Data, the politics of risk, and botox

If you work in or experience bystander exposure to, an organizational or corporate zero-error environment you may quickly pull the dots together. Data, spanning from KLIs* over KPIs* and KCIs* to KRIs* and beyond, i.e. the whole spectrum of performance metrics may be fear-inducing per se: whenever the thresholds, balanced scorecard objectives, or plain old deadlines are at risk of not being met.
*KI=key indicator, C, L, M, P, R=control, lead, management, performance, risk

When the engines which are supposed to be crunching figures and producing the desired metrics and reports, fail to deliver on time, then, well then, breaking into a sweat and feeling the heat is probably the most natural response a human being may be experiencing in such a situation.  Not surprisingly, the quest for means to cover up such visible signs of weakness (functional would be calm caring, expected may be dysfunctional detached cool) has resulted in a significant increase of requests for Botox (a form of paralysis-inducing toxic botulinum).

While diversity policies and strategies have been implemented and celebrated widely, homogeneity at recruitment stage is surreptitiously reproducing monocultures which offer little if any space for thinking outside-the-box.  In light of popular quick fixes in challenging times, most prevalently applied are drastic downsizing, restructuring, and right-shoring (a euphemism that hints at prior attempts of off- and on-shoring) which are all adding to the malaise. All of which have resulted in the opposite of genuine zero-error cultures. Rather, these factors in combination may explain why major errors such as a neglected server at JP Morgan’s could happen. We see such failures and negligence (including pervasive data massaging) frequently, although differences in forms, shape, and dimension can be observed, entailing various degrees of active or passive neglect and manipulation.

Restructuring workloads and task areas often result in fewer individuals doing more work. Permanent staff may have been laid off in favor of newly hired contractors and temps. Overall, the [permanent] headcount appears reduced and shareholders are pleased. In times of downsizing and cost cutting, coupled with key decision-makers being keen on maintaining their budget rather than investing in smarter technology and revising processes and procedures with a view to efficiency, remaining staff often are crippled by fear of what will happen next. Add the typical lack of clear communication, direction and reliable visionary stances from the top that marks these situations, the sheer overload induced by the additional work becomes even more of a botox-requiring sweat factor. Who will be axed next? Which department evaporates entirely in the next round?

In industries where particular aspects of corporate sub-culture add a layer of misuse of power onto those who are charged with tasks beyond their meaningful boundaries and structure of responsibilities (see discussion of the 100 hours workweek), the error rate is further multiplied.  Stakeholders and shareholders should feel alarmed as such incidents reveal only the tip of the iceberg of operational risks.

Responsible and dedicated management (not to be confused with micro-management that creates more of the above-mentioned issues) and meaningful staff development go hand in hand with sustainable risk management. It cannot be “happily de-coupled”, rather it needs to remain consciously intertwined and run within a wider framework of ethical values and legal requirements.  For instance, operating with rest times and sensible breaks keeps the human error rate down and contributes to maintaining high levels of morale, creative problem-solving and energy levels.  This will also facilitate retention and maintenance of trust in order to ensure the organization finds its position at the front of the competing pack when it comes to lasting long-term success.

In an interconnected and highly interdependent global economy, such contradictions and irrational sub-cultural aspects can have vast and potentially hugely damaging ripple effects: risk of human error, on the one hand, severe retention issues on the other.  Where zero-error policies are still in place and staff fear showing weakness or admitting to gaps (take the “fat finger” trade at Deutsche Bank for instance) they cause havoc with sensible risk mitigation strategies as the instant knee jerk response of firing will shift blame to those who were at the receiving end of failing policies rather than focusing on those who devised them in the first place.

Smart risk governance will embrace and harness the power of information, the knowledge of potential weaknesses and incidents that need to be addressed.  The aim has to be prevention and mitigation policies, methodologies and mechanisms that need to be devised in order to avoid losses and costs related to reputational risks entailing them. Providing a safe environment (World Bank case) in which to disclose potential or occurring risk events without fear of censorship and scapegoating gagging those who are mindful of their work and environment is key to sustainable leadership and a leading position of the organization – it requires much higher priority in strategic considerations than currently recognized.

Acknowledging the possibility of human error in a heavily competitive, excessive hours-environment would be the intelligent thing to do.  After all, it’s a strength to know your weaknesses (see this SWOT discussion)– and not push them under the rug.  It is a strength to acknowledge the flows and dynamics of power but your policies, processes, and framework need to be more than reflections of realpolitik.  Intelligently avoiding being in the eye of the storm of the next big conduct and reputational risk case can be achieved by methodological triangulation.  That would entail incorporating realistic ethics and enhancing the governance framework by insights and data gained from disciplines outside the narrow confines of your subject matter experts’ realm.  In the course of this, you might actually discover some entirely new strengths.

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