The Evolution of Cooperation Summary

In the The Evolution of Cooperation you will learn:

1. What is game theory’s Prisoner’s Dilemma


2. How it proves that a “Tit-for-Tat” strategy is effective;


3. Why an even more forgiving strategy could achieve even better results;


4. How this applies to the concept of cooperation; and


5. How a spirit of cooperation can prevail even in unpromising situations.

The Evolution of Cooperation Summary

The Prisoner’s Dilemma

Consider cooperation in a few different forms. If you are in a long-term relationship with another person, does it make the most sense in terms of your personal goals to cooperate with that individual? Do you gain any advantage by showing kindness to someone who never reciprocates? What could your business gain by working with another company if it was soon going to go bankrupt? How should your country react to an overt hostile action by an enemy nation? Can your country deal with – or manipulate – this enemy so that it will cooperate? A helpful way to portray and answer such questions is to use an iterated (repeating) “Prisoner’s Dilemma.”

The original conundrum is: The police capture two criminals and separately offer them a deal. The men are not allowed to confer. If one informs against the other and confesses, he will be released from prison, and the other will get a 10-year prison term. If they both remain silent, they each will get a minor, six-month term. If both inform against the other, they each get a two-year term. The dilemma is, if both inform, they each gain less than if they remain silent. In game theory, a Prisoner’s Dilemma again provides three possible outcomes between two players: 1) Both players benefit modestly when they cooperate with each other; 2) One betrays the other and benefits handsomely if, at the same time, the other player is trying to cooperate (that player gains nothing); and 3) Both players receive minimal benefits if they betray each other simultaneously.

The Prisoner’s Dilemma always has two players. Both have two distinct choices: cooperate or betray (that is, defect or inform against the other player). Each player chooses to cooperate or not without knowing what the other player will do. Defection always pays better than cooperation. The dilemma? If both players defect, they each gain less than if they both decide to cooperate.

Picturing the Prisoner’s Dilemma

To visualize the Prisoner’s Dilemma graphically, think of a simple matrix, like a box, with two rows and two columns resulting in a square cut vertically and horizontally to form four adjoining boxes. One player selects a horizontal row, either betraying or cooperating. The choices are symbolized by letters: “R” for reward, “T” for temptation to defect, “S” for sucker’s payoff and “P” for punishment for mutual defection. The other player chooses a vertical column. Together, these choices provide one of four separate outcomes as shown in each box of the matrix:

• Box 1: Cooperation column and cooperation row – When both players cooperate, each receives R, the reward for mutual cooperation, worth three points.

• Box 2: Defection column and cooperation row – When the column player chooses to defect and the row player chooses to cooperate, the defecting column player wins. This player receives T, for yielding to temptation and defecting. This is worth five points. The row player earns S, the sucker’s payoff, worth zero points.

• Box 3: Cooperation column and defection row – When the column player chooses to cooperate and the row player chooses to defect, the winner is the defecting player. This player receives T, worth five points. The column player earns S, worth zero points.

• Box 4: Defection column and defection row – If both players defect, each receives P, the punishment for mutual defection. This is worth one point each.

As the breakdown shows, the game assigns points based on each prisoner’s specific choices. A set number of points accompany each choice, that is, R (3), S (0), T (5) and P (1). Considering these payoffs, if you are the horizontal row player, defecting is always to your advantage, no matter what choice you think the other player plans to make. Thus, defection, not cooperation, is your sensible, strategic choice. This logic also applies to the other player, who should always choose to defect, too. Thus, it is always logical for both you and your opponent to defect. However, in such a scenario (Box 4), you and your opponent receive only one point each. This is a smaller payoff than if you both cooperate, which earns three points each (Box 1). What a conundrum! Rational choices lead to poorer individual payoffs. Thus the dilemma.

There is no way around this fix. If you and your opponent take turns defecting, the outcome will, nevertheless, always be worse than if mutual cooperation prevails. The three-point reward for mutual cooperation is greater than the average (two-and-a-half points) each player gets if one earns five points for defecting and the other earns zero points for being a sucker. When the Prisoner’s Dilemma is played only once, both players logically choose defection, and win one point each, a less successful payoff than if both had cooperated. If two people play the game a finite number of times, defection remains a logical, rational choice for both. Each player assumes defection on the other player’s part based on the last move and, by extension, the next to the last move. Thus, cooperation makes no sense. In such a scenario, it just isn’t the logical choice.

The Emergence of Cooperation

This logic changes if the game is played repeatedly and indefinitely. In that case, a cooperative strategy can emerge if the individual players are not certain when the game (that is, the interaction) will reach its last move. With that unknown, cooperation may make more sense than defection. This indefinite scenario is more realistic and lifelike than one in which two individuals (or groups or businesses or nations) precisely plan a finite number of interactions. In an indefinite scenario, cooperation becomes possible because both players understand that they may be interacting with one another again and again. Choices that individual players make now can influence subsequent choices. Thus, the future affects the present. But as in life, present payoffs are always more attractive than future ones. Therefore, the payoff for the current move always seems more valuable than the payoff for the next move.

“Tit for Tat”

Considering all of this, what is the best strategy for an individual player in an iterated Prisoner’s Dilemma of indefinite length? To find out, researchers organized a tournament. They invited psychologists, economists, political scientists, mathematicians and sociologists to submit computer programs that would compete with one another. They received 14 entries.

The winning program – which also was the simplest submitted – was “Tit for Tat,” entered by Anatol Rapoport, a University of Toronto professor. Tit for Tat’s first move is cooperation. After that, it always mimics the other player’s previous moves. In a 200- move game, Tit for Tat averaged 504 points per game. Other programs that did well in the tournament all shared a common characteristic with Tit for Tat: They all were nice. They never defected on the first move. It makes sense that the nice programs performed well. The tournament included a large enough number of them to demonstrate that they worked well with each other, thus raising their average scores. Tit for Tat incorporates a high degree of what can be termed “forgiveness.” If the other player defects, and subsequently then cooperates, Tit for Tat does the same. Plus, Tit for Tat is virtually nonexploitable. If the other player defects, so does Tit for Tat, quite remorselessly.

A subsequent, actual open-for-all-entries Prisoner’s Dilemma tournament drew 62 proposals from six countries. Tit for Tat was the clear winner in the first and second rounds. Its simplicity gave it an edge over other tactics. In the second tournament, as before, “Nice guys finished first.” The programs that did best against Tit for Tat capitalized on its niceness. A hypothetical “Tit for Two Tats” game would have done even better than the actual Tit for Tat program. In it, defection would occur only if the opposing player defected on the two previous moves.

If researchers projected a large number of Prisoner’s Dilemma tournaments, the results would show that the nice programs would thrive, while the other programs (called the “meanies”) would tend to drop out eventually. Thus, cooperation, in effect, evolves over time to become a dominant strategy when repeated interactions occur. Indeed, in such circumstances, it is logical that Tit for Tat would become a universal strategy that everyone would apply.

What about the Real World?

In addition to the artificial construct of the Prisoner’s Dilemma, the efficacy of Tit for Tat applies in far more practical realms. Consider the value of reciprocity (Tit for Tat’s ruling principle) in the U.S. Congress, where “you vote for my bill and I will vote for your bill” is a philosophy that has been in play for years. Individual congressmen cannot succeed without their colleague’s assistance. Their bills would never pass. Eventually, their constituents would deem them ineffective and vote them out of office.

Other examples of the logic and sensibleness of cooperation abound, not only in terms of human relations, but also widely throughout nature. Consider the relationship of ants to acacia trees (also known as thorn trees). The acacias provide food and domicile for the ants inside their inflated thorns; the ants protect the acacias from hungry herbivores and trim competing plants. Similarly, alga and fungus join in symbiosis to form lichen. Even bacteria sometime employ a conditional strategy to thrive. Cooperation, based on reciprocity (Tit for Tat), evolves even among nonthinking life forms.

“Live and Let Live”

Activity at the Western Front in France and Belgium during World War I provided a vivid example of the all-consuming cooperative power of reciprocity among human beings. Enemy soldiers shooting from trenches fought gruesome and bloody battles against each other for years, often for gains of only a few small yards of territory. But in between the actual battles, enemy soldiers commonly exhibited remarkable restraint about attacking each other. German soldiers would walk about, in clear sight and within rifle range, but the Allies would not shoot at them. This applied equally to Allied troops. Often, shelling on both sides would cease precisely at meal times. Snipers and artillery gunners knew not to attack certain areas marked by flags. Often, between battles, riflemen and artillery operators on both sides would purposely shoot to miss each other. And, the troops would not fire on each other when bad weather prevailed.

