Are You Good At Giving and Seeking Advice?

In an excellent HBR article entitled ‘the art of giving and receiving advice’ David Garvin and Joshua Margolis highlight how “seeking and giving advice are central to effective leadership and decision making. Yet managers seldom view them as practical skills they can learn and improve. Receiving guidance is often seen as a passive consumption of wisdom. And advising is typically treated as a matter of ‘good judgement’ – where you either have it or you don’t, rather than a competency to be mastered.”

 

There are many influencing factors that influence our basic desire to seek advice, just as much as they influence how we give advice;

 

Our upbringing – i.e. were we encouraged to seek advice when we were growing up, or did we ‘learn’ that asking for advice was often seen as a weakness and hence we’ve taught ourselves that it’s better just to ‘keep quite’ and appear smart. This influencing factor has a huge impact not just on how individuals avoid seeking advice, but also significantly impacts how these individuals give advice and their perception of those that ‘seek ‘ advice from them.

 

Organisational culture influences employees ‘desire’ to both seek and give advice. Some organisations encourage an open and transparent environment where employees are encouraged to seek advice from as many quarters as possible and this is seen as a strength. Also in these cultures ‘leaders’ are keen and available to give advice but not from a position of power and/or telling, but based on the situation – where for example they might counsel; or coach; or mentor depending on the situation and the type of advice being sort.

 

Age will influence an employee’s desire both to give and seek advice. It wasn’t that long ago – before the advent of social media and the like, that age equated to wisdom. In fact it wasn’t that long ago that age equated to seniority and hence perceived experience – and this is still true in some cultures today. But organisations have learnt that age and historical experience don’t on their own equate to genuine wisdom as business is constantly evolving and changing over short time intervals. So the wisdom resides with those that have learnt to adapt to different business scenarios and who are up-to-date with current business skills.

 

But because of the above, there will be some who have been in business for a long time who genuinely believe that they know best; and what they don’t know isn’t worth knowing. And then at the other end of the spectrum there will be those who have been in business for a long time who are nervous about seeking advice as they fear that it will be perceived as a weakness rather than a strength – but this links more to culture than age.

 

As Garvin and Margolis mention “advice seekers and givers must clear significant hurdles, such as deeply ingrained tendency to prefer their own opinions irrespective of their merit, and the fact that careful listening is hard, time-consuming work. The whole interaction is a subtle and intricate art. On both sides it requires emotional intelligence, self-awareness, restraint, diplomacy, and patience. The process can derail in many ways, and getting it wrong can have damaging consequences – misunderstanding and frustration, decision gridlock, subpar solutions, frayed relationships, and thwarted personal development – with substantial cost to individuals and their organisation.”

 

Even then, it is not a ‘black and white’ scenario – some employees may be good at asking for or giving advice in certain situations and not in others; good at giving or receiving advice on certain topics and not on others; etc. Just the daily pressure of work can significantly influence the quality of advice given or received.

 

Garvin and Margolis remind us that “whether you’re receiving or giving advice, flawed logic and limited information complicate the process. Advice seekers must identify their blind spots, recognize when and how to ask for guidance, draw useful insights from the right people, and overcome and inevitable defensiveness about their own views. Advisors, too, face a myriad of challenges as they try to interpret messy situations and provide guidance on seemingly intractable problems.”

 

When you’re seeking advice, watch out for these common obstacles;

 

1) Thinking you already have the answers;

2) Choosing the wrong advisers;

3) Defining the problem poorly;

4) Discounting advice;

5) Misjudging the quality of advice;

 

And when you’re giving advice, watch out for these common tendencies that can cause problems;

 

1) Overstepping boundaries;

2) Misdiagnosing the problem;

3) Offering self-centered guidance;

4) Communicating advice poorly;

5) Mishandling the aftermath;

 

Garvin and Margolis mention that “though seekers and advisors work together to solve problems, they have different vantage points. Recent social psychology research shows that people in an advisory role focus on overarching purpose (why an action should be performed), whereas recipients of advice – who usually face an impending decision – are more concerned with tactics (how to get things done). An individual is likely to think idealistically as an advisor but pragmatically as a seeker, even when confronting the same challenge.”

 

You’ll often find that those who are best at giving advice are those that regularly seek advice themselves, regardless of their level in the organisation – and that’s what makes them extra special advice givers. They appreciate that asking and giving advice is an art – and they are keen to perfect it.

