Humility – The Gandhian Way

gandhi king

Gone are the days of Gandhian simplicity and unpretentiousness. The rush for materialism and economic progress has robbed Indians of their humility. Arrogance and egoism has taken centre stage.

Now, household help count is a status symbol while Gandhi preached self-service. He weaved the clothes he wore, and currently wearing high-end fashion brands is a social necessity. Whether in personal life, interviews, or jobs, we present a flawless image as drilled by the personal branding consultants. Admitting to weaknesses is a no-no. Our leaders are picture perfect till their names become media headlines for some scandal. Where are we heading with this behavior?

Mahatama Gandhi’s two autobiographies “The Story of My Experiments with Truth” and “Satyagraha in South Africa” reveal the humility of the great man.

1.  Humility in Personal Life

“The Story of My Experiments with Truth” sounds more of a confession of wrong doings and mistakes from childhood to adult life. Gandhi ji admitted to smoking cigarettes, eating meat, acting like a sex-starved teenager with his wife and visiting brothels a couple of times. He basically did what all youngsters do in the name of adventure, rebellion and growing up. However, very few leaders take the trouble of writing them down to share it with their followers,  to enable the followers to learn from the leaders mistakes.

Nowadays, doing so at the peak of the political career is considered suicidal. Our society needs a reality check. It needs to accept that failures are a part of life, no one is perfect, not even our greatest leader. Alas, others look akin to a clown, a circus joker, a pathetic beggar, a disreputable character, a corrupt greedy man, a ruthless psychopath, a loose woman, a calculating witch, but prey why do we miss seeing all these in self.

2.  Obsession With Titles

A title is the ultimate hallmark of supremacy, be it Lord, King, CEO, President. If you have an exalted designation on your visiting card, all character flaws, deficiencies and short comings are wiped clean. People must bow down in front of you and you get the right to treat them inhumanely with disrespect. Contrast this with Gandhi ji’s attitude towards the title of Mahatma bestowed on him. He mocked and ridiculed it. In the introduction of the book  “The Story of My Experiments with Truth” he wrote -

“My experiments in the political field are now known, not only in India, but to a certain extent to the ‘civilized’ world. For me, they have not much value; and the title of Mahatma that they have won for me has, therefore, even less. Often the title has deeply pained me; and there is not a moment I can recall when it may be said to have tickled me.”

About his second visit to Kashi Vishanath Temple he indulged in some good-natured self-depreciating humor –

“Since then I have twice been to Kashi Vishvanath, but that has been after I had already been afflicted with the title of Mahatma, and experiences such as I have detailed above had become impossible. People eager to have my darshan would not permit me to have a darshan of the temple. The woes of Mahatmas are known to Mahatmas alone. Otherwise the dirt and the noise were the same as before.”

Ask the question “Who am I?” If the response is a designation or a degree, then there is confusion in identity.

3.  Grandiosity of Leaders

Everyone desires to be a leader as it makes them look grand in eyes of others. Aspiring leaders avoid contemplating whether they actually inspire their followers, work on improving the world and add value to the society. The aim is to get the perks and privileges of leaders without the responsibilities. Even the spiritual leaders, swamis and yogis, the embodiment of austerity and simple living, are sitting on golden thrones. During investigations or after death, shocked followers see the display of hoarded cash and jewellery.

The servant-leadership followed by Gandhi ji showed his true leadership mettle. In the book – Satyagraha in South Africa – he described himself as servant of the public. He wrote -

“A public meeting of the Indians was called in Durban. Some friends had warned me beforehand that I would be attacked at this meeting and that I should therefore not attend it at all or at least take steps for defending myself. But neither of the two courses was open to me. If a servant when called by his master fails to respond through fear, he forfeits his title to the name of servant. Nor does he deserve the name if he is afraid of the master’s punishment. Service of the public for service’s sake is like walking on the sword’s edge. If a servant is ready enough for praise he may not flee in the face of blame. I therefore presented myself at the meeting at the appointed time.”

Further on, he expounded servant leadership in the following words -

It has been my constant experience that much can be done if the servant actually serves and does not dictate to the people. If the servant puts in body-labour himself, others will follow in his wake. And such was my experience on the present occasion. My co-workers and I never hesitated to do sweeping, scavenging and similar work, with the result that others also took it up enthusiastically. In the absence of such sensible procedure it is no good issuing orders to others. All would assume leadership and dictate to others and there would be nothing done in the end. But where the leader himself becomes a servant, there are no rival claimants for leadership.”

These are fabulous examples of role,  accountability, and responsibility of leaders. Just a handful of leaders can be so humble and fill these shoes. Autobiographies of great leaders show that leadership is a long hazardous journey requiring great deal of personal sacrifice, hard work, and vision. It is incorrect to assume business titles automatically bestow leadership traits. Queen Marie Antoinette’s immature and inconsiderate statement – “If they don’t have bread, let them eat cake” – didn’t get her dedicated followers, it is Napoleon who is respected for leadership qualities. . Earn the honor of being a leader. Ask yourself – Why should others follow you?

Closing thoughts

Wishing all my readers, a very Happy Gandhi Jayanti.  As it is a holiday in India, let me end this on a humorous note.

A donkey twisted his leg, so the owner put him in a red Ferrari to take him to the vet. On the way, the owner stopped at a car wash. The car cleaners said – “Wow, what a body, such a dazzling color.” The donkey joyously brayed. The cleaners remarked – “Sounds fabulous”. After returning to the  farm, while walking on the mud path, the donkey was extremely disappointed and thought – “Why is no one appreciating me, as the car cleaners did?”