Both German and Allied troops honored such unspoken rules. Indeed, this “live and let live” philosophy, while not formalized in any way between the deadly trench combatants, was nevertheless starkly evident across the entire 500-mile Western Front. One British veteran explained it this way to a comrade who was new to the trenches, “Mr. Bosche ain’t a bad fellow. You leave ’im alone; ’e’ll leave you alone.”

What took place in those trenches was nothing less than an iterated Prisoner’s Dilemma. Since the opposing soldiers routinely attacked each other’s trenches, a policy of mutual defection (always shooting and shelling to kill) was the sensible choice in the short term. This would weaken the enemy. However, the enemy troops that faced each other across that No Man’s Land did so for extended time periods. Thus, the combatants could develop conditional strategies that fit their lengthy interactions. Therefore, it should come as no surprise that, given these circumstances, a mutually cooperative policy based upon reciprocity developed among the enemy combatants.

In the trenches, reciprocity was the controlling factor. If the Germans began shelling the British at the dinner hour, then the British would immediately follow by shelling the Germans at dinner, and also at breakfast. If the British snipers suddenly become accurate marksmen in between battles, then so would the German sharpshooters. This was essentially Tit for Tat with machine guns. Throughout most of WWI, cooperation was a spontaneous, self-replicating and evolving phenomenon along the entire Western Front. This proves that cooperation is an immensely powerful strategy. In fact, it can quickly take shape, unspoken, amongst the deadliest of enemies.

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The Snowball Summary

 The Snowball Summary

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The World’s Wealthiest Individual

Warren Buffett earned his vast fortune all by himself. Instead of living amid Wall Street’s bustle, Buffett lives and works in Omaha, Nebraska, a bucolic city in the U.S. heartland. Throughout his career, backwater Omaha has been Buffett’s base, though the rest of the business world sees it as a déclassé town of no special significance. To build his enormous wealth, Buffett exhaustively studied the stock market and the world of commerce, learning everything he could about individual companies, and their potential for growth and earnings. This hard-earned knowledge has been his guiding light and his path to becoming the richest man in the world.

Buffett’s investment philosophy, adapted from his mentor, investment guru Benjamin Graham, is remarkably simple: Look for companies whose stock values are priced less than the organization’s “intrinsic” value and invest accordingly. Buffett does not concern himself with the market’s temporary ups and downs. He invests for the long term, focusing on companies’ sound business fundamentals and capacity to generate superior earnings year after year. Through this straightforward process, he made his fortune. Of course, the “Oracle of Omaha’s” legendary expertise in separating commercial winners from losers is much easier described than accomplished. How did Buffett become the world’s best company evaluator and stock-picker?

You can find the answer in his single-minded quest, from childhood, to become a millionaire. One of the earliest photographs of Buffett as a little boy shows him proudly holding his favorite toy, a nickel-plated change-maker, a small gizmo with four tubes that dispensed coins. As he grew up, Buffett zealously studied everything he could find about business and investing, including decades-old magazines and newspapers. That he far surpassed his initial financial goal is a testament to his prescience and steely-eyed focus, as well as to his idiosyncratic formula for financial achievement. His story is the classic American tale of hard work that pays off beyond all expectations. How the kid who wanted to make a million actually did that – and more – is a truly amazing tale.

The Early Years

The members of the Buffett clan were Nebraska tradespeople, straightforward, honest, no-nonsense types. Warren’s father, Howard, worked in his own father’s grocery store in Omaha before attending the University of Nebraska. After that, he sold insurance. In 1930, Howard’s second son Warren Edward was born just at the start of the Great Depression. Soon after, Howard opened a stock brokerage, Buffett, Sklenicka & Co. To do so when people were shunning stocks took real courage. However, Howard’s business was a winner from the start.

A precocious toddler, Warren loved numbers and collecting things. His hobbies included counting and measuring. Of course, these interests would stand him in good stead. As a boy, Warren was a bona fide businessman. His first products were packs of gum, which he sold to his neighbors. Later, he sold golf balls that he retrieved from the lake at Omaha’s Elmwood Park golf course. He also sold popcorn and peanuts at local football games. Warren saved every penny he made. Even as a youngster, Warren avidly read all the investment books and periodicals at his father’s office. His favorite library book was One Thousand Ways to Make $1,000. He studied it religiously. He vowed to himself that by age 35, he would be a millionaire.

During the 1940s, Howard, a rock-ribbed Republican, was elected to Congress. He and his family moved to Washington, D.C., where Warren entered junior high school and became a newspaper boy. In 1944, Warren submitted his first income tax return. By age 14, he had saved $1,000. Through hard work, he doubled it and purchased a 40-acre tenant farm in Nebraska. As a teenager, Warren also went into the pinball business, buying and installing the machines in local barbershops. Additionally, he became a horse

race handicapper, selling a tip sheet he entitled Stable-Boy Selections. After high school, Warren briefly attended the University of Pennsylvania, which he did not like. He was shocked when Harvard turned him down. He got admitted to Columbia University, where he took classes with Benjamin Graham, the famous author of The Intelligent Investor. He quickly became Graham’s star pupil. Warren read and memorized Security Analysis, the influential book Graham wrote with Columbia professor David Dodd.

By this time, Buffett was a regular investor on Wall Street. He focused on companies that kept costs low and always made money, such as GEICO, an insurance firm that sold policies over the telephone. Buffett initially bought 350 shares and later bought many more. After graduation, he returned to Omaha, where he sold stocks for his father’s firm and taught investing at the University of Omaha. He married a sensitive, empathetic girl named Susan (“Susie”) Thompson. By 1951, Buffett’s capital was $19,738, which he invested and reinvested. He and Susie lived inexpensively on his earnings as a stockbroker and part-time teacher. This was not hard because Warren was quite cheap. He would wash his car only when it rained, so he could save on water. In 1953, Warren and Susie’s first child, Susan Alice, was born. She became known as “Little Susie.” They later had two sons, Howard and Peter.

In 1954, Buffett and his young wife moved to New York, where he went to work at Graham’s investment firm, the Graham-Newman Corporation. He subscribed fully to Graham’s investment philosophy of focusing on companies’ net worth and purchasing stock in firms that Wall Street undervalued. Graham called such companies “cigar butts.” Buffett studied Moody’s and Standard & Poor’s, and “with his prodigious ability to absorb numbers and to analyze them,” he quickly became a sensation at Graham’s firm, invariably recommending great buys. Buffett learned a valuable lesson about “capital allocation” – “placing money where it would earn the highest return.” This became one of his bedrock investment principles. When Graham retired, he offered Buffett a partnership to keep him at the firm. But Buffett had come to New York to be close to Graham. With him gone, Buffett saw no reason to stay. He moved his family back to Omaha.

Buffett Associates Ltd.

By 1956, Buffett had $174,000. Although only 26, he planned to retire and live off the investment income that he could make from his nest egg. He invited some friends and relatives to benefit from his investment expertise. Six initial partners joined the new Buffett Associates Ltd., including his father-in-law, Doc Thompson ($25,000), his Aunt Alice ($35,000), and his sister Doris and her husband ($10,000). Buffett was the seventh partner. As a management fee, he charged his new partners “half the upside above a 4% threshold.” He also “took a quarter of the downside.” Soon others joined the partnership, which made money rapidly. Buffett set up numerous additional partnerships with other investors, including attorney Charlie Munger, who also operated his own investment firm. He eventually became Buffett’s primary partner. By now Buffett was making a large return from each partnership. He constantly reinvested his earnings, so his wealth kept increasing. Indeed, Buffett’s “snowball” was starting to grow substantially.

Buffett was managing more than a million dollars a year by 1958. His goal was to outperform the Dow by 10% annually. He was doing so well he no longer recruited new partners. Now someone who wanted his investment advice had to solicit him. In 1962, Buffett merged his partnerships into Buffett Partnership Ltd. (BPL), with assets of $7.2 million. Buffett was now a millionaire. His early $3 million investment in American Express paid handsomely, but his investment in Berkshire Hathaway, a New England textile firm, initially did not. In 1962, he bought 2,000 shares of Berkshire at $7.50 per share. Then he bought more. Eventually, he bought the company, as well as the Blue Chip Stamps Company, Illinois National Bank and Trust Company of Rockford, Sun Newspapers in Omaha, See’s candy company and, over time, many more.

