s an electronic system to keep score.  Top givers and top receivers are profiled on a periodic basis, and sometimes points can be cashed in for swag or experiences.  A quick internet search reveals programs such as Kudos, Achievers, Point Recognition, and Terryberry.  Terryberry has a great infographic detailing the benefits of these programs, referencing credible sources at the bottom of the page.

In terms of effectiveness, recognition programs cause higher customer satisfaction, better employee engagement, and staff turnover that is about 24-31% lower, depending on the study.  To clarify, if your turnover rate used to be 8% and it dropped to 6%, that’s a 25% reduction in turnover.

These programs net a massive value proposition.  If a company spends 1% of payroll on these programs, 85% see a positive impact.  Delta Airlines saw a 564% return on their investment.  Massive percentage returns are often the result of an incredibly low denominator.  That is, if Delta spent 1% of payroll and saw a 6.64% increase in productivity, that is consistent with a 564% return.  But it’s nothing to sniff at.  If you know of people trying to earn more than 10% per year on the stock market, you would have to acknowledge that recognition is far more impactful than anything being pushed to you by bankers.

Incentive Plans and Recognition Programs Are Very Different

A key detail that must not be missed, is that recognition programs bear little resemblance to formal incentive plans.  In Alfie Kohn’s 1999 book Punished by Rewards, he details how performance-contingent rewards (i.e. do this and you’ll get that) cause behaviours that largely decrease business effectiveness.  When you offer an employee a 10% target bonus for exhibiting certain behaviours, they tend to minimize risk, abandon creativity, game the system, and express severe outrage when they get less than the maximum bonus.  And so, this 10% bonus achieves approximately zero return on investment, and possibly a negative return.

The issue is that people don’t like to be controlled by overlords, and incentive plans are inherently controlling.  Incentive plans have a scientific legacy that they are designed by people who make no distinction between humans and rodents.

By contrast, recognition systems are expressions of warm-feeling and a sense of emerging qualitative relationships between peers.  When you exchange thanks with peers, you love them a little.

So, reflect on your week and think about those who helped you achieve your goals.  Get past that misinformed sense that expressing gratitude will create discomfort.  Establish those threads of good-will between peers, and weave together an archaic society of those who can keep things even.  It makes you more competent.  It makes you human again.