 

Garvin and Margolis conclude that “overall our guidelines for both seekers and advisers amount to a fundamental shift in approach. Although people typically focus on the content of advice, those who are most skilled attend just as much to how they advise as to what they advise. It’s a mistake to think of advice as a one-and-done transaction. Skilled advising is more than the dispensing and accepting of wisdom; it’s a creative, collaborative process – a matter of striving, on both sides, to better understand problems and craft promising paths forward. And that often requires an ongoing conversation.”   

 

The danger is that future generations aren’t being encouraged to ask for advice face-to-face; but are being taught at an early age that they can get advice remotely – without being able to check whether the ‘adviser’ is qualified or whether advice is accurate or not, often until it is much too late. The art of seeking and giving advice needs to be an integral part of the educational curriculum so that ‘we’ can teach future generations the importance of seeking and giving the right advice.

 

References:

 

Garvin, D.A. and Margolis, J.D. (2015). The Art of Giving and Receiving Advice. Harvard Business Review. Jan/Feb, p.61-71.

 

 

 

Can You Be Fooled By Your Own Experience?

Emre Soyer and Robin Hogarth write in the Harvard Business Review (May, 2015) how “experience seems like a reliable guide, yet sometimes it fools us instead of making us wiser. The problem is that we view the past through numerous filters that distort our perceptions. As a result, our interpretations of experience are biased, and the judgments and decisions we base on those interpretations can be misguided. Even so, we persist in believing that we have gleaned the correct insights from our own experience and from the accounts of other people,” (p.73).

 

It can be one of life’s most embarrassing moments, when as a leader, you simply go on your own experience, confident beyond doubt that you are correct – only to find out that you are wrong – and it’s not just the realization that can be a shock to the system; but how you deal with the ‘error’ with your team or organization can have far reaching implications for your leadership long into the future.

 

Soyer and Hogarth remind us that “in the business environment, the outcomes of decisions are highly visible, readily available for us to observe and judge. But the details of the decision process, which we can control far more than the result, typically don’t catch our attention. If the aim is to learn from experience – mistakes as well as successes – acknowledging the process is critical. Where a good outcome can lead us to stick with a questionable strategy, and a bad outcome can cause us to change or discard a strategy that may still be worthwhile. For example, in the NBA, coaches “are more likely to revise their strategy after a loss than a win – even for narrow losses, which are uninformative about team effectiveness,” (p.74).

 

Our attention to outcomes – and disregard of the processes that create them – make solutions seem more valuable than preventative actions. A decision maker who solves a burning problem can be identified and rewarded, while one who takes action to avoid the same problem is far harder to spot. This common error has a serious implication on organizational culture that most leaders are totally unaware of – and the act of unrewarded, unnoticed, pro-active problem solving can lead to long term problems – as the ‘problem solver’ often moves on to greener pastures and the organization starts to encounter problems that they are not ‘geared’ to solve – and a once seemingly well run organization can suddenly look badly run and unsustainable in its current form.

 

“Honest feedback – an unbiased, undistorted assessment of one’s experience – is essential for improving decisions. Yet decision makers are often surrounded by individuals who have an incentive to feed them censored and self-serving information – and these people are not necessarily a crowd of yes-men.” (p.74).

 

Yet sadly it seems that too few leaders are genuinely open to receiving honest feedback, especially when mistakes have been made – and this one trait is ‘core’ not just to effective leadership, but has a significant impact on employee motivation, performance and hence overall productivity.

 

“Censorship is a powerful tool for influencing opinion. Restricting the information that reaches decision makers installs a strong bias in their perceptions. Even if we are aware of the existence of censors, it can be difficult to think beyond the immediately available information. Our intuitions are often shaped by the evidence we recall, no matter its relevance – a tendency cognitive scientists call the availability bias,” (p.74).

 

The issue of openness should be a key part of leadership development at the very start of the ‘talent pipeline’. That means leadership development at the start of an individual’s career should focus on teaching leaders to understand the importance of seeking different points of view; not just being open, but actively seeking ‘different’ opinions, to help them solidify their thoughts and to make this the rule in their decision making process.