San Francisco Susie

While Buffett made himself and his partners wildly rich, Susie became socially active on behalf of Omaha’s poor black community. She also became a part-time singer, making a separate life for herself though remaining deeply supportive of her husband. By 1966,

Buffett’s wealth totaled nearly $10 million, but Berkshire Hathaway was now “on life support.” He tried to sell it to Charlie Munger. But Munger, who deeply respected Buffett’s investment acumen, had no interest in owning a firm Buffett did not want. Eventually, Buffett closed the Berkshire Hathaway plant and laid off the workers. From then on, Berkshire Hathaway became Buffett’s holding company, his main corporate enterprise. By 1974, Buffett, with his many companies, was a business mogul, although a small one. By 1977, his wealth surpassed $70 million. He was only 47. But Susie wanted more. By this time she had moved to San Francisco, where she now lived alone. She loved her husband, but wanted a life outside Omaha. Warren and Susie remained devoted, and talked daily on the phone. In 1978, at Susie’s urging, Astrid Menks, age 32, began to take care of Buffett, eventually moving in with him. The arrangement was an unusual triangle, but Buffett never felt the need to explain it to anyone. It worked well for all the parties concerned.

Richer and Richer

As the years progressed, Buffett continued to expand his fortune, along with those of his partners and fellow investors. By 1980, when Buffett was 50, Berkshire Hathaway was listed for $375 a share. By 1983, the Buffetts were worth $680 million and he was a billionaire by 1985. In 1987, Berkshire Hathaway traded at $2,950 per share and Buffett was worth $2.1 billion, making him the ninth-richest person in the United States. By 1991, he was the second richest, with a net worth of $3.8 billion. Buffett’s initial partners each had made $3 million for every $1,000 they originally invested with him. Year after year, Buffett’s fortune (his “snowball”) grew exponentially. By 2008, he was the richest man in the world. Throughout his climb, he watched his expenses and invested carefully, always investing his profits and letting his funds appreciate at compound interest. Buffett never allowed the fickle stock market to dictate to him, particularly when it plunged into high tech. He freely admitted he didn’t understand it, saying, “The software business is not within my circle of competence...We understand Dilly Bars and not software.” Thus, he avoided high tech’s bubbles, booms and busts. Instead, Buffett dictated to the market.

The Salomon Brothers Debacle

Buffett loved money, but he loved his hard-won reputation for honesty even more. In 1991, Salomon Brothers – a Wall Street investment bank in which Buffett and Berkshire Hathaway had a $700 million investment – tested his reputation. A Salomon executive, Paul Mozer, had engaged in a series of rule-breaking bids in his dealings with the U.S. Treasury. News of his violations hit Wall Street, which went into a fury. It turned out that other Salomon executives, including CEO John Gutfreund, had known of Mozer’s misdeeds. This implicated the firm in the scandal. Gutfreund, who should have fired Mozer and didn’t, had to resign. Salomon’s stock nosedived.

During this rough period, Buffett put his reputation on the line by assuming the post of Salomon’s interim chairman. He was known worldwide for his probity, honesty, openness and integrity. Thus, his willingness to rescue Salomon Brothers saved it from declaring bankruptcy. During Buffett’s testimony before the U.S. Congress about this affair, he said he had told Salomon’s executives, “Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”

Family Matters

In 2004, Buffett’s beloved wife Susie died of a cerebral hemorrhage. Two years later, he married Astrid Menks, his longtime live-in companion. Also in 2006, Buffett announced that he planned to give away his Berkshire Hathaway stock, valued at $37 billion. He stated his intention to donate some 83% of it to the Bill and Melinda Gates Foundation “for the betterment of the world.” Buffett did not ask the Gates Foundation to memorialize him. He made only one precondition: It should spend the money quickly to help people in distress.

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No More Pointless Meetings Summary

No More Pointless Meetings Book Review

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Facilitators choreograph workflow sessions to assure that the group is collaborative, productive and efficient. They are impartial and assume responsibility only for process – not content. They do not join in content discussion. Workflow management facilitators begin each session by asking the group to subscribe to three precepts:

1. “The facilitator accepts responsibility for meeting process.”


2. “The group accepts responsibility for meeting content.”


3. “The facilitator and the group commit to an outstanding workflow session outcome.”

The Four Workflow Sessions

The workflow management system sets up four sessions to deal with problematic issues:

1. “Issues management session” – Uses defined steps to identify and prioritize the main issues that managers and employee teams need to tackle.


2. “Innovation session” – Brainstorms dozens of innovative ways to think about problems, spot new directions or generate ideas.


3. “Problem-solving session” – Establishes an environment conducive to finding specific solutions.


4. “Ongoing planning” – Results in an “action plan” that participants enter in a “planning database” to enable continual strategizing that is based on current input, data and feedback.

The Issues Management Session

The issues management session forms the starting point for all gatherings. Managers together with their teams identify issues affecting their ability to conduct business, situations requiring resolution, trends and opportunities worth developing, or problems facing the team. An issue is “anything that occurs, that should have occurred or that you wish would occur that has relevance to your job or area of responsibility.” The workforce management system refers to urgent matters as “critical issues” to indicate that they demand immediate consideration.

Guidelines for running workflow sessions specify that the group should number around 10 to 12 people, though it can be as many as 20 or as few as two. Sessions may be as short as 20 minutes or as long as several hours. Insert a 10-minute break for every hour of meeting. Participants can sit at a conference table or in any formation the facilitator deems appropriate. Attendees should refrain from using mobile phones. Participants need pens and paper for issue management sessions, which also require three easels equipped with paper pads. These sessions work through a seven-step process:

1. “Laying the groundwork” – Begin each session by describing the difference between content and process. Explain that the facilitator will not participate in content discussions; gain participants’ agreement to respect this process. Use one of the large paper pads to record “information gaps,” unanswered questions that arise during the session. In today’s knowledge-driven economy, continually educating a team is imperative. Fill in all information gaps so participants stay current.


2. “Identify the purpose of the session” – Obtain everyone’s agreement regarding the reason for meeting.


3. “Surface all the issues” – Ask participants to write down as many issues as they can think of in five minutes, with no discussion. Do not limit the issues to their areas of responsibility. Record the issues on a large pad, listing two from each participant.


4. “Narrow the list to critical issues” – Ask each participant to identify his or her top five most critical issues from the list. Compile them on another sheet of large paper.


5. “List the top 10 critical issues” – Break the group into teams and give them five minutes to identify – as a group – their top 10 critical issues from the combined previous lists. Have a representative from each group present its list with a brief explanation for each choice. Rank each issue on the combined list in order of importance until the group winnows the list to the top 10 most critical issues.


6. “Resolve the issues or move them to another session” – Determine which critical issues the group can settle immediately. Resolving an issue requires identifying “next steps,” that is, assigning responsibility and creating a deadline. If the issue is too complex for immediate resolution, decide whether an issue requires a later innovation session or problem-solving session to find a solution. Schedule the appropriate follow-up sessions.


7. “Write the action plan” – Record the group’s conclusions, solutions and agreements in an action plan. This document includes four columns: “tasks/next steps, responsibility, due date and report.”

If you hold a two-person session follow a similar format. One person acts as facilitator while the other discusses content. The two switch roles about halfway through the meeting. You also can hold solo sessions to focus your thinking between workflow management sessions. On your own – acting as both facilitator and participant – formalize your thought process by following the steps for issues management, innovation and problem-solving sessions.

The Innovation Session

This session stimulates creativity to generate new solutions or products, update systems and processes, improve communication, originate strategy, or conceive promotion and marketing ideas. Begin each session with the first steps of every workflow session: explaining content versus process, going over the need to record any information gaps and gaining agreement from participants. Set up three additional easels for the breakout portions of the innovation and problem-solving sessions.

The innovation session unfolds in four stages. In this case, a session dedicated to generating new product ideas serves as an example:

1. “Ideation” – Ask each attendee to write as many product ideas as possible in three minutes. Don’t allow discussion. Record two ideas at a time from each contributor until you have several dozen on the easel. Repeat this exercise until the group is low on ideas.


2. “Building” – Pinpoint methods for making the ideas function and expand on ideas to turn them into concepts. Do not address why a suggestion may not work. Subdivide the group and ask each unit to pick 10 ideas from the list and develop them into viable concepts. After 15 minutes, reassemble the group and have each unit present its 10 concepts. Prohibit any negative commentary.


3. “Evaluation” – The participants whittle down the idea list to those with the most potential and feasibility. Assess each concept individually. The facilitator should prompt the group with numerous questions: Is the idea fully developed? What is its viability? Is it worth an investment of more time? Ask each participant to rank the remaining concepts until you have a top 10 or 20 list.


4. “Action plan” – End the session by creating a plan to move ahead.

“The Problem-Solving Session”

This session focuses the group’s problem-solving abilities on an issue by working through three stages of discussion, “entry points, leverage and questions.” First, to address problems, identify entry points that define the exact nature of the issue under discussion or the problem at hand. Second, discuss leverage to clarify the problem and find the access point to begin working out its resolution. Third, ask the right questions to provide a map toward the solution. Questions have a “leverage-ability quotient”; that is, well-targeted questions lead to accurate and timely solutions.

