Management Insights

The Myth of Self Service

Every activity carries transaction costs. A decade ago, administrative assistants and librarians carried most transaction costs for managing information. The costs were visible on the balance sheet as their salaries. With self-service web-sites, intranets, and document management systems, the transaction costs of managing information appear to have fallen. In fact, they've shifted from lower-cost administrative staff to professionals - hidden in the salaries of professional staff who start early, stay late, and spend weekends checking email. Self-service has another consequence. It takes professionals attention away from their real job, which is to use information to think. 

One way to free professional to think, as suggested in a recent article in Harvard Business Review, is to reassign administrative staff to teams as "information managers". Applying the manufacturing metaphor of staging parts in a "kit" where assemblers have the right materials at the right time rather than having to go to the warehouse to find them, information managers can research information and prepare briefing kits, freeing professionals to do the value-adding work of using information to think and make decisions.

 

Rewarding Good Behavior

Is it better to reward behavior or results? Two new papers describe the effect of pay for performance and suggest that rewarding behavior is more effective. In a study where half the students at poor performing schools were given the opportunity to earn a cash payment if they passed all tests, completion rates increased by about a third - but only for girls and mainly for those who only needed to improve a little. Students whose performance improved had clear ideas about what they needed to do to improve.

A different study paid some students for test scores and others for specific tasks like reading books. The results of the experiments where performance was rewarded were disappointing - plenty of money was paid out, but no evidence was found that paying students led them to do better. However, where students were simply given $2 for every book they read if they passed a computerized comprehension test, school grades improved substantially. This suggests that for students who do not know how to improve their own performance, the best strategy may be to reward them for simple tasks that ultimately translate into higher grades.

Applying these findings into a business context, incentive schemes designed to reinforce and reward specific behaviors on a frequent basis may be more effective for more people than schemes that award a year-end bonus based solely on performance.

Red Flags and Brown M&Ms

Today's managers are frequently overwhelmed by information. Flat organizations and ever cheaper information technology have resulted in a torrent of data. The challenge is not getting enough information, but sorting through it all to find the proverbial needle-in-a-haystack.

What if you could identify early warning signs by monitoring only a few key pieces of information? Rather than trying to measure everything - often just because it can be measured - focus on a few critical things that act as a red-flag for potential problems. For example, when visiting a factory for the first time I find it helpful to keep an eye on housekeeping, which is frequently a good early warning indicator for maintenance effectiveness.

As Dan and Chip Heath write, your source of data doesn't need to be high tech or numerical. Consider the rock band Van Halen. In its heyday, the band became notorious for a clause in its touring contract that demanded a bowl of M&Ms backstage, but with the brown ones removed. The story is true - confirmed by former lead singer Dave Lee Roth himself - and it became the perfect, appalling symbol of rock-star-diva behavior. 

Get ready to reverse your perception. Van Halen did dozens of shows every year, and at each venue, the band would show up with nine 18-wheelers full of gear. Because of the technical complexity of staging a show, the band's standard contract with venues was thick and convoluted with many clauses. Van Halen buried a special clause in the middle of the contract. It read, "There will be no brown M&Ms in the backstage area, upon pain of forfeiture of the show, with full compensation." So when Roth would arrive at a new venue, he'd walk backstage and glance at the M&M bowl. If he saw a brown M&M, he'd demand a line check of the entire production. So Roth was no diva, he was an operations expert. He couldn't spend hours every night checking every detail. He needed a way to quickly assess whether the stagehands at each venue were paying attention - whether they had read each line of the contract and taken it seriously.

Ask yourself, what are the brown M&Ms in your business?

Carrots or Sticks?

Which is the better incentive, a carrot or a stick? Economists working with managers of a Chinese electronics factory recently discovered that by changing the wording of a productivity bonus scheme it became more effective.

The Economist reports that at the beginning of the week, some workers were told they would receive a bonus at the end of the week if they met a given production target. Other groups were told that they had "provisionally" been awarded the same bonus but they would "lose" it if their productivity fell below the same threshold.

Objectively these are two ways of describing the same scheme. But under the theory of loss aversion - that is people attach greater value to things they already have and abhor losses more than the equivalent gain - workers thought of the provisional bonus as theirs and worked harder to prevent it from being taken away.

Carrots, this research suggests, may work better if they can somehow be made to look like sticks.

The Difference Between Groups And Teams

Groups don't become teams simply because that's what someone calls them. Many organizations have a "management team" but it doesn't mean that the members behave like a team or demonstrate teamwork. Most commonly, management teams meet periodically to provide each other with updates rather than to do real work together.

Teams differ fundamentally from groups because they require mutual accountability. Groups can be successful based on the contribution of individuals whereas a team requires people to work together to achieve a common goal. Jon Katzenbach and Douglas Smith capture this distinction in their definition of a team as “a small number of people with complementary skills who are committed to a common purpose, set of performance goals, and approach for which they hold themselves mutually accountable.”

Teams aren't always the best approach and groups or individuals can sometimes be more effective. If a task does not require joint work products, a group may be more effective. If a task requires people with interdependent skills to work across organizational silos then a team is most likely the best approach.

Make Quicker Decisions

More time does not always result in better decisions. More information may help, but more time just creates anxiety and can actually reduce the quality of decisions. Sometimes we are better off making a snap decision and moving on. This way we free up our most valuable asset; time.

Malcolm Gladwell describes in Blink how we are able to make certain kinds of decisions very quickly. He explains that great decision makers aren't those who process the most information or spend their time deliberating, but those who have perfected the art of "thin slicing." Thin slicing refers to the ability of our unconscious mind to find patterns in situations and behavior based on very narrow slices of experience. The unconscious mind is very good at filtering the few factors that matter from an overwhelming number of variables. For complex problems that don't lend themselves to logical decision making, thin-slicing often delivers a better answer than more deliberate and exhaustive thinking.

Rather than waiting until you have all of the possible information - which may never happen - make a decision and move on.