 

Soyer and Hogarth remind us that “we can’t place the blame of our distorted view of the world on the environment and our inner circle. Some of the blame lies with us. Our own reasoning abilities can sabotage how we collect information and evaluate evidence. We end up learning the wrong lessons from our experience – even when it’s possible to learn the right ones. One issue is that we tend to search for and use evidence that conforms our beliefs and hypotheses, and we gloss over information that contradicts them – an exercise of selectively building and interpreting experiences known as the conformation bias” (p.75).

 

It’s easy to gloss over articles like this and adopt the ‘yeah, yeah philosophy’ where leaders ‘hear’ the words, but don’t internalize the problem – believing that it doesn’t really apply to them. Leadership has a very long way to go in the 21st Century, and in my opinion, is lagging way behind other developments in the last 20/30 years. We need leadership to develop at the same pace that technology has been developing – and the only way that is going to happen is for ‘us’ to create a global culture, where we all start being highly critical of ourselves (before we are critical of others) – whether we are currently leaders or not. 

 

Sadly the ‘social media’ scene is one of the greatest barriers against this happening – as social media encourages everyone to ‘pretend’ that they are brilliant and discourages them to be open and honest, and to share their failures and fears with the world.

 

Soyer and Hogarth identify six techniques that “can uncover the real lessons experience offers. None are easy, but making the effort to adopt them can help you base decisions on a clearer world view” (p.76-77).

 

Sample Failure: Failures and the processes that lead to them are doomed to stay in the dark unless special occasions are created to bring them to light – something that is not easy for managers to do.

 

Don’t Miss Near Misses: Another oft-ignored event is the near miss – a failure that’s disguised as a success, but only because there are no dire consequences.

 

Pursue Prevention: Recognizing a potential problem requires a different approach than solving an actual problem. One strategy is to harness employees’ collective talents by allowing people to raise concerns about the firms operations. Many companies incentive mechanisms work exactly to the contrary, and employees often hesitate to speak up for fear of reprisal or being labelled a nuisance. Employees should be made to feel comfortable reporting issues to the very top – even obliged to do so.

 

Disagree: As Peter Drucker wrote, “the first rule of decision making is that one does not make a decision unless there is disagreement. Ed Catmull, the president of Pixar and Walt Disney Animation Studios, stresses the importance of building a brain trust, a group of advisors who will deflate egos and voice unpopular opinions. He argues in his September 200b HBR article that disagreements in meetings end up benefiting everyone in the long run, because it’s far better to learn about problems from colleagues when there is still time to fix them than from the audience after it’s too late.

 

Disconfirm: Rather than finding clues that corroborate your hunch – all too easy in an information rich world – start by asking yourself how you could know you were in fact wrong. What evidence would contradict your belief and how likely is it that you would see it?

 

Lose Focus: Managers who acknowledge the role of serendipity and luck have an advantage over those who have illusions of control and are overconfident about the accuracy of their judgments. Change is both inevitable and unpredictable. A wide perspective can help, giving new meaning to our varied experiences and allowing us to learn from them and draw on them in surprising ways. The result is often serendipitous discovery and innovation.

 

These six techniques are a brilliant first step to becoming a better leader and improving your decision making processes. Beyond that, simply employing these techniques so that they become the rule and not the exception in your organization, will create a significant positive change on your organizational culture that will be traceable right through to the bottom line and also highly influence your potential for optimizing your sustainable growth into the future.

 

Finally as the late Hillel Einhorn, one of the fathers of behavioral decision theory, asked “if we believe we can learn from experience, can we also learn that we can’t?”

 

References:

 

Sayer, E. and Hogarth, R.M. (2015). Fooled by Experience. What you think you’ve learned may be wrong. A guide to figuring out the real lessons. Harvard Business Review, May Issue, p.73-77.

 

Can We Justify the Gap Between CEO and Worker Pay?

In a 2014 article in Forbes, Kathryn Dill highlighted how “with CEO compensation analysis season in full swing, the AFL-CIO released data (in April 2014) stating that American CEOs in 2013 earned an average of $11.7 million - an eye-popping 331 times the average worker’s $35,293; where information is further broken into categories including compensation by industry and state. As of April 2014, Michigan, Nebraska, and Rhode Island have the greatest CEO to minimum wage worker pay ratios, with New York and Colorado following close behind.”

