Resilience - The Prize, The Price and Organisational Pilates

As with many leadership words “Agility” has many meanings and components. Yet, when used, it is often mistakenly assumed that we all have the same understanding. Whether that’s about mental, physical, verbal or other forms of agility. Unsurprisingly, for a word applied to so many contexts, we frequently don’t.

Reflecting on things while traveling can be stimulating and so it proved in the beautiful hills near Maseru, Lesotho recently. The reason for my visit was to contribute to an Institute of Directors Lesotho event on governance, for which big thanks to their Chair, Selebalo Ntepe.

The proliferation of the "C" prefix to job titles has coincided with seismic changes in the way we lead, work and communicate as well as with generational shifts and changes in the power balance between functional leaders.

There’s more to arrogance than a humility bypass. It is important not to confuse a minor bout of over-confidence or healthy self confidence and assurance with a long-term and deep-rooted corrosive condition. A condition which ties a dead weight to the person suffering it and impacts those they come into contact with.

Poorly managed conflict can all too easily turn into destructive behaviour, ruining lives and livelihoods in the process. There’s a toxic torrent of evidence for this in the appalling images of violence on our screens, the divisive behaviour of many of our politicians and the media, as well as the dark side of social media. Yet, as the Gershwins’ famous song goes, “It ain’t necessarily so!”. Managed well, conflicting ideas, objectives and personalities are powerful stimulants for creativity, innovation and organisational transformation, as well as performance. They are also strong vaccines against the dangers of “Group Think”. For most of us the conflict in our lives isn’t about armed conflict, physical violence or sinister trolling. It’s far less noxious. It’s about people or situations causing us frustration, anger or anxiety and undermining performance and happiness. However, it can still come at a heavy price. According to Susan Clews, the ACAS CEO, in 2021 "A failure by employers to deal with conflict early can be costly to businesses and our study estimates that these costs add up to nearly £30 billion a year (in the UK). Poor conflict management can also cause staff stress, anxiety or depression and impact workplace productivity.” I have always believed that the ability to manage difference and conflict is a defining characteristic for successful leaders and organisations. The increased pressures, uncertainty and volatility of the last few years, as well as the welcome progress in increasing the diversity of boards and leadership teams have simply reinforced this belief. It’s an underacknowledged capability and I’d love to think that this article might help a little to change that. Many struggle to find the right place on the “Harmony Spectrum” and to bring out the best in others and themselves but over the years I have been fortunate enough to work with many who can. So, what is it about them that makes them effective and what is it that they do to navigate and to use conflict positively? Firstly, they assume that conflict is natural and expect it to happen. They know that there are things that you can plumb in to the organisation to increase the chances of it being healthy rather than growing into corrosive and undermining “Long Conflict” . For example, they discuss how we might resolve predictable conflicts before they happen and put the mechanisms in place to deal with them. They work hard to understand the specific sources and nature of the conflict. The “Big Five” being: · Context. · Conflicting or misaligned objectives. · Lack of clarity on roles or role conflict. · Asymmetry of information and poor communication; · The fundamentals of human behaviour Recognising that there’s typically no single source but a combination making each situation distinct. Underperformance, existential or reputational threats, societal tensions and other factors influencing the context have the power to bond or bust relationships. The pressures they create can also lead to conflicting or misaligned objectives as well as misunderstanding, weakening confidence and trust. Those strong on conflict are usually on the front foot communicating the impact of significant contextual factors and how the organisation is going to deal with them. We saw numerous brilliant examples of this through the pandemic. There can still be misaligned objectives even a benign or positive context can’t solve, either through poor management or because that’s just life. It’s perfectly natural for different stakeholders to want different things. Zero sum games happen and are a part of life’s rich pattern. Smart leaders know that having integrated stakeholder strategies reduces the risk of legitimate misalignment causing unhealthy conflict. We are seeing many good and bad examples of this in the way governments and organisations are dealing with the climate challenge. For those in the UK dare I mention ULEZ! Being on a board or a leadership team without clarity or unity of purpose can be uncomfortable. If our roles collide and or we work in a “Rabble” state with everyone pointing in different directions it’s just plain miserable. Unless, of course, you thrive on chaos and don’t care about the cost to others or the organisation. Autocratic cultures may have the superficial