The question that is often posed to me is: Why is strategic management so much more important and challenging today?

Answer: Because now we are operating in a flat world. New York Times’ Pulitzer Prize winning columnist, Thomas Friedman, clearly explains ten reasons why business challenges are continuously accelerating in an outstanding book, titled: The World Is Flat.

Friedman identifies ten ‘flatteners’ that are creating a level playing field for global business: 1) fall of the Berlin Wall on Nov 9, 1989; 2) launch of Netscape on Aug 9, 1995; 3) work flow software; 4) open-sourcing; 5) outsourcing; 6) offshoring; 7) supply-chaining; insourcing; 9) in-forming [Google, Yahoo, MSN search]; and what he calls ‘the steroids’ [digital, personal, mobile, virtual].

Flattener #6, offshoring, is all about China and India. The other nine flatteners have dramatic implications for the ongoing acceleration of business opportunities and risks. Strategic management in China has become all the more difficult and dynamic because of these flatteners. What is a company and its senior management to do? How can they cope with these catalysts for accelerating change?

Answer: look to global best practices in strategic management for guidance.

Dr. Randall Russell is Director of Research at the Balanced Scorecard Collaborative [BSCol]. He says: ‘Until now, best practice research and analysis has focused almost exclusively on operational processes. Little attention has been paid to management processes and almost nothing has been done to advance our understanding of processes used to manage strategy. During the past twelve months we have begun to share the results of a multi-year program of research directed at defining categories of best practice in strategy management and execution’.

Dr. Russell and his colleagues have defined a taxonomy of best practices that describe the management processes of a Strategy Focused Organization [SFO]. They have reviewed the files of more than 500 business cases, and documented 27 specific practices that differentiate companies who have achieved breakthrough financial results.

This body of practical knowledge and quantitative results is forming the basis for an evolving science of strategic management. There is no body of knowledge more important in a flat world. This is because the content of any strategy is more likely to change more quickly because of the ten flatteners identified by Friedman. Given this degree of accelerating change, a senior management team has little to rely on for stability. This is so, unless they establish a strategic management process they will use to guide their organization through the dynamically changing circumstances presented by a flat world.

What I find deeply reassuring about this body of knowledge is that it enables the identification and implementation of a repeatable management process. I learned the practical value of repeatable business processes in China from 1993-1998.

During that time period I observed more than 75 MNCs use cross functional teams to map, analyze and redesign their core business processes. More recently I have been observing how Chinese organizations are benefiting from a similar disciplined approach. This time, however, the focus is on the highest level process a company can deploy: the management of its strategy. The tools, vocabulary, concepts and skills are different from before; the similarity lies in the systematic nature of the approach.

In our book on the subject I explained the organizational reasons for why the Balanced Scorecard methodology is practically useful for strategic management. Thomas Friedman has now clearly explained and documented a critical global context for strategic management: We must now manage strategy in a flat world. To become successful and remain so in a flat world, organizations must develop the internal competency for strategic management. The optimum approach for accomplishing this is to learn how to deploy the best practices that have been identified as the differentiators for creating breakthrough results.

The best practice research done by Russell and the Balanced Scorecard Collaborative is changing management in a flat world.

____________________________________________ 

 Dr. Irv Beiman has helped more than 100 companies on two continents [US & China] improve their business performance. Dr. Beiman serves as Chairman of eGate Consulting. eGate’s primary focus is on consulting, training and software that enable Chinese organizations to better formulate, execute and adjust their business strategies using the Balanced Scorecard. This strategic focus on the BSC extends to the realm of corporate governance, business process improvement [BPI/BPR], competency development, variable pay, leadership development, and organizational culture.Dr. Beiman earned a Ph.D. in Psychology from the University of Illinois at Urbana-Champaign in 1973, and served on the faculty of the University of Georgia from 1973-1980, publishing in the leading refereed journals in his field. From 1986-1992, Dr. Beiman’s US company was heavily involved in leadership assessment and development in high risk areas of the nuclear service and decontamination industry. He served as Country Manager of Hewitt Associates from 1997-1998. He has significant experience advising agencies within the Chinese government on matters of enterprise performance management and evaluation. 