Like the innovation session, the first two steps in a problem-solving session are ideation and building. After the group isolates the specifics of the problem, take two more steps: In step three, “reframe the problem.” Ask participants to attack the problem in as many ways as they can in five minutes. Use the “what-if exercise” to offer solutions. For example, “What if communication within and between departments was streamlined?” or “What if managers and executives validated and empowered others?” This helps the group find the roots of the problem.

In step four, ask each group member to offer three solutions to display on an easel for everyone to see. If the group agrees that one of the solutions solves the problem, proceed to the action plan. If the group doesn't come to an agreement, in step five, ask participants, “What question do we need to ask ourselves at this time?” Record one response from each person and ask each participant to “write a better question.” Seeking better questions will help make the group more focused and solution-oriented. The facilitator should repeat this exercise as many times as he or she feels is productive. Once the group agrees on the best solution, proceed to the action plan.

“Ongoing Planning”

Annual strategic planning meetings are obsolete. To be relevant, the planning process needs to be timely, ongoing and fluid. Management must build its capacity to respond quickly to new information and to react promptly to changes in the marketplace. Three interconnected forces cultivate effective strategizing:

1. “Innovative collaboration practices” – Put the action plans that workflow management sessions generate into a universal planning database. Assign a planning coordinator to monitor the database.


2. “A robust planning database” – A comprehensive, continually updated planning database helps leaders evaluate productivity, assess companywide communication, analyze workflow proficiency, and identify challenges and opportunities.


3. “Personal workflow planners” – Managers use personal workflow planners as a tool for handling and prioritizing their responsibilities. This allows them to be proactive rather than reactive and replaces the traditional, inefficient to-do list.

Personal workflow planning enables managers – for every issue or task – to consider their goals, strategy, impediments and information gaps. The system lets managers analyze whether their action plans show “the investment of human and other capital in a manner that maximizes the viability” of their projects. When managers implement their solutions, they must answer the question: “Have I done my best and everything ethically possible to ensure success?”

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A Handbook of Employee Reward Management and Practice Summary

Money and Value

Reward management involves designing and implementing strategies, policies and practices to pay people and otherwise reward them. Ideally, rewards should be fair, egalitarian and consistent with your organization’s ideals and purpose. Thus, reward management pays people for their work, but it also sends a message about what the organization values. At the same time, properly managed rewards can encourage a culture of performance, motivate staff, recruit and keep the right people, and form a psychological contract to ensure a positive relationship between your employees and your organization. People feel they are being treated justly when they believe their rewards are commensurate with the value they contribute.

Contemporary reward theory rests upon two concepts:


• Strategic pay – Policies and practices governing pay should flow naturally from the organization’s strategy, and must be a product of its culture, values and objectives.

• New pay – Since reward policies can motivate organizational change, this philosophy holds that compensation should focus on results and should reward behavior that advances the organization’s goals. It says employees should have a voice in determining whether the organization’s reward systems are appropriate.

Reward Management

Reward management is the collection of your organization’s strategies, policies and practices designed to pay people fairly, in accordance with the worth of their contributions and the organization’s values and objectives. Rewards are not exclusively monetary. Any well-considered reward system should include nonfinancial rewards. For example, you can boost your organization’s ability to recruit and keep good people by providing the right work environment and by giving employees opportunities to grow along clear career paths.

Use strategic reward management to determine what your reward system should be and how to establish it. Base your decisions on your organization’s philosophies, beliefs and value judgments about reward. Create explicit reward strategies so you can use them to:

• Show employees the paths they should travel and give them touchstones so they can tell when they have achieved the organization’s goals.

• Ascertain whether money is well spent. Wages constitute the single largest expense in many organizations.

• Ensure that rewards have the desired impact on performance.

• Define links between rewards and other human resource management functions and objectives.

Reward strategy is not static. It always grows and changes as organizations themselves grow and change. Support your evolving reward strategy with a foundation of information gathered by analyzing the current reward system and its results. Use gap analysis to compare goals with attainments and to highlight areas that need special attention. Link your reward strategy to your organization’s documented objectives. Give line managers responsibility for reward management, but have human resources staff develop training and other support to help line managers make the right reward decisions.

Reward Policies

Reward policies address the balance between external competitiveness and internal fairness. Companies may opt as a matter of policy to pay more than the market, the market median or, in some cases, below the market level. Equal pay for equal work should be important in driving your reward policies, if only because legislators in the U.S. and the European community have made such equality a matter of public policy interest. When developing a reward policy consider:

• Which policy issues are most germane to your organization’s culture and values?

• Which policies are most germane to your business objectives and employee needs?

• What policies are possible to implement?

• How much training or preparation do line managers need to implement the policies?

• How will the organization communicate necessary information about the policies?

Your company’s reward policies cannot be static. As the market moves and the organization moves, reward policies should also move. Periodically ask whether policies that were relevant in the past are still relevant and whether any changes are necessary.

Reward Management in Concept and Context

Competitive pressures are the most important external factors that influence your reward policy. Global competition certainly affects reward policy because it drives businesses to be more productive. A corporation that wants world-class status must have world-class people. National and regional competition affects the demand for labor, the fragmentation of the labor market, the structure of local industries, the availability of skills, and other matters that inevitably influence reward management. For example, in an environment of low inflation, pay grows more slowly. Similarly, the increase in temporary employment and the end of society’s job-for-life assumption has driven a more intense emphasis on short-term rewards, while lessening employee emphasis on long-term rewards, such as pension schemes.

Seven economic concepts guide professional thinking about pay:

1. Labor theory of value – Karl Marx wrote that the value of goods and services is proportional to the amount of labor required to make them. Although mainstream economists rejected this labor theory, it still survives as an unspoken assumption in many conventional approaches to job valuation. Such approaches are indifferent to market rates; they address only the content of jobs.

2. Labor market – A labor market may be regional, continental or international. When many buyers chase a limited supply of labor, the price of labor rises; when few buyers are looking and labor is abundant, the price of labor lags. Labor markets may be external or internal.

3. Classical economics – This approach looks at the labor market as a dynamic play of supply and demand in search of equilibrium. Classical economic theory assumes that all other things are equal and that there is a perfect market for labor. While theoretically useful, such assumptions ignore many real-world facts, such as constraints on labor movement.

4. Efficiency wage – This idea suggests that companies will pay above market rates to attract the best people, who presumably will perform at a higher level and make the company more competitive.

5. Human capital – Workers are skill sets rented by employers. The worker’s capital consists of skills and knowledge gained from education, experience and training.

6. Agency theory – Corporations separate ownership and management. Agency theory, therefore, seeks to align incentives with desired behaviors. Critics of agency theory say that its carrot-and-stick approach implies mistrust.

7. Effort bargain – This concept suggests that managers must offer certain incentives and rewards to get a certain level of effort from the workforce. Thus, it says, managers must determine what a particular set of rewards will buy in terms of effort, as well as in terms of hours worked.

Organizations – at least, major organizations – have formal structures that govern pay and jobs. These formal structures may begin at the highest level with directors and officers, and stretch all the way down to the shop floor. Job evaluations often determine what an individual job is worth to the organization, based on the job’s contribution to overall objectives. But market forces almost always play an important part in decisions about individual rewards. Your company’s objective must be to pay people according to their contributions, but the company’s financial position determines what rewards it can and cannot afford to offer.

Reward and Motivation

One of the goals of reward management is motivation. Your company’s reward system should include extrinsic and intrinsic rewards. Extrinsic rewards help you recruit and keep employees and may also help encourage additional effort. But in the long term, nonfinancial rewards such as autonomy, the inherent satisfaction of the work and individual achievement, may be more important than pay. Though it is not a financial reward, recognition can be an important psychological award. Goals also motivate people. In fact, people clearly perform at a higher level when they are attempting to reach stretch goals and when their managers provide feedback.

Make your job evaluation schemes analytical, appropriate, comprehensive, transparent and nondiscriminatory (that is, they should meet the standard of equal pay for equal work). Job evaluation is distinct from role evaluation. A job is a discrete group of tasks, but a role includes both the behaviors and the results expected from the behaviors. Role analysis is complex and difficult, and may rely heavily on opinion and interpretation. Organizations establish pay structures and grade structures to communicate information about opportunities and compensation based on their analysis of jobs and roles.

In addition to formal pay structures, many organizations also offer contingent pay, which makes it clear to employees what the organization really values and will pay to attain. Many organizations consider contingent pay a powerful motivator, but strong arguments exist against it. Critics target the questionable motivational effect of contingent pay, the slippery definition of success and the fact that individuals respond differently to contingent pay. Given the evidence on both sides of the debate, no blanket answer covers the advisability of contingent pay. Given that its benefits are uncertain, most companies should consider relying more on nonfinancial motivators. However, if your company decides to provide contingent pay, ensure that the standards are fair and equitable, and that the system allows people to influence their rewards by behaving differently or by developing new skills. The reward always should have a close relationship to achievement. Many of the criticisms of individual contingent pay also apply to team pay. In fact, many organizations have decided that the disadvantages of team pay outweigh its merits.

