Who? Me??

Everybody you know, will probably agree with this, that Technology can be a great enabler.

It’s one of those motherhood statements (like “Shit happens” or “Life sucks”) that arguably can’t be denied. As someone who has often taken upon himself to forge this enablement with the demands of the business, I want to take a different stand.

Technology CAN be an enabler, only if you possess the know-how of implementation and your audience possesses the temerity to bear the brunt of teething and adoption problems, then can it be an enabler. How many cases have we seen that an organization wide technology upgrade has failed simply because the intended audience does not adopt it, but merely reverts to the easily available alternative.

My mother heads the medical department of State Bank of India, she in fact is the Chief Medical Officer. She tells me that they had tried three times to implement some form of an enterprise system for their department, Each time it had failed. Why did it fail? Not because the implementation was incorrect. We can’t say that, the moment we do – the implementation partner will pull out the requirements sheet, the scope document or some form of agreement which indicates that there was no breach of contract from their side.

And that is the problem I want to point out. Technology is not a function which can run in a silo. It permeates through the organization, from the most mundane of activities like checking email, to most complex of them like implementing a Decision Support System to help the top brass in strategic decision making.

Technology adoption therefore has to be intense. So intense that it should change the identity of the organization. If done properly, it can vault the firm into the next level.

The next time someone tells me that technology CAN be a great enabler, I will tell them that if my aunt had a moustache, then she CAN be my uncle.

No, I deliberately wrote it as Hell instead of Bell.

Managers who have run teams must surely know this model. A friend of mine works in one of the top IT organizations this country has, every year he worries incessantly about how he is going to survive appraisals. Not his own, he is consistently in the top 10% of the firm, but his teams.

They carry out appraisals using the bell curve in this organization … that means in any project team, someone has to be top performer, someone has to be average and someone has to be in the bottom 10% … survival of the fittest in this corporate jungle … that’s the rule.

The problem with this rule is that managers are forced to take under-performers and average team members as opposed to top performers. This is so, because when appraisal time comes, he cannot appraise everyone as a top performer. So if he has more than 10% of his team putting their hearts into the project, then after a year, someone will get an unfair assessment … someone will be disappointed in his superiors. Someone will get disillusioned. And that someone would be reporting to the manager who appraised him.

The only solution available for the manager then, is to select a mediocre team and hope that they deliver the project. An entire organization that runs on mediocrity!

My question to HR personnel then are two-fold -

1. Why the bell curve?
2. What will you do if the curve becomes skewed (towards the top performer side)?

Or No pain, no gain … the adage holds, is what empirical data says. A working paper by Harvard Business School presents its findings on human capital, performance incentives and ownership models.

Do different kinds of firm ownership drive the adoption of different managerial practices? HBS professor Raffaella Sadun and coauthors focus on the difference between the two most common ownership modes, family firms and firms that are widely held, namely that have no dominant owner. They find that the greater weight attached by family firms to benefits from control induces a conflict of interest between family-firm owners and high-ability, risk-tolerant managers. Key concepts include:

• Family firms systematically offer low-powered incentive contracts to external managers compared with widely held firms. The differences are economically large.
• Where incentives are more powerful, managers exert more effort, are paid more, and are more satisfied.
• Firms that offer high-powered incentives are associated with better performance. This result holds even after controlling for the type of ownership.
• Economies where family firms prevail because of institutional or cultural constraints are also economies where the demand for highly skilled, risk-tolerant managers languishes.

What this study suggests, is that to have high performance managers, organizations should employ the high powered incentives (this may not be as simple as cutting the current CTC of an individual into fixed and variable components). The last finding suggests that economies (and even societies) where family firms are prevalent (take Marwaris or Sindhis), the risk-appetite may be lesser. The first set of findings is also interesting since it is related to satisfaction.

So the next time you are considering a job, maybe these tips might help you evaluate that job slightly better -

1. Is there a variable component, is the calculation of that component completely transparent?
2. Will you be empowered enough to take risks and get the job done?
3. How mediocrity based is the leadership? (As in, is the leadership attracting the best talent, or the talent which can be ordered around)
4. Is your work ecology risk tolerant Or does it always stick to the safe path?