____________________________________________

When recruiting and selecting new hires, most organizations tend to spend more time on skills and experience, and less on cultural fit. That’a what happens in a War for Talent market. Skills and experience are easy to assess, but cultural fit is a little more difficult to pin down.

But the results of research indicate that companies ‘hire for skills, and fire for fit’. So if companies are losing good employees after only 4 months of work, it doesn’t make sense to do things the same way again, does it?. Unfortunately, on average, company policies are slow to change and the whole process is usually done again the same way. History repeats itself.

Corporate culture is is very hard to develop in China in large part because turnover is high. Even when a culture has developed it is hard to identify or verbalize, and just seen as ‘How we do things around here’. It is these unstated elements of the culture that are most important and staff are often not conscious of what these elements really are.

If you are going to sell your culture in your recruitment process, and get the right kind of staff, you will have to identify your organization’s dominant culture first. Then you need to develop and utilize recruiting and selection tools to determine cultural fit, add these tools to your online recruitment system and finally, monitor the process by using exit interviews and metrics.

Identifying Your Culture

While organizations may have many cultures, one culture usually has the greatest influence on how a company operates. To identify this dominant culture, start at the top by reviewing the organization’s formal vision, mission, and value statements. Count the number of times you see trigger words, such as: client, customer, service, delivery, results etc. Where do these words appear in the documents?. Upfront or last in the list?

Next look at written performance objectives. Are they primarily expressed as dollar results, or do they include activities or competencies? If so, which ones?

The inclusion of activities and competencies may indicate that the organization is as interested in how a job is done as it is in what gets accomplished. Customer-focused organizations may have objectives addressing the number of visits to clients, response times to customer requests, or customer satisfaction survey scores.

A process-focused organization, on the other hand, may have objectives about adherence to company policies and procedures or numerical objectives regarding various aspects of execution of assignments.

Reality Check

To confirm that you have truly identified the dominant culture, make sure to do some confirmation tasks.

- Ask employees to tell you the company’s vision, mission, or value statements. If they can’t do this in their own words, you may need to realign operational practices with the stated cultural values. At the very least you will have to improve training so that staff at least know what the company’s vision and mission are.

- Talk to both management and individual contributors about the organization’s culture. Do you get consistent responses among and between these levels of employees? Note the gaps. If you have the time, develop an online survey product that will allow you get real, confidential opinions from your staff. Email is a good start but SMS produces better results.

Once you have a clear statement of your dominant culture, put it into your Applicant Tracking System (ATS) and all of your online job related material. Those who fit your culture will be excited by this online material, while those who don’t will tend to cancel their job applications and join another company that fits them better.

It’s not necessarily an expression you hear too often, and you may never have even heard about Candidate Value Propositions (CVPs) before.

They have to be the way forward though, in a tough hiring market like China. How else can you differentiate yourself from every-other-company-in-China. All of us are fighting the good fight, and victory accrues to those companies who can finesse their Job Offers into what appears to be the best available in the China market. If the match is done sufficiently well, and honestly, it will fit the aspirations of candidates in the market and offer the best career progression in the industry.

The end result is obvious but how do you get there?:

Get Help - The methodology involved in producting a Candidate Value Proposition (CVP) is very much in the skill set of the marketing department. It’s just another way of looking at recruitment branding and marketing.
  
Marketing people have knowledge of the 4Ps, and can assist you to build a CVP that will be effective in the marketplace. The good news is that they will need your HR and hiring knowledge to flesh out the actual details but in order to have a successful cooperation you will have to begin to think like a marketer. Just a bit.

Candidate Research - This is the starting point and possibly the hardest thing to do. It requires time commitment and a budget, two things in very short supply for any HR staffer in China. You know the candidates but you will need the help of someone who can actually get people together in some sort of focus group situation. Someone who can tease out the information that you know is there, but you can’t quite get to.

Analysis of Results - For this issue I would again suggest that you need help from either a company a company that does competitive intelligence or a market research firm. You need someone with the subtlety of interpretation necessary to understand what candidates want in your industry, how they view your company, and how they can be enticed to view it in a better light.