 

This perspective is supported by further research highlighted by Schuyler Velasco who mentions that “worker pay has been a big story in 2013, with worker strikes in the retail and fast-food industries putting a harsh light on anemic wage gains alongside ballooning corporate profits. Now, a new study from NerdWallet and Glassdoor.com highlights just how vast the wage gap is in major US companies, comparing how much the United States' highest-paid chief executives make in an hour with the average hourly wage of their employees. Can you guess which company had the highest pay gap?

 

McDonalds: CEO: Donald Thompson

 

Average hourly worker wage: $7.73

 

CEO hourly compensation: $9,247 (1,196 times the average worker wage).

 

The next 9 companies with the highest pay gap between the CEO and the average hourly worker were;

 

Starbucks: CEO: Howard Schultz, hourly compensation = $9,637 ((1,096 times the hourly average worker wage of $8.79);

Dollar General: CEO: Rick Dreiling, hourly compensation = $7,720 (1,007 times the hourly average worker wage of $7.67);

GAP: CEO: Glenn Murphy, hourly compensation = $8,209 ((947 times the hourly average worker wage of $8.67);

T.J.Maxx: CEO: Carol Meyrowitz, hourly compensation = $7,256 (924 times the hourly average worker wage of $7.85);

Target: CEO: Gregg Steinhafel, hourly compensation = $6,882 (824 times the hourly average worker wage of $8.35);

Walmart: CEO: Mike Duke, hourly compensation = $ 6,898 (779 times the hourly average worker wage of $8.86);  

CVS Caremark: CEO: Larry Merlo, hourly compensation = $6,777 (769 times the hourly average worker wage of $8.81);

Best Buy: CEO: Hubert Joly, hourly compensation = $6,517 (666 times the hourly average worker wage of $9.78);

AT&T: CEO: Randall Stephenson, hourly compensation = $7,412 (558 times the hourly wage of an average worker of $13.28).

 

These figures should shock even the most liberal believers when it comes to executive pay. Even if you reduce the CEO hourly compensation by half, compensating for tax for example, the figures are still impossible to justify, surely.

 

The biggest problem is that even when these figures are ‘out there’ for everyone to see – and 99.9% of people find them unjustified – nothing actually happens to change the ‘status quo’ and in fact it appears that the gap just keeps on getting bigger

 

Velasco goes on to highlight how “wage inequality is becoming a growing concern, both on the ground and at the political level. The wealth gap between the top 1 percent of American earners and the other 99 percent is as wide as it’s been in nearly a century. Corporate profits and stock holdings have soared in value, while the federal minimum wage has remained unchanged since 2009.”

 

So how has this gap been allowed to develop over the last 10, 20 years, especially taking account of one of the worst global financial crashes in our time and more importantly what can be done, in practice, to narrow the gap to a more equitable and justifiable pay scale. Because it appears that though many in academia, the media and definitely at the worker level are strongly opposed to the current pay anomalies – no one has the ability or influence to change this behavior by corporate boards and their shareholders. As we must never forget that it is the boards and shareholders that ratify executive compensation packages on an annual basis.

 

Kathryn Dill pulls no punches when she states that “America’s CEOs, as exemplified by the individuals of companies like Wal-Mart, Darden Restaurants and T-Mobile, are cannibalizing their own consumer base,” by taking money out of the pockets of their workers and putting it into the pocket of the CEO.

 

This isn’t just a US phenomenon and Gretchen Gavett points to research by Chulalongkorn University’s Sorapop Kiatpongsan and Harvard Business School’s Michael Norton that concluded “we’re currently far past the late Peter Drucker’s warning that any CEO-to-worker ratio larger than 20:1 would ‘increase employee resentment and decrease morale.’ Twenty years ago it had already hit 40 to 1, and it was around 400 to 1 at the time of his death in 2005. But this new research makes clear that, one, it’s mindbogglingly difficult for ordinary people to even guess at the actual differences between the top and the bottom; and, two, most are in agreement on what that difference should be.

 

The lack of awareness of the gap in CEO to unskilled worker pay - which in the U.S. people estimate to be 30 to 1 but is in fact 350 to 1 – ‘likely reduces citizens desire to take action to decrease that gap,’ says Norton. (Though he notes some movement on that front, including an unsuccessful vote in Switzerland to cap the ratio at 12 to 1 in 2013 and recent protests by fast food workers in the U.S.)”