Nonfinancial Rewards

One of the most important nonfinancial rewards is the opportunity to learn. While a job itself may be an important learning experience, organizations also offer separate specialized training programs that focus on skill development. Often, the availability of training is a major factor in an employee’s decision to stay with a job or to leave.

Performance management can enhance your relationships with your employees, especially if managers use feedback and performance reviews to clarify what they want. The most important issue in performance management is getting the backing of upper level executives and ensuring that managers conduct the right kind of reviews at the right time. Ensuring that managers have the performance management skills they need to make a review program succeed requires a fairly substantial investment in training.

A reward system involves much more than simply paying what the market will bear. Rewards have important psychological and motivational dimensions that are not always intuitively obvious. Moreover, certain groups (such as directors and officers, or even expatriates) need specialized reward treatment. Reward system administration will often be the purview of the human resources staff, but actual decisions about who gets what rewards belong increasingly, and rightly, to line managers. These complexities suggest that reward management needs to be an organization-wide initiative, and that human resources staff members need to work closely with line managers to be sure that rewards align with the organization’s strategy and values.

101 Tips for Telecommuters Summary

Telecommuting

Telecommuting may save you from a long, frustrating commute every morning and eve- ning. It may give you greater flexibility to spend your time with your family. Your work attire may even be soft slippers and an old housecoat. Telecommuting has plenty of advantages; still, it is not for everyone. You will probably get lonely and miss socializing with colleagues. You may lose your motivation and your focus. Or your presence at home may create family difficulties and tensions rather than bring you closer together. You might use up all that saved commuting time by working even more hours. You may even want to hurl your computer out the window when it freezes or crashes in the middle of an important project.

Self-assessment

Succeeding as a telecommuter involves certain skills and ways of thinking. Consider whether it fits your lifestyle and goals. Evaluate the benefits, obstacles, and challenges you would face. Think through your personal preferences, your home office environ- ment, your economic goals, and your family support system. Ask yourself how you work, whether you need coworkers around you, how disciplined you are, what skills you bring to a telecommuting situation, and whether telecommuting can fulfill your financial goals and needs.

Your phone keeps ringing, your child keeps knocking on the door, and your neighbor has dropped by for a chat. All the distractions of a home office can cause you to lose focus on your daily routine, your work, and your life. To stay focused, make a plan for your life. Write down the answers to these questions: “What things are most important to you in life?” What are your core values?” “What do you want to achieve in your lifetime?”

To focus on your work, create a job plan that includes your mission statement. Keep your customers and stakeholders in mind. Elucidate five results you plan to achieve, and a way to measure them. For daily planning, make “to do” lists that includes: your top work priorities for the day, specific accomplishments for the next day, actions you must take to achieve them, and a reward for yourself when you do accomplish them.

Avoid Wasting Time

At a traditional office, you tend to put all your less important chores and distractions on the back burner in favor of other, more important goals. When you work at home, these routine chores, time wasters, and distractions assume more importance. These time eaters include such things as laundry, errands, another round of computer solitaire, the morning paper, coffee, a chat with your neighbor, Internet surfing, and television.

Promise yourself to avoid these time wasters and focus on a productive day. Write down the major time wasters you engage in daily, so you identify them. Work on omitting, or at least managing, two of these this week. Use a symbol or key word to remind yourself of a goal, or post a reminder near your area of temptation, for example, the refrigerator.

Get Organized

A clean, organized workspace is essential to an office that runs smoothly. You need a system for keeping things tidy. Look around your office and move the stuff you don’t need, including files you haven’t used in more than a month. Take them off your desk. Clear out your desk drawers. Rearrange storage spaces so you can use them more effi- ciently. Do the work you need to do in order to organize yourself better.

A daily structured routine is one of the keys to successful telecommuting. Carry a micro- cassette recorder or put notepads and pens wherever you might be, so you can record your thoughts and ideas. Put a pad and pencil in your purse or briefcase, by the phone, in your car, on your desk, and beside your bed. Try a waterproof board in your shower. Make a habit of gathering your notes and using them in your calendar or planning system.

Avoid Isolation

Isolation is a major problem for telecommuters, even those who enjoy working on their own. Stay connected with your colleagues, as well as the rest of the world, to avoid isola- tion. You can do this several ways:
• Use all the available modes of communication to keep in touch.
• Schedule regular meetings to keep personal contacts.
• Join professional trade organizations to keep up-to-date on your industry.
• Take classes and seminars to meet people and update your skills.
• Volunteer. You’ll feel good and you’ll stay connected with your community.

Keep Track of Your Expenses

If your employer does not furnish a company expense log or form, you will need to create a system for recording your expenses. Be sure to:
• Keep consistent records, whether computerized or paper-based.
• File daily receipts for tax deductible or reimbursable expenses.
• Log your car mileage.

Family Time and Other Considerations

The common myth about telecommuting is that if you work at home, you will have more time to spend with your family. This is not always the case. You will save commuting time and you will have more flexibility, but if you take on child care or eldercare as well as the demands of your home office, you are bound to burn yourself out. Combining your work and home life is a challenging balancing act that requires dedication and hard work. However, you can adopt some strategies that will make it a little easier.

1) Work with your family – Tell your family you are setting aside certain times for work and will be available at other times, and for emergencies. Tell them why your work is important, and what you need and expect from them. Ask about their concerns and feelings, and listen to what they need from you. Agree to a compromise that will make you all happy.

2) Minimize distractions – Others can distract you, but you can also distract yourself. Separate your office space from your bedroom, so work does not invade your sense of personal space. Do not put your office in a high-traffic area where you will be constantly interrupted. Make clear rules about interruptions. If a family member constantly interrupts you, have a talk and clear up the problem right away.

3) Minimize stress – You will feel stress when you are under deadlines, if you feel isolated or disorganized, or if you are bombarded with demands from all directions. Don’t take on too much. Delegate chores. Deal with conflict right away. Talk openly, and listen.

4) Provide for the kids – If you keep your children home with you, make important phone calls during naps or when they are not in the room. Keep toys and games handy in a box in your office, which should be childproofed. Give them a desk for activities, or even a VCR for movies. Talk with them openly about what you do. Con- sider child care issues, and ensure that your children have appropriate care. See if affordable child care is available.

5) Relate to your team – It is important to maintain a sense of trust, integrity, reliability, and consistency in your working relationships. Be honest and forthright in all you do. Because e-mail and voice mail messages can be misinterpreted, be careful with sar- casm and joking in your communications. To maintain people’s confidence in what they tell you, refrain from gossip. Find at least three ways to show that you are reli- able. Pay attention to what people tell you about your performance or your interactions with other people.

6) Keep in touch with your colleagues – Because everyone is so busy, people may not take the initiative to keep in touch. Take the responsibility of initiating that contact. Keep your manager up-to-date on your activities. Immediately communicate any concerns or questions. Get to know your co-workers and stay in touch with them.

You and your co-workers are interdependent. Identify which people have helped you in the past. Recognize and thank them for their effort in an appropriate way. Ensure you are accessible by phone and e-mail. Get a second phone line, return calls promptly, and use call forwarding. Keep informed through your business contacts. Remember birthdays and acknowledge people’s successes.

7) Work with your external partners – While you may feel isolated at times, you are certainly not alone. Besides your family and co-workers, you have another network of people. In your home office, you may need the services of an accountant, office manager, printer, researcher, public relations/marketing consultant, graphic designer, equipment technician, or administrative assistant. You will need to negotiate the details of a contracting agreement with your on-line service provider. Get it all in writing, including who will do the work, exactly what product or service is to be provided, the time it will take, how and when payment will be made, and what performance incentives or penalties are in place.

8) Technology tips – Technology changes so quickly, and so many gadgets and gizmos are available that you may become overwhelmed by all your choices. To make choosing easier, narrow your choices down by carefully deciding your specific needs and requirements. Follow this process to make decision making easier:

• Decide on your specific requirements.
• Make a “spec sheet” for the item you need. Think about how much you will use it, how it will work with the technology you already have, and what constraints may exist.
• Research the options. Discuss your specific requirements with a knowledgeable sales rep. Find out what is working for others in your field.
• Test your options. Try out the equipment in the store.
• Find out if you can conduct a trial run of the equipment that you are considering, with the option to return it if performance is unsatisfactory.