Impact of Power Styles on Organization Risks

Power, we all want it. If we don’t have it, we associate with the powerful in the hope some of it rubs down to us. Being in the upper echelons of corporate world or the political corridors of the country’s parliamentary houses ensures that you are exempt from the rules applicable to the common person.

However, the way a person gets power and uses it reflects the person’s character, and its influence on others. In the corporate world, the power styles used by senior managers directly influence the risk levels of the organization. Unsurprisingly,  power and politics are undiscussable topics in the corporate world; hence, when risk managers do risk assessments, they ignore the two.

I personally recommend risk managers to understand the individual power styles of the senior managers and overall organization power style. To appreciate the connection between power and risk, let us first look at the power styles and their impact on the organization.

Power Sttyles

Depending on the situation, a leader needs to use various power styles. However, if a leader uses coercive style even when it is not required, then something is wrong. Leaders frequently use power styles of reward and punishment for fulfilling illegitimate requirements. Hence, the probability of followers being involved in unethical activities requiring compromise of personal values is higher. On the other hand, the expert style ensures that followers make informed judgments as the leader attempts to enhance their ethical values and knowledge level. The reward is not in the form of a bribe and is implicit; the leader is dedicated to improving the organization.

Another aspect that requires understanding is the need for creating perception of power. When a leader is undertaking illegitimate activities (watch any Hindi movie to see the underworld Don) he needs to create a strong perception of power by using threat and punishment. Else, his coercive tactics will be ineffective, as people will not cooperate. Therefore, he makes some sacrificial goats to demonstrate that he is above the law and normal rules don’t apply to him. Another tactic is to break the social norms, and not behave rationally and predictably. Both these methods focus on creating fear to ensure compliance. Without the perception of power and fear, the leader becomes vulnerable to revolt from the common person. The only way for him to retain his power is by increasing the number of sacrificial goats, threats, and punishments.

1.   Impact on Legal and Reputation Risks

A coercive leader is usually riding a tiger. The organization risks continue multiplying as more and more people become aware of the unethical practices. An elastic can be stretched up to a limit. Eventually, the concocted environment cocoon will burst and all hell will break loose. The leader cannot trust anyone after a point. Hence, his fear increases in direct proportion to his vulnerability. The leader takes more and more risks to protect his personal fiefdom. The organizations reputation risks and legal risks increase proportionately.

2.   Impact on Human Resource Risks

Overtime, the leader’s charisma wears off. As the layers peel off, disillusion sets in. Employees realize that the leader doesn’t behave with integrity and honesty. Even the loyalists recognize that whenever it suits the leader’s personal agenda, they can face the bullet without any fault of their own. This creates disquiet among employees, and employee disengagement increases. The human resource risks increase manifold with disengaged employees.

3.   Impact on Operational and Financial Risks

The disengagement starts effecting productivity and performance as everyone grasps that meritocracy has no links with rewards. This in turn impacts the bottom line as leader fails to deliver on targets. Failure to show profitability and results makes the leader’s position precarious. The leader starts feeling pressure from the top. As he is unable to improve productivity, he attempts to manipulate results and financial statements. In nutshell, leader’s power style influences operational risks and financial risks of the organization.

Closing Thoughts

No one can deny that success in life depends quite significantly on a person’s power and influence. The general opinion is that means to the end do not matter when we strive for power. On the contrary, how we get power and maintain power, is crucial for longevity in the powerful position. For a coercive leader, the end is tragic, as the hunter becomes the hunted. Moreover, if a leader gets power by paying bribes or giving rewards, his power ends when he stops doing so. His loyalists disappear with speed. Abusing power is no longer safe in the present world, as it increases the personal risks of the leader and the organization risks. Therefore, risk managers need to ensure for continued prosperity of the organization, that leaders get power by the rights means and use it for the right purposes.

Leadership of Dead Bodies, Stones and Flowers

leadership imprint1

In April, two Air India pilots handed over the controls in auto-pilot mode to two female cabin attendants to take a short nap. They decided that their sleep was more important at 33,000 feet while flying the 160-passenger flight from Bangkok to Delhi. They returned to the cockpit after 40 minutes when one of the cabin attendants accidently knocked off the auto-pilot mode.

The angry Twitterate asked for pilot’s license suspension, removal from job and legal charges for culpable homicide. Everyone questioned their work ethics and shock at their irresponsible behavior. Air India investigated the incident, suspended the pilots and sated that passengers’ safety was never compromised. Unbelievable, how can passengers be safe without any pilots at the helm?

1.     Double Standards in Evaluating Corporate Leaders

 The pilots were crucified for risking the lives of passengers. However, surprisingly the pilots of the corporate world do not suffer the same fate. The wizards and titans of the banking industry crash landed the world economy, but they didn’t lose their CXO seats.

Look from another lens. Did any senior in Supplier Company or the multinationals lose their job in the Bangladesh factory fire? In Foxconn, the Apple contractor, 11 employees committed suicide, four died in an accident and one collapsed after continuously working for 36 hours. However, Steve Jobs was rated as the second most popular leader by the CEOs in a survey conducted by Price Waterhouse Coopers. The first and third were Winston Churchill and Mahatma Gandhi respectively.