 

Michael Norton concludes by stating “many of the heated debates about whether CEO pay should be capped or the minimum wage increased are debates based on an extreme lack of knowledge about the true state of affairs. In other words, both liberals and conservatives fail to accurately estimate the actual current gaps in our pay. Our hope is that presenting the data to all sides might force people to examine their assumptions about whether some people are making more than they would like, and others less.”

 

References

 

Dill, K. (2014). Report: CEOs Earn 331 Times As Much As Average Workers, 774 Times As Much As Minimum Wage Earners. Forbes, 15th April.

 

Gavett, G. (2014). CEOs Get Paid Too Much, According to Pretty Much Everyone in the World. Harvard Business Review, 23rd September.

 

Velasco, s. (2013). CEO vs. worker pay: Walmart, McDonald’s, and eight other firms with biggest gaps. The Christian Science Monitor, 12th December.

Where are all the Successful SME Leaders?

There is plenty of research on small and medium sized business failures – for example, 50% of all UK based small/medium enterprise (SME) start up’s fail within the first five years, where many reasons are cited, from the UK tax system and the lack of bank lending, to the failure to plan and budget correctly.

 

In the USA, according to Bloomberg, 80% of SME start up’s ‘crash and burn’ in the first 18 months, where the reasons for failure include (a) not really being in touch with their customers; (b) no real differentiation in the market (i.e. the lack of a unique value proposition); (c) leadership breakdown at the top (founder dysfunction); and the inability to turn a potentially great business model in a proven business with a regular, sustainable revenue stream.

 

With these kind of odds though, a successful SME must be led by an amazing person or persons, and yet where are they and why don’t we hear from them. Imagine the stories, good and bad, they have to share with all of us and how much we could learn. And how their wisdom and experience could start changing the odds in the SME start-ups chances of success.

 

‘Big’ business leaders get all the attention – in the media, print press etc – we hear about the large corporate successes and get the advice of the large corporate CEO’s and entrepreneurs – but at the size they are at, failure is only really an option if they mess up really, really badly year after year.

 

But the successful small business leader is someone truly special. They are used to dealing with risks and market ‘issues’ on a constant basis and they have the ability to ride the waves to sustainable success. They operate in an environment where the loss of a single customer can put their cash flow under pressure and they are able to re-align and adapt to ensure organisational success.

 

‘We’ can learn so much from these special people – but we hardly ever get a chance. Most of the ones I know are highly successful and remarkably humble people. You could be standing next to them in a queue or sitting next to them on a plane and you would never know just how brilliant these people are.

 

The mainstream business press doesn’t seem to want to recognise their success – where they may get a mention if they donate a significant amount of cash to a charity or something similar – and their business may get a brief mention as an editor’s afterthought – missing the pot of gold just sitting there in front of them.

 

As just one of many examples, I know a brilliant SME owner who applied for his company to be considered for the Queens Award for Innovation in the UK. He had innovated some truly remarkable changes in his business manufacturing methodology that had reduced his manufacturing costs by some 40% - which obviously has a huge impact on the bottom line, especially if you’re in a market where you don’t need to reduce the selling price. But because the company didn’t show an increase in revenue, the award committee turned down the application.

 

How crazy and short sighted is that. Business isn’t just about revenue, it’s ultimately about the whole financial stream and especially net profit. So while this SME leader might be smiling on his way to the bank, the government seems to be as blind to their success as the media are.

 

Some of the business principles and traits I’ve noticed from successful SME leaders include;

 

1) They appreciate the value of money – often coming from humble backgrounds they don’t take ‘profit’ for granted and spend wisely;

2) They know their staff – and inspire and motivate them;

3) They are natural innovators and know how to make things happen;

4) They aren’t afraid to ask for help in areas they know aren’t their strengths;

5) They are transparent leaders;

6) They aren’t afraid to take risks – and excel at evaluating risk and reward;

7) They are humble and don’t look for attention outside of their own business;

8) They put their customers first;

9) They work hard.

 

Maybe if we spent more time learning from the small percentage of truly successful SME business owners, the overall percentage of SME successes could increase dramatically, which would have a huge impact on economic growth. Further still, rather than us just hearing and being ‘directed’ to learn from ‘big’ business – maybe big business could learn more from successful small and medium sized businesses, especially in the realms of leadership, customer service, real risk taking, employee motivation, – in fact the list is endless.