Implementation
If you are thinking about becoming a telecommuter or just starting out, decide the steps you need to take to make the transition. Note: The book contains work- book materials for making this assessment.] If you are already a telecommuter, assess your own practices and highlight areas you need to work on or improve. Focus and sharpen your skills as a telecommuter. Run through a telecommuter’s checklist that includes:

• Your potential for telecommuting success.
• A checklist for negotiating with your employer. Your agreement should cover terms and conditions, expectations, and plans for communications and equipment.
• Family agreements.
• Office location and layout.
• Equipment, furniture, supplies, and technological resources.

The Contrarian’s Guide to Leadership Summary

The contrarian leader thinks differently. While others see black and white, contrarians maintain intellectual independence and see many different shades between the extremes. Leaders who can conceptualize a range of ideas are more creative and intellectually open. What is the essence of “thinking gray?” Avoid forming an opinion until you’ve heard all pertinent facts and views, or until circumstances force you to form an opinion to move forward. Binary thinking, which is “black and white,” can lead to disaster because:

• You want to stay open-minded — Once leaders form opinions, their minds often close to new facts and information.
• You want to be decisive — The leader who forms an opinion yet remains open- minded will flip-flop, believing whatever case has been presented most recently.
• You want to think for yourself — People tend to believe whatever is strongly believed by other people. “Thinking gray” is the best defense against this herd instinct.

So, should you employ “gray-think” as a leader in all situations? Of course not. In fact, in most circumstances, it might be counterproductive. You could drive yourself crazy “thinking gray” about each of life’s routine decisions, but the deepest dilemmas demand it. A leader’s vision is important, but the ability to “think free” and to consider a range of ideas may be just as pivotal. For example, the leader must be able to envision how different organizational structures and combinations will affect a company’s development. You can be a leader without being terribly creative if you are able to nurture free thinking among your associates and are willing to implement their ideas.


Artful Listening

Most people think that what they have to say is more important than what they have to hear, and that’s why people are often lousy listeners. Contrarian leaders listen first and talk second. They genuinely want to hear different viewpoints and receive new data.


Machiavelli once observed, “Minds are of three kinds. One is capable of thinking for itself, another is able to understand the thinking of others and a third can neither think for itself nor understand the thinking of others. The first is of the highest excellence, the second is excellent and the third is worthless.” True leaders must be able to think for themselves and understand others’ thinking. That requires listening, the key to the contrarian leader’s intellectual independence. Listening enables leaders to “see double” — both through their own eyes and through those of their followers. The leader is never immobilized when confronted by conflicting points of view, and develops an ability to see two viewpoints simultaneously.

The leader’s inner circle should be based on confidence and awareness. Colleagues should feel free to constructively, candidly criticize the leader’s direction. However, this requires real trust between the parties, a level of trust that often takes years to develop.

To turn listening into an art, go beyond passive listening. You must be genuinely, intensely interested in what someone else is saying. Deliberately draw out the other person and seek additional details. Paraphrasing and active listening can help define the terms of the discussion. The leader who “thinks gray” must also learn to “listen gray.” That means listening to all types of input — anecdotes, briefings, complaints and puffery — without drawing any immediate conclusions or offering a definite response. Knowing when to stop listening is another rarely recognized component of artful listening. At some point, the leader must make a decision and take action. Taking the time to listen carefully at the beginning, however, can save a lot of wasted time at the end.

“Open communication with structured decision making” is one way to achieve a higher level of clear communication in a bureaucracy. Under this model, anyone at any level is free to communicate problems, opinions and concerns to anyone at any other level in the organization. If the janitor wants to address an issue with the CEO, that is permissible and, perhaps, even encouraged. However, the flip side of open communication is structure. That means that commitments, expenditures and decisions are made strictly through the operational hierarchy. This opens a free flow of information to the leader, but it avoids undermining the authority of subordinate managers.

Contrarian Authority Takes Its Time

When someone takes over an organization’s leadership, conventional thinking is that the new leader should seize the reins as quickly as possible. While this may be necessary during a crisis, the new leader really should have a few months to observe the organization before actually assuming control. CEOs who rush in to fix problems they do not fully understand risk making major blunders at a critical time.

Of Consultants, Saviors and Charlatans

Where would today’s leaders be without the gaggle of experts — consultants, analysts, attorneys and technicians — who tell them what to do? Just remember, you rarely hear about all the CEOs who stumbled because they listened to the wrong advice. As George Bernard Shaw once said, “Every profession is a conspiracy against the public.” The key to dealing with experts is to know your goals precisely.

If you feel any uncertainty, your views and direction will probably be subordinated to those of someone with greater expertise — even if you’re right. Thus, you must be sufficiently familiar with technological fields within your organization.

For example, the way a leader handles lawyers is particularly important. Considering that businesses must function in a world where a woman in New Mexico won $2.7 million (later reduced to $600,000) for burning herself with a cup of hot coffee from McDonald’s, the attorney plays an important role in any enterprise. The job of knowing when you’re on safe ground and when you’re not is complicated by constant changes in the law and its interpretations. However, if any expert, including an attorney, says that a given matter is so complex that it is beyond explication to a layperson, a contrarian leader becomes immediately suspicious. Perhaps the expert does not understand the issue well enough to explain it. While experts may be necessary, the leader should not kowtow to every bit of their advice.

Contrary Reading Habits

Don’t get so caught up in current events that you overlook the timeless classics, the “super texts,” such as Machiavelli’s The Prince or Homer’s Odyssey. Authors whose influence has stretched across the centuries are very rare. They offer not so much timeless truths about leaders, as timeless truths about the nature of human beings. The notion that we are superior or even substantially different from our forebears is problematic. If The New York Times does not shed light on your circumstances, perhaps a return to the classics will help. One drawback of the modern media is that you may allow gatekeepers to make decisions for you. If newspapers are the first rough draft of history, the implication is that some events of historical significance are being roughly handled. A pretty good chance exists that the stories that are not included in the newspaper — such as those which document subtle but powerful social undercurrents — are often more important than the stories that are included. To cultivate a contrarian’s healthy attitude toward the press:

• Read newspapers primarily for entertainment.
• When the press attacks someone, assume that important facts in the person’s defense have been omitted.
• Always suspect herd mentality.
• Realize that newspapers pay little attention to the subtle gray shades of reality.
• Know that even the best newspapers occasionally get the facts wrong.

Select your reading material carefully because leaders are heavily influenced by what they read.

Contrarian Decision-Making

“To decide or not to decide?” can be the contrarian leader’s most important question. While the clean-desk mentality that demands dealing with each issue as soon as it arises may work well for bureaucrats and managers, it’s lousy advice for leaders. The contrarian rules say that when feasible, you should:

• Wait to decide — Never make a decision today that can be reasonably delayed until tomorrow. That’s not to say that you should procrastinate on important decisions. The key word, of course, is “reasonably.” Indeed, if you clear your decks for all but the most crucial decisions, you will be able to focus on those. Harry Truman always used to ask, “How much time do I have?” He understood that the timetable often influenced his decision-making. Beware, however, because you face a pitfall: the danger of waiting too long.
• Delegate decision making — Never make a decision you could delegate reasonably to staff. Military leaders follow this practice with the understanding that they retain responsibility for the tasks and decisions that they delegate to subordinates. Delegation accomplishes two goals: it frees up the leader’s time and it helps develop subordinates’ decision-making skills. It is no coincidence that dictatorial managers rarely leave able lieutenants who can replace them.

Proactive Leadership

Part of the fine art of leadership is creating circumstances that require you to take a course of action. Leaders trying to manage unwieldy bureaucracies often use this technique. A CEO, for example, may declare his intention of reducing the number of senior officers by 30% within two months without announcing who is likely to go. The leader of a nonprofit may decide it’s time for a whole new mission statement, assigning its creation to a vice president or advisory board. This can be a way to get an organization to respond without attacking it directly.

Occasionally a leader feels the need to appear to be doing something about a high profile situation without actually taking substantial action. On such occasions, all a leader can do is reassure people. Occasionally, a leader’s role includes acting against subordinates’ advice, even if they are unanimous. You must do this properly to avoid offending your most trusted assistants.

Machiavelli, the father of modern political science, had a few suggestions for today’s leaders:

• Remember that no policy is without risk.
• A leader is justified in resorting to almost any action to prevent civil chaos or foreign domination.
• If you do a man a slight injury, he will seek revenge; if you crush him, he cannot.
• Never compromise with or submit to evil to avoid war.
• Luck plays the biggest role and fortune favors the bold.
• In a newly conquered territory, commit harsh acts all at once, but distribute mercies and benefits gradually over time.
• The leader’s main job is to protect from foreign invasion.

A Hill to Die On

Always know which hill you’re willing to die on — that means knowing where your ultimate core beliefs reside, and what you’re willing to do to defend them. Without that clarity, you will lack ethical leadership and people will hesitate to follow you. Work hard on behalf of the people who work for you. Make sure that your direct reports have direct access to you. And be willing to put forth a concerted effort to remove the obstacles they face every day.