Now this is going to rattle my readers but let me say it. Steve Jobs was a great inventor, designer, strategist and marketer. However, when it came to people, his employees considered him rude and manipulative, and his competitors found him uncivil. Though Apple achieved great heights, he paid low salaries to the employees in the Apple stores, paid no dividends to the shareholders, pushed down suppliers to manufacture at lowest possible rate and didn’t believe in charity or corporate social responsibility. His behavior and actions weren’t people centric or humanity oriented. So my question is – do we consider him a great leader because he managed to put Apple on top? That makes him a great CEO, not necessarily a great leader.

2.     Misconceptions of Leadership

 The problem arises due to the definition of leadership. Read the dictionary meaning:

Leadership is “organizing a group of people to achieve a common goal”.

- We don’t focus on how the group of people were gathered; by inspiring them or arm-twisting them.

-  We don’t focus on the nobility of the goal; was it to exploit others or liberate them.

-  We don’t focus on the method adopted to achieve the goal; was it by breaking the rules or a journey of virtue.

In the present world we see leaders leaving dead bodies in their path, walking over people as if they were stones and sucking the life out of them. Great leaders create leaders not followers, they make others blossom like flowers.

Be it a corporate leader or political leader, we don’t wish to question the leadership methods. Our thinking is, how it matters to us, we have nothing to lose. We have everything to lose, and Martin-Niemöller-Foundation words at Hitler’s time still resonate:  

“First they came for the communists,
and I didn’t speak out because I wasn’t a communist.

Then they came for the socialists,
and I didn’t speak out because I wasn’t a socialist.

Then they came for the trade unionists,
and I didn’t speak out because I wasn’t a trade unionist.

Then they came for me,
and there was no one left to speak for me.”

Our own silence will kill us and the society we live in. When humanity is at stake, can we close our eyes and say nothing is at stake.

3.     Leadership Training

The Institute of Strategic Change reported that – “the stock price of ‘well-led‘ companies grew by over 900% over 10 years, compared with 74% for poorly led companies”. Warren Bennis in 1998 said – “The Truth is that no one factor makes a company admirable. But if you were forced to pick the one that makes the most difference, you’d pick leadership.” However, how many companies train on leadership or do a performance evaluation on leadership qualities?

Quite a few would be saying we do it. So let me clarify. In organizations bosses tell the juniors what to do and how to do it. They give rave reviews to the employee who completes the task as they had stated. They promote that employee and now he becomes a boss. At best, he will be a good manager, not a leader.

Corporate world determines success rate by title and salary.  Neither guarantees leadership skills. Employees aim to become a boss, not a leader. The terms are not synonyms.

According to Malcolm Gladwell,  all outliers practiced their talent for over 10,000 hours to achieve greatness.  In the corporate world, how many hours are dedicated by each employee to learn leadership? Learning leadership is a by-product of the main job, till CEO level. Then isn’t it surprising that we do not have many great leaders in the corporate world.

 Closing Thoughts

Maximum damage in the world was caused by people who got powerful positions without good leadership qualities, be it Hitler, Jeff Skilling, Bernie Madoff or Lance Armstrong. The biggest risks in the corporate world are leadership risks. It is the leaders who make the decisions, so unless we have a system of putting the right people in leadership positions we will continue to have these disasters. Hence, our job is to develop good leaders, select good leaders and continuously monitor the leaders.

 Wishing my readers a Happy Mother’s Day. Being parents is the toughest job in the world,. They are responsible for raising the next generation of leaders.

References:

  1. Air India Pilots Story  
  2. Deaths in Foxconn
  3. Price Waterhouse Coopers report on best leaders

 

Risk Managers Leadership Challenge

British Petroleum was recently fined US $ 4.5 billion for the Deep-water Horizon disaster in April 2010. The highest ever fine till date. The verdict implicated two employees for negligence. Similar news is coming of regulators charging huge fines to banks for their wrong doings. Regulators and law enforcement agencies change in approach sends a clear message – regulators won’t tolerate lax attitude towards risk management. Organizations will have to pay through their nose if caught contravening laws and regulations. Therefore, risk managers have to pull up their socks and gear themselves for tougher times.

It is apparent that risk management approaches and practices that worked until 2011, will not work by 2015. Frequently, risk managers focused on self-preservation by blaming the top management for lack of support. They continued the silo approach and turf wars with other risk management departments at the expense of the organization. They escaped majority of the blame for the debacles, as business was responsible for the risk management decisions. Risk managers role was recommendatory and supportive in nature; hence, the ball was never in their court.

1.     New demands from business heads

In my view, business heads will not allow this type of smooth sailing to risk managers now. They will hold risk managers accountable and responsible for the level of risk within the organization and for failure to prevent risk management disasters. In the current environment, risk managers need to focus on the following.

a)     Build risk awareness across the organization and spread the message to every employee of the organization.

b)     Maintain a risk register that captures internal and external risks at strategic, tactical and operational level.

c)      Ensure decisions are taken after giving due regard to risk versus reward parameters. Organization risks remain within the risk appetite.

d)     Guarantee complete compliance to all legal and regulatory requirements at a global level.

e)     Make risk management departments efficient and effective by managing costs and working with limited resources.