Segmentation - Now matter what industry you are in, and no matter your size there will need to be some form of segmentation of your hiring market. If you don’t have any then you probably don’t have the depth of analysis and understanding that you need to succeed. You don’t just need to segment the market, you also need to decide your own company’s positioning within that market.

This is where the hard questions arise: Do you offer high salaries? Or a balanced work and life scenario? Which one are you more comfortable with, and which fits the market best? There are no easy answers here but your answer will determine how successful you can be. Clearly there is no perfect positioning but not all positioning is made equal.

Career & Hiring Message - The key to this is to figure out the question: Why do people want to work in our company? So you are looking to craft a message that accurately defines the features and benefits of your product, a job. This has to be a real…

Delivery - Now you have to choose where to present your newly created message. The obvious places are recruitment portals and newspapers, but now that you have a method with a fancy new acronym, why not go the whole hog and put it onto blogs, Youtube, social networks, career fairs, radio, TV etc. The possibilities are endless but again each media may or may not reflect the kind of positioning you are aiming for.

What are we waiting for here? This feels more like play than work.

Go!, have fun, and call it your job.

In order to make any decision you need all the available information.

The China Labor Law has finally come into effect yet but the jury is still out, and the data still coming in. This is an update.

Feedback

The first piece of news, courtesy of CSR Asia, is that the Otis Elevator Company, has recently been accused of attempting to circumvent the new law. According to reports on Sina dot com Otis has allegedly requested employees to sign new contracts which cause them to forfeit benefits under the new law. It’s not the only company to be cited for this but it is the only one that has been specifically targeted by Sina. A local company, Huawei, was also found to be doing this earlier on in 2007 but that issue seems to have generated much less interest.

The action by Otis is not necessarily the smartest thing to do when some of China’s legal eagles are looking for carcasses to pick at. Or should I say visible targets with deep pockets that can be mined for gold. Compensation gold.

It reminds me of the old joke about the guy who gets hits by a car and tells his friend that ‘Yeah, it hurts, and compensation is setting in’. A culture of entitlement may not be upon us but the signs are that the times are a’ changin’.

Meanwhile other elements in the legal profession are risking life and limb to ensure that the provisions of the law that protect workers are actually implemented. Stereotypes always run the risk of being shot down so kudos to the lawyers with the ‘right attitude’.

Drawback

Rumors of a pullout by Taiwanese companies abound but much of this may be part of the usual bargaining that you see in any situation where some group is going to lose out. China’s top legislators seem to be happy enough to force companies who do not comply with even the current laws to find another place to operate. They feel they have the choices, and in that respect they may just be right.

On the other hand, if these companies really are struggling at present, as they claim they are, the new law may be the straw that breaks the camel’s back. A cut in employment is only a good thing if Foreign Direct Investment(FDI) continues to arrive, China’s internal markets continue to expand, and the factories that are lost are just sweatshops.

Replacing these sunset industries with electronics and car assembly may cause a temporary loss of jobs but the longer term benefits are huge. This is certainly worth the short term pain, and more akin to ‘creative destruction’, as opposed to simply destruction.

Having said this, however, we are not ready for the scenario where jobs are lost in large numbers. Even a less drastic scenario, where lazy workers are emboldened to hang on desperately to their positions, is not a tenable position for a country that must deliver continuous economic growth and development, or risk the consequences of a failure to satisfy rising expectations. There is a pre-existing drift towards lower cost countries like Vietnam that makes this scenario a bit more likely.

Pushback

Separately, the Dongguang labor bureau has issued a modified version of the national Labor Law. According to the China Herald, the differences are significant:

- Industrial action is equated to criminal behavior and can be reason for dismissal
- Workers must give a reason for leaving their job
- Any work done in dangerous situations is excluded as a condition to terminate labor contracts

The article concludes that we are likely to see more such modifications in the future, and that this is likely to muddy the waters. Not only do I agree, I would suggest that we may see a response from the central government as it tries to put a finger in this particular dyke.