360 Feedback Summary

The Powerful New Model for Employee Assessment & Performance Improvement

New Assessment Model

360 ̊ feedback is a new model for performance appraisal. It is based on the idea that anonymous feedback from multiple sources is superior to direct feedback from a single source. It overcomes the false perceptions, blind spots and ignorance that may exist in single source assessments.

The story of “The Emperor’s New Clothes” can be updated to demonstrate the power of a 360 ̊ feedback process. In the story, the Emperor asks his courtiers how his new clothes look. Even though he is naked, having been tricked by traveling tailors, the courtiers give the response they think the Emperor wants to hear. “Superb,” they tell him. Since the Emperor knows that people often tell others what they want to hear, he asks everyone in his court to assess his new suit anonymously. The response is unanimous: the Emperor is naked. The use of anonymous multi-source feedback provides the Emperor with better information for making a decision about his clothes. Thus, the Emperor, in this updated story, does not go walking around his kingdom wearing only his birthday suit. Like the Emperor, organizations need to improve the quality of decision-making information.

The 360 ̊ feedback assessment model permits organizations to make more informed personnel decisions. This system draws feedback from multiple sources within the decision maker’s ‘circle of influence’ and not just from direct supervisors. Thus, the assessments tend to be more open and honest. Feedback from such sources is generally better than supervisor reviews for assessing employee competencies, specific behaviors and skills, personal strengths and career development areas. A 360 ̊ feedback approach aligns organizational goals to create opportunities for personal and career development. It links individual performance expectations with corporate values.

Traditional Feedback vs. the 360 ̊ Approach

To understand the structural and value differences between traditional feedback and 360 ̊ feedback systems, examine key stakeholders from each type of program. In traditional feedback systems, the key stakeholders are the supervisor and the employee. A 360 ̊ feedback system includes coworkers, team members, external customers, internal customers, direct reports, skip-level reports and others.

360 ̊ feedback also compensates for some deficiencies in today’s corporate organizational structure. Compared to the early 1980’s, organizations today are “flatter,” that is, they have fewer managers and are arranged around self-directed teams. Managers with direct supervisory responsibility now manage many more employees. They supervise employees whose technical or expert knowledge exceeds their own. And, they manage employees organized in project configurations. These scenarios make traditional feedback more difficult today.

Changes in organizational structure, culture and employee relations have led to an increase in the use of 360 ̊ feedback methods. It is now used to achieve corporate management objectives, including participation leadership, empowerment, customer service, quality focus, re-engineering, competency-based rewards and team-based rewards. This system can help achieve other personnel objectives, such as: career development, fair reward decisions, accurate and valid performance measures, non-performance measures, diversity management and legal protection.

How Organizations Use Feedback

360 ̊ feedback systems are instituted to measure personnel development and performance. Development feedback is instituted because it can facilitate an employee’s development within an organization. It permits co-workers to give an employee a confidential assessment that otherwise might never be articulated. This feedback is always confidential and is not shared with the supervisor. Co-worker feedback is never used in making pay or promotion decisions. Firms also use a 360 ̊ feedback process for performance coaching and organizational intelligence.

One 360 ̊ feedback system is the “Team Evaluation and Management Systems Model” (TEAMS). This program includes development and performance information. It helps companies get feedback from a competency-based pay structure by evaluating employees’ work accomplishments and methods. TEAMS is a proprietary program developed and owned by the authors.

Implementing 360 ̊ Feedback

A 360 ̊ feedback project has three phases. Phase I is Process Design, which requires some advance preparation. Phase II is Process Implementation and Phase III is Process Evaluation.

Phase 1: Process Design

For the system to succeed, you must accomplish several steps before initiating Phase I. The most important step is securing leadership support for this process. Support can come from senior management or a change agent within the organization. Ideally, the leadership team will include people from several departments.

After securing the top management’s support, be sure your organization is ready for a feedback process. One symptom is general dissatisfaction with established performance measures. This even helps the feedback process succeed. The leadership team selects a design team of six to fifteen members to assess readiness. If the assessment is favorable, then the design team identifies the process objectives. Finally, the leaders write a promotional plan to tell employees about the program.

Process design consists of selecting an application and developing a competency-based survey. The application selection is driven by the organization’s goals. Generally, organizational leaders want the process to give them either strategic or performance applications. The survey instrument should identify employee and organizational competencies. Developing this instrument is the most difficult part of the process. [Charts in the book offer guidance for assessing readiness and for creating a survey instrument.]

Phase II: Process Implementation

This phase consists of six steps:

1. Select evaluation teams of six or fewer members based on policy, trust and credibility concerns.
2. Conduct training, level one, to provide instruction on giving feedback to others.
3. Conduct the evaluations, using professional methods to gather the desired information.
4. Score and report the results, using both internal and external scoring. Software can facilitate this process, as can score range reporting.
5. Conduct training, level two, to instruct managers and employees on how to receive feedback.
6. Create action plans to highlight areas of personal improvement, areas of strength and areas for development. Action plans might also cover career development, life long learning and professional development.

Phase III: Process Evaluation

This phase also consists of analyzing safeguards and conducting user assessment. Safeguard reports involve computerized statistical analysis of the survey instrument. An analysis of a successful project will give high marks to both item reliability and respondent type. Your company then can conduct an assessment through user satisfaction surveys. Information gathered from this step is used to refine the process.

User Concerns and Needs

The 360 ̊ feedback process has several common pitfalls. The first occurs when companies misapply old knowledge. Users mistakenly try to force the multi-source model to comply with their existing assessment model. Statistical validity makes this impossible. The multi-source survey’s sample size is much smaller and does not conform to traditional survey sample size validity.

Companies make mistakes in this process when they rely too much on technology, substitute labor for technology or use “homegrown” technology. Over-reliance on technology is a problem when companies use adequate technology in the feedback process, but don’t provide enough internal support systems to manage the rest of the process. Substituting labor for technology is the opposite problem, which occurs when the organization tries to use personnel in place of technology. Without appropriate software, the feedback process is too labor intensive for most organizations. When organizations believe they can effectively develop their own software for this process, they may hit snags they could possibly prevent by purchasing the licensed applications [offered by the authors].

Administrative overhead is often a pitfall. Organizations tend to underestimate the total cost of this process. An organization needs a process administrator, a clerical person and an area coordinator to conduct this process successfully. Culture shock and autocracy also inhibit implementation. Senior managers generally do not embrace change because it can dilute their power. Fear of the unknown is an equally powerful pitfall. Employees whose positions depend on cronyism, nepotism or coasting have reasons to inhibit the process.

Day to day pitfalls can derail the process, including supervisor inaction and confidentiality issues. Organizations which allow managers to ignore the process, fail to train participants or breach confidentiality, are all at risk for process failure. Finally, organizations that misapply 360 ̊ feedback risk undermining employee confidence in the process. Misapplications include directing feedback at selective targets, or using it for discipline, discharge and work force reduction.

When users criticize the process, they cite value and cost concerns. Value criticisms range from the general (How do you know the 360 ̊ feedback improves productivity?) to the specific (What do you do if someone receives negative feedback and refuses to change?). In response to these concerns, a quote is given from Pat Riley, the famous basketball coach: “Professional athletes are not highly motivated by the coach alone. In fact, they are tough to motivate because they are paid so handsomely. But when they receive feedback from their teammates on their hustle factor – their effort demonstrated on a basketball floor – they are motivated to hustle, recovering loose balls and playing aggressive defense.”

The Promise and the Future of 360 ̊ Feedback

Research shows employees prefer feedback from additional sources beyond their immediate supervisor. Employees also see multi-source feedback as fairer than single source feedback. These employee preferences and perceptions lend credence to an organization’s use of a 360 ̊ feedback process to adapt personnel management policies and increase productivity.

Because a 360 ̊ feedback approach uses information technology to produce reports, it can become the central element for the development of intelligent systems (also known as learning models). These systems can be designed to identify effective performance practices. This design flexibility makes the 360 ̊ feedback system valuable today and in the future.

100 Ways to Motivate Others Summary

How Great Leaders Can Produce Insane Results Without Driving People Crazy

Do the One Thing

Managers like to think that they can do many things simultaneously, but even the most effective manager can only tackle one problem or deal with one issue at a time. Many times, your mind may seem to be racing at 100 miles an hour – tomorrow’s meeting with the vice president, the project that’s due in a couple of weeks, the inbox full of e-mails. But if you allow your mind to dart from one thing to the next, you easily can become overwhelmed. In most cases, that will increase your stress, build tension in your workplace and harm employee productivity. As a manager, combat feelings of being overwhelmed by establishing priorities. Decide which phone call to return, deal with the person who called in a calm, intelligent manner and then turn to the next task. Resist the temptation to think ahead.