2.     Change in leadership style

Hence, it is crucial for risk managers to change their leadership style and take a deep look on the management practices they have followed until date. I know you would think that isn’t a big issue. I also thought on the same lines before I read Lisa Wiseman’s views on multiplier effect of leadership. She is the author of the book – Multipliers: How the Best Leaders Make Everyone Smarter. I must say it is a revelation. She has divided leaders in two major categories – diminishers and multipliers. Multipliers use and amplify intelligence of others that results in a 2X effect. Unfortunately, diminishers use less than half the intelligence of those around them. Diminishers have the attitude that they are the smartest in the room, and hence do not leverage on the intelligence of others. On the other hand, multipliers create an environment where best thinkers grow. See the chart below to understand the ten sub categories.

3.     Risk managers diminish business teams

I understand that our first reaction is to believe that we are a multiplier leader. However, you will change your opinion on reading the details in the paper or on taking the accidental diminisher quiz (links below). Majority of us are somewhere between the spectrum on multiplier to diminisher. Here are some of the instances where risk managers show diminishing behavior:

a)     As risk managers sometimes we have focused on building large departments to show importance rather than deliver value.  We do so at the expense of other risk management departments who might be requiring the resources desperately.

b)     We use our positions politically to create a fearful environment among business teams. They believe all shortcomings and failures will be reported to senior managers and their jobs will be at risk.

c)      We use our limited knowledge of business operations to give advice to business teams without considering their viewpoints and thoughts on the same.

d)     We roll out risk management plans and initiatives without having any discussions with the business teams and people at lower levels that have to execute the plans.

e)     We believe without our personal involvement business teams cannot manage risks. Instead of training and educating business teams, we get involved in every small aspect.

Closing thoughts

Though, if you read the top five things risk managers have to do at the top of the page, we need to cultivate multiplier behavior patterns. Nothing can be better than using twice the brainpower of a resource at the cost of one. Moreover, the multiplier effect will facilitate using the knowledge residing with business teams. It is only when business teams start thinking about risk management on their own that organizations will avoid disasters.

In the present environment, risk managers have to meet new demands with insufficient resources and knowledge. Do you think becoming a multiplier will address some of the problems? According to you what alternative approaches should be followed?

References

  1. Multipliers: How the Best Leaders Make Everyone Smarter Management Forum Series presentation by Liz Wiseman Synopsis by Rod Cox
  2. Accidental diminisher quiz

US Presidential Race – A Learning Board

A yearlong battle with approximately US $3 billion spent on it and the verdict is the  same. President Obama got re-elected; Republicans have majority in the house and Democrats in the senate. On the face, nothing changed. Even to maintain status quo, it is a case of survival of the fittest. So here are some lessons risk managers can learn from the US Presidential race.

1.      Don’t rest on your laurels

President Obama was leading the race, and then he was complacent in the first debate. Romney gained advantage and in the last few weeks, the race was neck-to-neck. Once we achieve something, we tend to take it for granted. Over time from peak status, we gradually unnoticeably start slipping until the gap is huge. Then we are shocked on discovering we are not as good as we thought. As risk managers, we need to continuously manage risks and upgrade skills. We cannot take it for granted that risks will remain the same and everyone will see things in the same light.

2.      Use disasters to demonstrate skills

President Obama in 2008 used the financial crises to demonstrate his leadership skills. In this election, he exhibited presidential capabilities during hurricane Sandy. The message was clear to the public, in crises he leads with calmness and control. He is on top of the things. Risk managers must lead from the front to build trust and confidence in the business teams. They must not start the blame game when risk disasters occur.

3.      Cover the whole organization

President Obama won the elections due to his people centric approach. He was the favorite among women, minority communities and middle class. The Republican party upper echelons are white dominated and Romney sounded pro-rich. He failed to address specific issues of the masses except the jobs shortfall. Risk managers to build a risk culture and make risk management successful, you must spread the word at all levels of the organization. Communicating just with the top management is insufficient and ineffective.

4.      Negative messages work

This election saw the highest number of negative messages from both parties. Democrats and Republicans ran down their competitors. Pointing out problems with others strategies benefitted their game. Risk managers need to incorporate negative messages in their communication strategy. Sometimes giving strong messages of what can go wrong helps in changing minds. Secondly, communication has to be continuous, not periodical. To build the right culture, communicate daily.

5.      Define starting point clearly

Most of the problems President Obama faced during first term were from President George Bush’s era. He took over an economy and country in distress. However, he made that clear to the public and did not take the blame for Bush’s bad decisions. In risk management too, on taking a new role clearly highlight the current status and previous problems. Define the starting point first before laying down the road map for progress. Don’t take blame or responsibility for predecessors problems.

Closing thoughts

President Obama’s first task is to address the fiscal deficit and that will lay the foundation of his second term. In his book – Audacity of Hope – he had inspired many to think beyond the present limitations and lead change. This term will define whether he will be remembered successfully as a President. With his personal achievements, he has shown the world that most barriers can be broken. Risk managers can take that lesson from his life and work towards changing the organizations risk climate.

Building Trust Between Auditors And Business Teams

As we know, management is about formal authority, whereas leadership comes from moral authority. Leaders derive moral authority when followers trust them. Hence, the crux of people management is building a relationship of trust.

Auditors and risk managers face some serious challenges in building trusting relationships with business teams. Frequently, when the business teams hear an internal auditor is coming to meet them, the reaction is – “Why is he coming? When will he go?” Auditors are unwelcome, as business teams view them suspiciously. The relationship is as healthy as that of a divorced couple sharing parenting responsibilities. Aha, we base marriages on trust and it reminds me of this one.