appearance of alignment. However, in reality, they’re often fragile. Factions and cliques below focus on pleasing the autocrat, avoiding their ire, positioning for enhanced status, or to be the next in line. The place a board or a leadership team ideally want to be is all pointing in the same direction but with enough creative tension and diversity of thought to avoid “Groupthink” and to make sure it’s the right direction. Smart leaders also know that getting the right connecting managers and support function leaders reduces the potential for conflict between roles. Good examples of this are in compliance, finance, talent management, systems and operations. This is as much about the right attitude as it is about the plumbing. On the plumbing there are many more systems and best practice processes to reduce potential friction these days. I came across a good example from my friends at SAP Concur the other day at a micro level to do with a conflict rich area, expense fraud and compliance and how to plumb it away. As an aside their research showed that only 35% of employees claim that they would never exaggerate mileage claims. There is also a bigger more general point here in that not having true and accurate data for the board and leadership can cause mistrust and lead to conflict. Those who are good at managing conflict tend to be magnetic aligners, attracting others to recognise competing objectives and aligning them behind the route through the conflict, keeping their eyes on the prize. There’s a whole section on conflict between boards and management teams in my Boards book . Some boards operate in a parallel universe with the management presenting the bare minimum in the maximum possible time, leaving just a little bit of time for them to tolerate a few questions and enable them to get back to doing what they were going to do anyway. The non-execs or trustees here are too distant and not as involved as they should be. All pretty pointless and risky with periods of “Silent Seething” punctuated by bouts of noisy discontent when the inner conflict breaks through the surface. At the other end of the spectrum boards and leadership teams are falling over themselves trying to do each-others’ jobs and there’s conflict over roles and usually personalities leading to turf wars. Yet there are those who find the right balance with real clarity over their own roles and those of others and who are able to stimulate a productive intersection with other groups and individuals. Asymmetry of information and poor communications are another source of conflict. Misinterpreting reality, projecting views on to people which they don’t hold and uniting through contempt for other people or groups is a well-known tactic of dictators. There is more on this in my previous article on Silos . Skillful managers of conflict focus on finding out the facts, artfully dispelling myths, understanding real motives and removing bias and misunderstanding. Self-awareness is critical both on an individual or collective basis. Dierdorff and Rubin's research published in the Harvard Business Review showed that groups composed of highly self-aware people outperformed those made up with people with low levels of self-awareness by a factor of two at making decisions, coordinating and managing conflict. Sadly, research from Ethan Zell and Zlatan Kirzan, with data from over 375,000 people in large organisations with feedback and review processes, showed that self-awareness is not something that comes naturally. Indeed, their work showed a correlation of only 0.29 between people’s own self-assessment and objective evidence and the views of others. It’s therefore something that we need to work on. As an indicator of the level of explicit or implicit conflict between boards and exec teams the 2022 Survey by PWC and The Conference Board of 601 C-Suite executives in major US corporations was really interesting. Of those surveyed: Only: • 29% rate board’s overall performance as excellent or good • 20% think their boards are diverse enough • 33% say their boards ask probing questions • 21% think their boards spend enough time fulfilling their responsibilities Worse: • 60% don’t trust their boards to effectively assess their own performance • 64% of execs don’t trust their boards enough to remove underperformers • 75% think two or more board members should be replaced Somewhat ironic in that in the US the CEOs have much greater influence on the choice of their boards. So, they picked these people, haven’t done anything to change it and are now complaining about them. Also, I wonder how many of the board members in these companies think that it’s the others around the table who are the problem not them. I wouldn’t be surprised either if many of the board members had mirror views of their executives. As an aside, the ability to deal with underperformers is also something those who manage conflict well use to reduce the chances of “Long conflict” . Reflection and feedback are two tools we can use to help us increase our self-awareness. Our schedules can drive out time for reflection if we let them. For me a good walk really helps with this. Most often alone but frequently with someone else. Sometimes reflecting on a situation together can be more powerful. Another is to build a culture of Constructive Challenge and to be aware of the level of pressure and its impact on us individually and collectively. Resilience also matters in that the more resilient we are the