“Manage Agreements, Not People”

Managers frequently make the mistake of coddling those employees who seem to experience the most emotional turmoil. Managers get caught up in this tumult to be liked, and to keep that attitude of constant churn from becoming contagious. The end result resembles a father-son or mother-daughter relationship, which is doomed to fail in the workplace. You can’t send an employee “to your room” if he or she fails to meet deadlines or submit reports. However, you can appeal to an employee’s professionalism and explain why a job must be completed. Feelings and emotions have little to do with such agreements. Establish a relationship that makes the employee feel accountable.

“Use Positive Reinforcement”

A positive attitude is always better than a negative attitude in the relationship between a manager and a team member. Embrace every opportunity to be uplifting, whether you are suggesting a team-building exercise or giving someone a pat on the back.

Welcome contributions from team members rather than rejecting ideas out-of-hand. When you embrace an employee’s idea, you elevate yourself in the eyes of your team members and convey the advantages of having a positive attitude.

“To Motivate Your People, First Just Relax”

Think about the batter who steps up to the plate in the bottom of the ninth. The team is losing by a run; the bases are loaded. Two outs. The third-base coach calls time, meets the batter halfway down the baseline, puts an arm over the batter’s shoulder and says quietly, “Just relax up there. Take it easy. Don’t squeeze the bat so hard. Don’t worry, you’ll be fine.” The coach knows that acting nervous or pressuring the batter would be counterproductive. Such behavior could convey anxiety to the batter, who might then fail. The same principle applies to the workplace. Nervous employees probably will not achieve maximum productivity. But employees who see that their manager is relaxed and patient may well adopt the same attitude. To motivate your team, be positive and calm.

“Motivate by Doing”

At a professional or college football game, frequently you will see that the head coach is holding a laminated sheet of paper. It contains the game plan – plays the coach feels can succeed and lead to victory. Success is not haphazard, nor is it based on feelings. Those who plan ahead enter their offices each morning knowing how much time they are going to spend on the phone pursuing sales. They make decisions based solely on business strategies, not on mood or on how upbeat they feel that day. People who get things done feel good about themselves and develop solid self-esteem. Leaders determine their goals, figure out how best to achieve them, set the wheels in motion and follow through.

“Score the Performance”

Although many managers are reluctant to deal in numbers, that’s really the only way to keep your team members apprised of their progress, tell them what you expect and show them how they can improve. Imagine a coach sending a play to the quarterback without knowing how many yards the team needs, what yard line the team is on or what the score is? As a team leader, you need to know the score and to be able to discuss scoring more points. A coach may applaud his quarterback for trying to score, but ultimately if the quarterback can’t get into the end zone, the team will get a new quarterback. Your salespeople need to keep their eyes on the scoreboard at all times. They need to know when they’re winning or if they need to adjust the game plan.

“Hire the Motivated”

Too often, the hiring process doesn’t get enough emphasis. Companies get stuck with underachievers, yet managers fail to acknowledge that more thorough job interviews could have detected the failing employees’ flawed personality traits. Because the hiring process is so crucial and a poor hiring decision ultimately can be quite costly, managers need to make a more serious investment in this aspect of their jobs. Start listening carefully to each candidate and trying to zero in on his or her true motivations. During the interview, try to get a sense of the candidate’s personality.

Just look at the rigorous process that NFL teams utilize to screen players coming out of college. Even though coaches usually have no questions about the young players’ physical abilities, players must undergo psychological and personality testing. After all, a general manager who guesses incorrectly could be stuck with a nonproductive malcontent, just as a sales manager could be stuck with a melancholic nonachiever. Frequently, salespeople who fall short of their goals, fail to meet their quotas and generally are a source of frustration, all suffer from the same core malady. They want a job but they lack a strong desire to succeed. A smart manager must be able to diagnose that condition.

“Don’t Be a Know-It-All”

Many managers, especially those recently promoted to positions of authority, think they always have to be right. They believe everyone will scrutinize them now that they have been promoted, so they can’t afford to be wrong because that would show weakness. They believe their credibility will be affected if they make a mistake or don’t know something. Quite to the contrary, a manager who admits mistakes and is willing to accept team members’ suggestions graciously will gain infinitely more respect and become a source of inspiration. Who is right and who is wrong doesn’t matter. Reaching goals and achieving success is the ultimate barometer. Great leaders make mistakes all the time, but the key is whether they are able to extract the very best from their people.

“Be a Ruthless Optimist”

Although they are involved in serious work, good managers try not to take themselves too seriously. They may be disappointed when something doesn’t go well, but instead of plunging into self-doubt and depression, they pick themselves up and attempt to resolve the issue from a different angle. Instead of spending time worrying or over-analyzing a failure, they try again. In the workplace, especially during challenging times or even when business strategies fail, it is easier to be pessimistic than optimistic, but that’s a wrong turn – especially when your team members are looking to you for a psychological boost. Memorable bosses maintain their optimism through the most challenging times.

“Get Some Coaching Yourself”

Almost every successful business leader has had a coach – someone who brings out their best qualities and helps them reach their potential. In years past, businesspeople didn’t think of themselves this way, although in sports and other fields most successful people can point to an individual who particularly influenced their lives. Now, the business world offers many “success coaches.” Take advantage of their expertise. However, if you enlist a coach, heed the advice you get. Coaching is useless unless it’s applied.

“Stop Apologizing for Change”

To lead, first embrace the principle that change is good. A good leader advocates change, instead of defending the status quo. One of the biggest mistakes a manager can make is to apologize for change and lament the passing of “the good old days.” Few companies can progress without implementing change, refining techniques and exploring new options. However, realizing that many employees are uncomfortable with change, managers often attempt to ease their staff members’ discomfort by sending the message that change is not welcome. This “I feel your pain” approach doesn’t work. In fact, it can do a great deal of harm by undermining the team’s ability to adapt. Point out all of the positives of change and tell your team the benefits of working for a company that has the vision to welcome change.

“Create a Routine”

It takes only three months to create a habit, good or bad. Routine builds good habits. Just look at a successful major league baseball pitcher. In all likelihood, he can tell you his game day routine down to the minute. He eats his pre-game meal at the same time, arrives at the ballpark at the same time, and does his stretching exercises and warm-ups at the same time. He has programmed himself to succeed by using this routine. Imagine a teenager who has a messy room, but who sincerely desires to become neater. If she starts by tidying her room 15 minutes every day, eventually the results will encourage her to do more. Soon, she’ll find herself straightening up instinctively. Sometimes, a lack of routine is the only thing that stands in your way. Even something as seemingly mundane as checking e-mail can be turned into a productive routine. Instead of checking your e-mail every 15 minutes, only check it twice a day. Pretty soon that will be a habit, too.


“Phase Out Disagreement”

One basic principle is essential for workplace success: Disagreement is not productive. When you are in the midst of discussions with team members, try to extract nuggets of valuable information rather than flatly saying, “I disagree.” That attitude can be very deflating and may make employees reluctant to participate in discussions. Watch effective teachers solicit answers from the students in a classroom. Even if a student does not have exactly the right answer, the teacher will try to reframe the answer and pull out something positive. Or the teacher will say, “Good. Now what about the next step?” Managers who are receptive to their team members’ input provide motivation. Constant disagreement just demoralizes employees.

Many “old-school” bosses still believe that the best methods for motivating employees are intimidation and raised voices. Although old-time bosses may not admit it, feelings matter and managers must consider them. The typical workplace is not the Army, where the commanding officer issues an order and people follow it without question.

“Pump Up Your E-mails”

Since most business communication now seems to be accomplished through electronic mail, take the opportunity to send positive messages. Put yourself in the recipient’s shoes and determine if the e-mail you are about to send is uplifting or deflating. Nothing works as well as positive reinforcement and e-mail enables you to send encouraging lessons often.

“Use Your Best Time for Your Biggest Challenge”

Almost all employees can tell you what time of day they are most productive. Some people are at their energy peak when they walk in at 9 a.m., sit down and switch on their computers. Others do better when they’ve just returned from lunch. Managers who have a lot of responsibilities should tackle their biggest projects when they have the most energy. When you’re tired or distracted, postpone difficult tasks.

“Play It Lightly”

Sometimes, managers can feel absolutely overwhelmed, convinced that they do not have enough time to answer e-mails, handle faxes and respond to company superiors. Negativity can creep in quickly. You may even complain that your job is “awful.” It’s easy to be too serious and lose perspective. But would a person who just returned from the food stamp office or who just received a shutoff notice from the electric company consider your job “awful?” Or would any job look good? Sometimes, you may need to reframe your thinking, approach your job from a fresh perspective and not take things so seriously.