A man took this beautiful finance to his attorney to sign the pre-nuptial agreement. The attorney looked her over, smiled and asked the man – “Do you trust her?” The man replied – “With my life, but why bet my money on it”.

As is obvious, the trust levels are deteriorating in most relationships. However, auditors and risk managers cannot use that as an excuse.  Internal auditors enjoy very low confidence level with business teams. A recent PWC State of Internal Audit survey stated that just 45% of the respondents were comfortable with internal audit’s management of critical risks, though 74% had enterprise risk management in place. Another point to note was less than 50% believed that their internal audit function was well coordinated with risk management functions. The scenario is dismal; there are communication gaps with business teams and risk managers. The focus has to be on building better relationships.

Auditors must look at David Maister’s trust equation. According to him:

Trust = Credibility + Reliability+ Intimacy

                                 Self-Orientation

Let us see how the four elements affect auditors’ relationships with business teams. More important is to determine a way to build trust-based relationships instead of transactional relationships.

1.  Credibility

 Establishing credibility is about meeting technical and emotional aspects. The technical knowledge of auditors and risk managers qualify them guide the business teams. If they lack relevant qualifications, experience and knowledge, the relationship of partner, mentor and advisor is doomed. However, all the knowledge and experience will fail if the business teams believe that auditors and risk managers do not walk the talk.  An auditor cannot pile on the free launches offered by business teams, and in the same breath talk about ethics. Here, to build trusting relationships, each auditor and risk manager in the team has to establish personal and professional credibility.

 2.   Reliability

People need to know where a person stands on various issues to develop a comfort level. They need to perceive the person as predictable, just, fair and ethical in his/her dealings. The business teams fear auditors and risk managers; a politically motivated report can build up a storm. The principle of issuing accurate, apolitical and balanced reports goes a long way in building a reliable reputation.  Without it, there is going to be a fight, us against them mentality with prevail between business teams and auditors. The win-lose situation created will result in  business teams viewing auditors and risk managers as the bad boss archetype.

3.   Intimacy

 This is about sharing confidences and deepest darkest secrets about the professional life.  This is not about personal life. An auditor and risk manager delve into the negative side of business – identify shortcomings and high-risk scenarios. Depending on the organization culture, these findings have an indirect impact on career development, promotions, compensation and hiring and firing of business teams.

Hence, business teams will stay silent and it is not enough for auditors to say – “I have an open door policy”. Ethan Burris in his research found that – “employees who speak up and challenge the status quo are viewed as less competent, less dedicated to the organization and more threatening compared to those who support the way things are. They are also rated as worse performers, and their ideas get less support.” No one is going to open up and identify the real risks and concerns, unless some level of intimacy is established. Hence, auditors and risk managers need to show emotional honesty to break down the barriers of communication.

 4.  Self-Orientation

 When people view a leader entering into relationships primarily to serve his/her own self-interest, then this denominator will wipe out the positives of the three elements in the numerator. The use and discard policy of transactional relationships causes engagement and commitment to plummet. In this case, as Burris says – “It can be scary to open up the lines of communication, because you don’t know what’s going to come out of it.” Thrusting relationships will not form when business teams perceive risk managers as serving their own agendas at their cost to win brownie points and laurels. They need to be transparent, altruistic and balanced in their approach.

 Closing Thoughts

 An auditor went to do a stock take of a weapons factory. The inventory manager hated the auditor. In the previous report, auditor had made many disparaging comments about the manager’s work. This time, the inventory manager in a pleasant voice said to the auditor –“Please don’t touch this, it is dynamite. The manager held the next bin and the manager said – “Oh that is just anthrax”.

Rather than face a similar situation, it is much better to follow Blaine Lee Pardoe’s advice – “When people honour each other, there is a trust established that leads to synergy, interdependence, and deep respect. Both parties make decisions and choices based on what is right, what is best, what is valued most highly.”

 References:

  1.  PWC- State of Internal Audit Survey
  2.  David Maister – Trust Equation
  3. HBR – What is really silencing the employees – Ethan Burris

Should Risk Managers Take Different Roles?

Currently, media is brimming with stories of corruption, greed and unethical behavior in the corporate world. Risk managers are targets of public ire. All are under fire – compliance officers, fraud investigators, auditors, etc. The stakeholders and public are rightly questioning their commitment and capability in discharging their duties. Under such circumstances, a few risk managers must be contemplating whether it is the right time to change and take up different corporate roles.  Let us address the three main aspects of the decision.

1. Why am I in it?

Risk management roles have two sides. The positive aspect of the role is that it is intellectually stimulating as risk managers learn various facets of the organization. On the flip side, it is a thankless job as their advise and reports rattle most business executives. They never win a popularity contest, are not welcomed with garlands and operation teams think of them as party poppers.

Risk managers to function diligently need high emotional intelligence, integrity, courage and an altruistic temperament. They have to stand up and give negative information to senior managers, even at the risk of being shot, for the betterment of their organization.  With the same qualifications and experience, they can get a line job, most probably a better paying one. Hence, why should they continuously face flak, stress and heart-burn? The reason is passion. It goes back to why a person chooses a specific field. As Confucius said longtime back – “Choose a job you love, and you will never have to work a day in your life.” 