With dissimilar results from the classic story.

(This article was originally published on ERE dot net.)

Translating strategy into action includes the management of both organizational and individual performance.

Globally, there has been a continuing misalignment between strategy management and individual performance management. This is particularly true in China.

If the organizational strategy is pushing organizational focus in one direction, the performance management systems need to line up with that. Otherwise, there is a strategy disconnect between the two systems.

Best practices have been established, and are continuously updated, for how to link organizational strategy to individual performance management. Of the five principles for establishing a Strategy Focused Organization [SFO], the fourth principle is focused on creating alignment with the workforce. SFO Best Practice Principle 4.2 is specifically focused on creating alignment of the strategy with personal goals.

During the last year I have observed two large enterprises undertake two simultaneous projects: [1] an executive sponsored project using the Balanced Scorecard and SFO principles to implement a strategy management system in the company; and [2] an HR sponsored project using a traditional approach to improve the company’s individual performance management system. These two organizations are large complex enterprises employing more than 20,000 people.

The first enterprise devoted six months to clarifying and implementing its strategy across the top levels of the enterprise. The project team of managers and consultants mapped the company’s strategy and developed a Balanced Scorecard for the enterprise. The project team used a series of workshops to cascade the strategy to more than 20 large SBUs and Departments.

This yielded a clear specification of objectives, measures, targets and projects for translating the strategy into action at the top two levels of the organization. The HR department of this enterprise had initiated a project to improve their performance management system by focusing on job descriptions, responsibilities and accountabilities. The two project teams operated in parallel paths without coordinating with each other.

The first enterprise’s strategy management project using the Balanced Scorecard methodology succeeded. The performance management project using the traditional approach was not as successful. Now the key decision makers have recognized the problem and are revising the HR approach to align with the BSC objectives. The executive team has recommended the BSC strategy management system to their associated companies and to their holding company.

The second enterprise’s project team followed global best practice by involving the company’s executive team in developing and refining the enterprise strategy map and BSC, then cascading it to SBUs and Departments. The project team established Alignment of the BSC with performance management as one of the key objectives in the enterprise and the HR strategy maps.

Quantitative measures for this objective were defined. Revisions in the company’s approach to writing job descriptions were proposed. The HR department welcomed these improvements. Revisions were proposed to the process for defining the position accountabilities for executives and managers. These revisions were also accepted by the HR department. The twice yearly performance management discussions were also re-designed.

The second enterprise’s executive team followed the best practice principle of creating alignment between the strategy and the performance management system. As the second organization’s strategy management project nears completion the project appears to be successful. The process continues for creating alignment between the strategy and individual performance management.

Comments to: frank.mulligan@recruit-china.com

____________________________________________

Dr. Irv Beiman has helped more than 100 companies on two continents [US & China] improve their business performance. Dr. Beiman serves as Chairman of eGate Consulting. eGate’s primary focus is on consulting, training and software that enable Chinese organizations to better formulate, execute and adjust their business strategies using the Balanced Scorecard. This strategic focus on the BSC extends to the realm of corporate governance, business process improvement [BPI/BPR], competency development, variable pay, leadership development, and organizational culture.

Dr. Beiman earned a Ph.D. in Psychology from the University of Illinois at Urbana-Champaign in 1973, and served on the faculty of the University of Georgia from 1973-1980, publishing in the leading refereed journals in his field. From 1986-1992, Dr. Beiman’s US company was heavily involved in leadership assessment and development in high risk areas of the nuclear service and decontamination industry. He served as Country Manager of Hewitt Associates from 1997-1998. He has significant experience advising agencies within the Chinese government on matters of enterprise performance management and evaluation. This article was originally published on www.cbiz.cn

____________________________________________

Over the past few months there has been talk in economic circles about China reaching the Lewisian Turning Point.

In a nutshell, this notion suggests that a developing country that achieves a surplus of agricultural labour can grow its industrial sector for years without wage inflation. The labor surplus comes from an increase in farm productivity, and the reduction in need for farm laborers.