2. Can I do other jobs?

Risk management is a specialized field. The knowledge level required is so high, that a credit risk manager cannot do the job of an operational risk manager or vis-a-versa. K.Anders. Ericsson in his paper “Making of an Expert” analysed that it takes 10,000 hours of incremental learning to become an expert in a specific field. That is, it approximately takes 10 years to master an area. He categorically mentioned, there are no born geniuses, and there is no substitute for hard work.

Stories of success of Bill Gates and Steve Jobs, leads us believe that college drop-outs made it big, so why can’t we? Gates and Jobs, both started learning and continuously working in computer field from the age of thirteen. By the time they dropped out of college, they had 8000-9000 hours of studies and work time in computers. Hence, it isn’t surprising that they could leverage their knowledge successfully.

Therefore, the choice is whether one wishes to be a generalist or a specialist. It again comes back to, whether a person wishes to work for money or fulfill their passion. Normally, if a person works in an area they are passionate about, they find their life more meaningful and rewarding. Their happiness and positive attitude translates into more successful careers. Hence, aim at being an expert in your area.

3. So many failures!

Should the risk management failures dishearten risk managers to the extent of changing careers? I think not. At this time, the world requires well-trained and dedicated risk managers. This is a century of chaos; organizations are in for a roller-coaster ride in this decade. Risk managers can steer them into safe harbors, facilitate them in leveraging upside risks and mitigating downside risks. When the times are tough, the tough get going. Now risk managers need the stamina and perseverance of sports people. Let us take a leaf out of Michael Jordan’s career -

“I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” 

Closing thoughts

Risk managers in this age of turbulence can play a pivotal role in shaping the future corporate world. To do so, they need passion and commitment. I am sharing with you Isabel Allede’s speech on tales of passion. Isabel is awesome – witty and inspiring at the same time. I hope you too become a dedicated risk management activist after hearing her. Just discover your passion.

References:

Making of an Expert – K. Anders. Ericsson

A Women’s Day Special – Play with Colors of Life

“How wrong is it for a woman to expect the man to build the world she wants, rather than to create it herself?”   ― Anaïs Nin

Women are smart. They demand equality and have a special day for women. Men claim superiority and have no men’s day. One can say the rest of the days are of them, but are they? The male gender suffers; poor chaps can’t even protest as it isn’t a masculine trait to show weakness. Women can complain, shed tears, howl their heart out and it reflects feminine traits. Mothers teach sons – boys don’t cry. Wives complain – Husbands are unemotional. Haven’t women successfully shackled men in a stereotypical image from birth?

Shouldn’t women be fighting for the male cause to bring in some emotional gender equality? Shall we start by being a bit more honest ? Lets discuss some of the things that women should do for themselves and the male gender on this women’s day.

1. Miss Goody Two Shoes

Men are convinced women are more principled, honest and virtuous than them. Women have done a wonderful job of personal brand building. Most haven’t got their hands dirty publicly. However, surveys say women participate equally in sexual harassment in offices and are showing increasing propensity to commit white collar crime as their ratios improve in the workforce. Moreover, they backbite, rumor monger, tattletale and indirectly bully more than men in offices. Women are more likely to use sex to get a promotion. Yes, some strategically decide to sleep with the boss to boost their careers.

Women play an equal role in making destructive management practices flourish in an organization and do not hesitate to use them for personal gain. Let us stop playing the blame game and take ownership to improve the work climate within our organizations.

2. Women’s Worst Enemies

Women undercut women. They make loud claims that male gender does not support them. However, women make bad bosses to junior women. Women ruin careers of aspiring young women to remove competition. They feel insecure if men give attention to a younger woman, hence damage the youngsters chances of succeeding. If a senior male wishes to harass a young female, he uses her female colleagues to do so to avoid sexual harassment charges.

While women target the men’s club for all the negative events happening to them, they fail to collaborate to form a women’s club. With 20-50% female workforce in offices, female leaders need to push for reforms in their offices that benefit the gender. Laying the blame on male CXOs door doesn’t absolve women leaders of their responsibilities.

3. The Sacrificing Souls

Women undersell themselves by portraying the picture of sacrificing souls. At every opportunity they lament about the difficulties of being a mother and a career women. Yes, they have to make sacrifices but so do men, specially single dads. It is difficult but stop crying about it all the time. As Gloria Steimen said- “I have yet to hear a man ask for advice on how to combine marriage and a career.” 

Being successful is about managing different priorities effectively. Have you seen successful men or women incessantly talking about the same universal issue? Husband, kids and career are a woman’s personal choice, hence its an individual decision. No man or woman is going to get all three handed on a silver platter for all times. There is no point in attempting to win the corporate battle using these tactics.

Closing Thoughts

Fight the battle of equality on ethical and principled grounds, without playing the victim. Successful women don’t enact the damsel in distress routines while pointing fingers at others. Quit complaining and enjoy the colors of life. Be fair, be just and give both genders an equal chance of succeeding on merit and talent.

I know, women will be mad at me for writing this post.  But what to do, 90% of my readers are men :).

Wishing all my readers a special women’s day and a happy Holi.

Risky Selection of Leaders

Everybody in the business world has a litany of woes about leaders. There are many causes attributed to it, but the pertinent question is- are we choosing the right leaders or is this a case of blind choosing the blind? I found some flabbergasting research highlighting that leadership selection is mostly done on attributes perceived to make a person successful. More often than not, the actual traits required for leadership are ignored.  Read on to assess for yourself whether organizations are doing risky selection of leaders.