The laborers then head up to the city and look for work. The salaries they look for is a function of the income they received before, and therefore they seek a salary that is lower than their true output. The country avoids salary inflation because there is an ongoing supply of such labourers. Productivity remains high until such time as the worker’s salaries increase to the level of their true output.

   
The Coming Challenge

The problem that China faces is that it may have reached the point where the endless supply of new workers ceases, and factories have to actually compete for labor. Then inflation kicks in, and the situation becomes more difficult for government and industry to manage.

In practice we can see that the surplus of labor is already ending on the east coast, and inflation has become a problem. Factories complain of a serious lack of workers after major events like the Chinese New Year holidays. Companies have responded by moving factories inland to the western provinces. They have also been forced to increase factory wages.
   

The Solution?

Readily available, cheap labor is now a part of China’s history, so China can no longer be described as a low-cost country. This has been the case for some time but it is a particular meme that has not achieved some sort of critical mass. It’s hard to change a narrative that has worked so well for so long for both the media and the Chinese government.

The reports that I have seen suggest that this Lewisian Turning Point will become a big problem in 2009, and that after that time there will be a much more serious shortages of labor. The aging population seems to be a contributing factor here, with more and more dependents supplanting the working age population.

In this context, the governments decision to introduce China’s new labor law, and the implied focus on higher valued added industries, may actually be transformational. Inspired even.

The Lewisian Turning Point becomes an opportunity to move to the next level, not a problem to be endlessly debated by the dismal profession.

Question: How can a CEO meet the varied challenges involved in managing company strategy for successful execution? My colleague, Dr. Yong-Ling Sun, was working on a project when she heard the company CEO deliver a spontaneous speech last month that provided an answer to this question.

Consider the words of QingDao Beer’s CEO, Mr. Jin Zhiguo:

“Beginning our BSC project took a big stone away from my heart because when we formulated our strategy clearly, we learned how to turn it into action, how to have everyone in our company understand our strategy, to know how to execute our strategy, to clearly know what actions we should take to accomplish the strategy, and how to evaluate that action via our strategic measures and objectives. Our organization structure and process optimization are based on the strategy. We are busy every day working toward the company strategy. This has also solved the problem of work motivation.”

In just one paragraph, Mr. Jin touched on all five principles for establishing a Strategy Focused Organization [SFO]: mobilize, translate, align, motivate, govern. These are the five organizing principles for a finite set of best practices that have been identified from analysis of more than 500 case studies.

This executive understands that using the Balanced Scorecard Methodology includes more than simply developing a performance scorecard containing KPIs organized in four perspectives.

QDB’s CEO continued: “Using this methodology for communication enables us to make strategic thinking more real, visual and practical. We only strengthened our strategic thinking before, but our staff were not so clear about how to execute the strategy. Now our top management team knows how to manage the strategy, and how to execute company strategy through our management system. We are changing our organization. All changes need to meet the requirements of strategy execution instead of simply changing. We are not changing for change, but for strategy. This clarifies our objectives for the change.”

Mr. Jin understands that the tools for the BSC Methodology are both visual and practical. The SFO principles and methodology include powerful tools for creating clarity throughout the organization about how to successfully manage the strategy in the company management system. He sees this methodology within the context of creating change that is deeply focused on successful execution of the strategy.

Each principle includes a set of management tools and activities that are organized into a best practice. There are four to seven best practices included within each of the five principles. Each of these best practices can be incorporated into a comprehensive strategic management process.

The top executive clarified a major benefit of this approach: “BSC enables our work to be more systematic. We did some work on improving our culture and organizational structure before. These may have been preparation for strategic management, but they were not systematic enough. Our work is becoming more systematic through our use of the BSC tools. Our BSC project has effectively solved the challenges of how we can become stronger and larger. So BSC should receive sufficient attention not only from the top management team, but also from every department and every employee, because this is a system engineering methodology.

Every department and function is designed based on the strategy, so every department and BU must pay high attention to it. There is no department excluded from implementing BSC. BSC is a complex systems engineering, as well as a long term job.” He understands this is a sophisticated methodology. He is using it to enable everyone’s work to be more systematically focused on successful execution of the strategy.