1.    What attributes are organizations looking for?

The “2009 Best Companies for Leadership” report of Hay Group with Bloomberg identified 20 companies globally that were best in developing leadership talent. The results indicated that these companies gave better shareholder returns in short-term and over a 10-year period than the S&P 500. Infosys Technologies was the only Indian company in the listed 20. The graph below shows the traits top 20 companies value in leaders. Strategic thinking, execution and soft skills rate above technical skills.

2.    What is the percentage of effective leaders?

On the face of it, the above-mentioned attributes seem to be present in most of the staff. However, another survey -“The Global Leadership Forecast 2011” conducted by DDI  “found that only 33 percent of HR leaders are highly confident in their frontline leaders’ ability to ensure the future success of their organization.”  Now these frontline leaders are critical to the growth of the business as they interact with the customers. Hence, their leadership is crucial for increasing profitability of the organization

Secondly, in the long run these frontline managers are most likely to become business unit heads and hold other critical positions in the organization. We assume that with experience the leadership capabilities improve. This is an incorrect assumption. A research conducted by Hogan and Curphy (2004) asserts that managerial incompetence base rates are as high as 50% of all managers. So where are we going wrong? Dolitch & Cairo succinctly described the problem in the following words:

It’s instructive that an individual as ideally suited to a job as Pitt (former SEC chairman) could ultimately fail.  Too often, we assume that someone whose professional background is a perfect fit for a job—who has the ideal combination of intellectual acumen, experience, and expertise—cannot fail.  The lesson:  Never underestimate the power of personality in undermining the success of even the most brilliant and well-suited leader. (Dotlich & Cairo, 2003, p. 62)

3.    How are managers doing on personal attributes?

A 2010 survey of HayGroup- Emotional Intelligence at the heart of performance – identified the crux of the problem. It showed that out of 12 competencies for measuring emotional intelligence20% of the respondents had no strengths, 52% had 3 or fewer and just 16% had 9 or more. This means, that just 16% of the respondents are emotionally capable of being good leaders.

ESCI scores further analysis indicated that – the competencies typically seen as strength include achievement orientation, teamwork and organizational awareness. Whereas, those that typically require most development include emotional self-awareness, conflict management, influence and inspirational leadership. Think of it, without the emotional intelligence to understand one’s own and other people’s behavior, – can an individual positively influence others, lead teams and inspire people?

This means two things. First, that society doesn’t have a high percentage of emotionally intelligent people. Second, people without the emotional intelligence get leadership positions on technical and execution skills. Beyond a point, this results in failed leadership and causes damage to the organization. Leaders with low emotional self-awareness de-motivate 60% of the staff. The staff is disengaged, suffers in a toxic work environment and organization faces retention problems.

 4.    Why do organizations choose ineffective leaders?

 In light of the above facts, we assume the organizations should be doing a better job at selecting leaders. However, they are failing because psychologically humans chose leaders with negative traits. I am highlighting a couple of aspects on it.

Strategic thinking is the most important skill organizations are looking for amongst leaders. To develop a good strategy, leaders need to be creative thinkers. However, as I wrote previously in the article Creativity @ Risk” based on the Jenniger S. Mueller’s research paper – people don’t chose leaders with creative ideas. When a person with creative ideas is pitted against a standard thinker who follows established norms, the standard thinker wins the leadership selection battle. People select the creative thinker only when specifically asked to choose a charismatic leader. Therefore, people by themselves may not choose an inspiring leader.  That means, people chose leaders based with whom they are comfortable with, rather than the intellectual capability of the leader. The clear message is that organizations will get strategic thinkers and inspiring leaders only when they specifically focus on identifying, developing and promoting them.

The second aspect is the soft skills or emotional competencies of the leaders. A research paper by Robert W. Livingston, Taya R. Cohe, & Nir Halevy titled – Empowering the wolf in sheep’s clothing: Why people choose the wrong leaders – highlights that people tend to chose leaders with harmful attributes and lacking emotional skills.  The research indicates that there is stark difference in what people say that they value as leadership traits and the people they select as leaders. People chose leaders who are socially appealing but may not be interested in the welfare of the group. Social individuals are perceived as high status. Although they may be more self-serving, power seeking and self-promoting, people prefer them to an altruistic person.

This means, paradoxically people chose a person as a leader who is domineering and competitive  rather than an empathic team player concerned over the welfare of his team mates. Nice guys lose the battle of leadership. Therefore, we shouldn’t be surprised that organizations have such aggressive cultures with backstabbing and backbiting being the norm.

The quandary is, that in a drive to achieve targets and growth, competitive people rule. The thinkers, team players, influencers and change agents are not preferred choice for leadership roles. The excessive focus on achieving numbers itself reduces profitability due to destructive corporate culture.

Organizations need to maintain balance while selecting leaders. The right mix is required. A sales team leader needs to be more emotionally aware of customer reactions and be sociable. On the other hand, to develop and train resources a learning and development leader needs to be altruistic and empathetic. Hence, organizations will reduce leadership selection risks by identifying various emotional capabilities and soft skills required by a leader to fulfill a job description.

 Closing thoughts

 When one does the math for ineffective leaders, the failure rate is remarkable. While most organizations are focusing on developing leadership talent, a root cause analysis for failure of leadership and selection of ineffective leaders is not done. Realization dawns normally when organization is on the brink of a catastrophe.