The CEO also recognizes this strategic management methodology should be applied to employee competency development in order to improve organizational capability. This is one of the steps that takes place when comprehensively deploying this methodology for strategic management: “I hope that in this project process, we can not only improve our company’s competitiveness, but also improve our different departments’ and individuals’ competency so that each employee becomes an expert. This will enhance our organizational capability. Only by this way, can we make ourselves to be the leader in our industry.”

QDB is being led by a CEO who has a vision plus a methodology for how to execute. In a Flat World, this is one of the key ingredients for success. See related articles on strategic management.

____________________________________________ 

 Dr. Irv Beiman has helped more than 100 companies on two continents [US & China] improve their business performance. Dr. Beiman serves as Chairman of eGate Consulting. eGate’s primary focus is on consulting, training and software that enable Chinese organizations to better formulate, execute and adjust their business strategies using the Balanced Scorecard. This strategic focus on the BSC extends to the realm of corporate governance, business process improvement [BPI/BPR], competency development, variable pay, leadership development, and organizational culture.Dr. Beiman earned a Ph.D. in Psychology from the University of Illinois at Urbana-Champaign in 1973, and served on the faculty of the University of Georgia from 1973-1980, publishing in the leading refereed journals in his field. From 1986-1992, Dr. Beiman’s US company was heavily involved in leadership assessment and development in high risk areas of the nuclear service and decontamination industry. He served as Country Manager of Hewitt Associates from 1997-1998. He has significant experience advising agencies within the Chinese government on matters of enterprise performance management and evaluation. 

____________________________________________

In a study that will be published in the Journal of Family Psychology, researchers have just discovered that 80 percent of parents in the US do not consider their 18-25 year-old college students to be adults. At least in the group of people they surveyed.

Strangely enough the students had the maturity to agree with their parents assessment, so that’s a start.

The conclusion of the study was that parents are responsible for their kids for longer and longer periods of time. A new period between adolescence and adulthood is now common, and in this period people are called ‘emerging adults’.

I don’t have similar research for China but 20 years living in Asia has taught me that the same is probably true here, except that these emerging adults are working in your office. This period in China is likely to extend a few more years than the US.

The problem is obviously connected with the one-child policy and the fear that parents have that they might lose their precious bundle. So when the child asks ‘Can I ride a bike?’, the answer is ‘No, too dangerous.’. ‘Can I swim?’ ‘No, too dangerous?.’ ‘Can I stay in stay overnight in my friend’s house?’ ‘No, too dangerous.’

Survival is the key issue and anything that does not involve danger is likely to be approved. As they become adolescents, and even adults, little responsibility is expected of the current generation because to give them any decision making powers would involve some small amount of danger. The longer this continues of course the more likely it is that giving decision making powers would involve danger. A little power late in life, when you have had no real opportunity to get the normal feedback from failing, is a dangerous thing. Who knows what you might decide?

As a result of this, in your office you have professionals who have never gone through many of the normal rights of passage for a child, never mind those for an adolescent or adult. Young staff in China are roughly hewn from stone, and the final scupture has still to emerge.

Your job is to finish off the sculpture.

You might baulk at the suggestion that this is your job, but given that no one else is doing it, you don’t have much choice. As a manager you also have to recognize that you are seen as a replacement father in the business environment, and your screening processes will not be able to identify sufficient numbers of people who are genuinely mature for their age. That’s like believing you can stop the tide with your hand.

So forget the standard training courses, and push for acceptance of responsibility. The addition of more and more responsibility will ensure that eventually your staff will fail, and you can wipe their noses and rub their knees, and you can do root cause analysis with them. Only failure can have sufficient personal impact to change the pre-wired immaturity you face.

Anything less is insufficient to the task.

The Tipping Point is a great source of ideas, but the book is not likely to be seen as as source of good information or knowledge for HR.  

However, Malcolm Gladwell talks about a tendency we all have called the Fundamental Attribution Error (FAE), and this has direct relevance to assessment of candidates. He did not do the research on this issue but his description is excellent.

The FAE is a blindspot we all have when we process information. What happens is that when we interpret other people’s behaviour we overestimate the influence of the other person’s character, and underestimate the influence of their situation and context.

So we tend to explain the interaction we have with other people using their character traits, and we tend to ignore their situation.
 

Dumb Candidates

So the candidate that refuses our ‘career position’ suffers from conservatism, weakness, indecision, stupidity or worse. Their situation tends to be ignored, often completely.

But behind the refusal to accept a new job, and actually onboard, there may be many situational or contextual factors. The refusal could stem from the fact that there will be an open position in the candidate’s current company in 3 months time, and the candidate knows he is the likely choice.

Or it could be that the candidate’s wife has just said she is pregnant. Completely out of the blue. Or an offer letter arrives in the post giving the candidate a place on an Engineering Masters degree program in Beijing University in mid-2006.

Or the candidate has another, better job offer. This is by far the most likely contextual factor in China.

Each of these is enough to make a candidate refuse a job, and the refusal says nothing about the person’s character.

In The Tipping Point, the author points out that we are more attuned to personal clues, and less attuned to contextual clues. The FAE makes the world easier to understand. In the context of hiring, the contextual clues are often hidden to us, sometimes deliberately by the candidate, sometimes because HR doesn’t dig deep enough.

So this is going to continue to be a problem for HR departments in China because right now the power rests firmly in the hands of job seekers. They have many options and they control how much information we see. They control the Talent Gap.

If their situation remains hidden to us we will continue to be frustrated with job offer refusals and other fatal breaks in hiring process.

Unless we specifically ask them.

After attending a recent event on the subject of Performance Evaluations I was forced to revisit the issue of the Dunning-Kruger effect. The more you learn the more you realise how limited your knowledge is. Knowledge is truly humbling.

The Dunning-Kruger Effect is the notion that people who have a little knowledge think that they know more than they actually know, while people who have much more knowledge tend to underestimate that knowledge.

The results are predicted by the old adage ‘A little knowledge is a dangerous thing.” People who have little knowledge don’t know enough to know when to use it, and when not to use it. If you think you actually know more than you truly do then you are far more likely to mis-apply that meagre knowledge in practice. The negative feedback that incompetent people get from their decisions should inform them of their incompetence and the fact that it doesn’t is disturbing.

We could be suffering from this and simply not know.

The Dunning-Kruger Effect is backed up with actual studies which were published in 1999 in the Journal of Personality and Social Psychology. The research showed that incompetent individuals consistently overestimate their own level of skill, and completely fail to acknowledge their own inadequacy.

The researchers took students from Cornell University and tested them for skills like logical reasoning and grammar. Each student was asked to self-report on their skill level. When they were shown their actual scores it was clear that the least skilled tended to overestimate themselves, while the skilled people gave a more accurate self-assessment.

Know thyself  is a very useful piece of advice here because the researchers then asked the students to estimate their likely rank among the other students. The students with the strong skills did this reasonably accurately, but even after seeing their own raw score the unskilled group still overestimated themselves. Worse than that is that they fail to recognize skill in others.

The good news is that if incompetent people are trained up on their own skills they can then recognize and acknowledge their own previous lack of skills. The training seems to give them the confidence to acknowledge their skills deficit and this surely has immediate applicability in the Performance Evaluation(PE) process.

What it suggests to me is that the PE should focus heavily on the areas where skills are lacking without actually dwelling on the lack of skills. If you have to give someone an average score, which implies competence, and then suggest extensive training, so be it. You can disguise the appraisee’s lack of skills by appearing to set very high standards in employees. “Excellent work, Mr. Appraisee, but we think we can do better here.”

I found that listening to what the employee has to say, and wants to do, seems to be more important than handing out some score. After the first appraisal I shifted to lunch in a local restaurant. Interview rooms only encourage defensiveness.

Now of course we are all wondering which group we would be in Dunning-Kruger Land. The ones that know themselves? Or the ones that don’t?. If you’re not wondering about your own skill base you know where you belong.

Or maybe you don’t. I have no idea ….