Therefore, it is a good idea to build in an emotional competency evaluation system for selecting leaders. A fine balance has to be maintained between technical and emotional competency of the individual and organization objectives and culture. Without plotting the data on a matrix and evaluating it objectively, organizations might not get the right leaders. While leadership is a soft skill organizations require hard data to select a good leader. Leaders can make or break an organization; hence, huge risks occur when wrong leaders are selected. Risk managers must call management attention for selecting good leaders by conducting a leadership skill assessment.

References:

1. Better Leaders, Better Outcomes The Power of Selection Tools to Drive Business Results – A research paper by DDI

2. 2009 Best Companies  for Leadership -The future of leadership: a spotlight on the best -Hay Group Webinar Feb 18, 2010

3. EI at the heart of performance -The implications of our 2010 ESCI research – Hay Group

4. Empowering the wolf in sheep’s clothing: Why people choose the wrong leaders – Robert W. Livingston, Taya R. Cohen, & Nir Halevy- Kellogg School of Management, Northwestern University

Auditors Create Caustic Work Environment

When I say auditors create caustic work environment, I expect an indignant response from auditorville to the effect – “What are you saying, we are beacons of decency and always walk the high moral ground.” A question that begs an answer is – have auditors acknowledged the angst of business teams and if so, what have they done about it? Auditors sing paeans about their positive contribution to business operations. However, business teams frequently hold the opinion that auditors badger and bulldoze them. Such contrarian views create disharmony in the working environment. Hence, to some extent auditors can be said to be contributing to building a negative work culture.

Now before going on the defensive, just hear me out. As auditors, we sometimes build walls between audit and business teams without realizing that we are doing so. As clichéd as it may sound, our attitude and approach cause negative perceptions and build resistance amongst business teams. From being harbingers of building a risk culture in the organization, we become potent controversy creators.

Let me give a few examples here and some suggestions to corroborate my statement. Tell me whether you agree or disagree with the scenarios mentioned below.

1.    Park your ego at the door 

Whenever I read a blog and to see the text I have to close an advertisement, I am irritated. I feel why I am being forced to read an advertisement when I wish to read the article. I didn’t sign off for seeing a large advertisement covering the text. The interruption in my desire to read the blog post by closing the advertisement is a cause of annoyance.

Come to think of it, as auditors we are equivalent to these advertisements to business managers. Audit projects interrupt their smooth operations, as business managers prefer focusing on their key result areas. We are irritants to them and can become a source of stress if not managed properly. 

A few auditors deal with business managers with a sense of narcissistic entitlement.  Auditors somewhat falsely believe since they are auditing the work of business teams they have the upper hand and are superior. In some cases, without having knowledge and experience of business operations, auditors still believe that their opinions and suggestions must be accepted by business managers.

Sometimes auditors forget that the business managers have a different set of strengths and must be appreciated for the same. Rather than adopting a command-control structure, a positive culture is formed when auditors handhold the business teams.

2.    Don’t make a mountain of a molehill

Ever felt the urge as an auditor to present a B or C level observation in a manner to senior management as if the sky is falling. Just to settle an old grouse with the business manager and show him/her in bad light. Well you won’t be the first one, and as humans, all of us feel tempted sometime in our career to be spiteful. However, each such incident causes distrust amongst business teams.

To put it bluntly, auditors enjoy the privilege of having access to confidential information of the organization and to senior management. If they wish, they can abuse this power by politicizing audit observations to harm business teams. Each audit project gives auditors new ammunition to use against business teams. The idea to politicize audit report findings may appear tempting; however, auditors end up creating potential hurdles for themselves.  Whenever an audit is scheduled business managers would perceive that they are dancing with wolves and will be eaten alive for lunch.

Auditors need to take care that they do not damage anyone’s credibility. They need to empathize with the business managers and work together with them to resolve organization issues.

3.    Don’t take yourself so seriously

 Key to building good relationships is that communicate in a manner where the receiver of the message first gets a message that generates positive emotions. After making the emotional deposit, then maybe share a critical view and then again make an emotional deposit. This ensures that the receiver is positively inclined to take negative feedback and initiate dialogue. However, sometimes auditors don’t spend time on niceties. Auditors have the reputation of being brusque and humorless. They carry the serious furrowed-brow look, which makes them somewhat unapproachable to business teams. Without humor and empathy forming socially harmonious relationships becomes challenging.

 If you don’t beleive me, read the story below to understand the sentiments of the business teams for their auditors.

 A senior auditor and business manager were kidnapped. The kidnappers called the CEO for ransom money threatening to kill both of them. The CEO did a quick math and said “Go ahead and shoot them, in the ransom money amount, I can hire 20 more.”

Now the kidnappers asked the auditor what his last wish was. The auditor said – “It has saddened me to hear that my CEO whom I had worked for 20 years has no value for me. I have always worked diligently; hence as my last act on this earth I would like to read out my audit report to the business manager.”

The kidnappers saw no harm in the request and asked the business manager his last wish. The business manager looked deeply into the eyes of the auditor and requested pleadingly to the kidnappers – “Shoot me immediately”.

 Closing Thoughts

In my view one of the important things to do for making audit project successful is to make collaboration enjoyable for the business teams. Auditors have the choice to be enablers, navigators or roadblocks to the success of business teams.

According to you what lessons should audit teams learn to improve the working environment of audit projects and develop stronger relationships with business teams?