better we are able to absorb constructive challenge and to be more responsive rather than reactive in managing conflict. The masters of conflict management know when and how to raise or lower the pressure and have the right balance. If they spot someone, especially the CEO or CFO, coming under increasing unhealthy pressure they will override their natural impulses to pile on the pressure and instead find a way to relieve it. Understanding what causes us pressure and our own tolerances to pressure is again an important aspect of self-awareness. Over the last few years there has also been much written about the many biases that we are susceptible to. It’s a long list. From the obvious ones such as anchoring, confirmation and mirroring bias to the more complex ones such as selection bias and post rationalisation bias. Bias matters because it influences the way we view things as well as how we feel about them and that can lead us into unnecessary and unproductive conflict. Another thing to be aware of is what our own and others instinctive preferences are when it comes to dealing with conflict. This is really important if you want to be able to anticipate and prepare well for a situation which is likely to involve conflict. The most widely accepted test on this is the Thomas Kilmann test. It consists of 30 forced rank questions and ascertains whether you are most likely to Compete, Collaborate, Compromise, Avoid or Accommodate in a conflict situation I have found that CEOs when tested tend to be high in “Compete” and “Avoid” . They’ll die in a ditch over things they care about and disengage when they don’t. Sophisticated CEOs may throw a veil of collaboration over an issue along the lines of “Morning everyone I’m really keen to know what you think about X” but if it looks like the group are coming up with the “Wrong answer” on goes the Compete or Avoid switch depending on the issue. Really good board members and especially Chairs tend to be more even across the five approaches and have the ability to pick and choose which is most appropriate given the issue, the dynamics of the group and the atmosphere in the room. They recognise that all have their uses. When preparing for a potential conflict situation it is as important to try and listen to what others are thinking as well as what they are saying and to be really observant of body language and conscious of your own body and what that is telling you about how you are feeling. Understanding body language and the power of non-verbal communication also helps in choosing and using the right approaches. Leap Confronting Conflict , the charity I chaired for many years and am now a proud Patron of, has a wonderful little mnemonic called FIDO for helping young people manage conflict more effectively. I think it is just as helpful for board members and leadership teams. FIDO stands for Facts, Interpretation, Decision and Outcome and is designed to make us respond thoughtfully and achieve a better outcome rather than simply reacting and possibly making the wrong choice. By starting with figuring out what the facts are and what you can interpret from them and other inputs you can slow yourself up enough to avoid a hasty reaction. This can also help you to work out what outcome you want and what might be realistic. Then finally, motivated by having your eyes on the prize, making the right choices to achieve it. These choices are typically what you say, who you say it to and how and when you say it. In summary, in my experience the “Big 3” things that help you to manage conflict well are: · Self- Awareness and awareness of those in the conflict or potential conflict. · The Power of the FIDO (Facts, Interpretation, Decision, Outcome) approach · Developing the knowledge, skills and character for high performance in conflict situations. I hope that you found this article helpful, please do contribute by commenting and reposting and in the meantime I wish you every success in developing your conflict management superpower.

Once a quarter the Financial Times Board Network gathers together a group of senior leaders from a broad range of sectors, roles and sizes of business to take a deep dive into a theme of interest to the group. I really enjoy facilitating these sessions and always learn a lot from doing so. June’s theme was “Silos” and drawing upon the combined wisdom and experience of those attending we addressed the following questions: How do we define silos? Why is the Silo meme not so positive? Is the current context reinforcing Silo behaviour in organisations? What are the potential costs and benefits of Silos; Have we got in a Silo over Silos and; What practical tips are there for dealing with Silos? How do we Define Silos? Ironically, the word Silo, derived from the Greek σιρός (Siros – A corn Pit) was originally used to describe a highly positive and collaborative concept. Silos were a shared resource of deep storage bins designed to provide protection from the outside world and to reduce risk through dividing up a harvest of grain. They were collaborative in the sense that Silos were community based as well as community funded. Apart from the benefits of increased protection for valuable and vulnerable crops they also brought other benefits through cheaper storage for individual farmers as well as the ability to sell or to use over a longer period. A concept that has survived for over 4,000 years. A Google search on Silos today reveals just under 300 million references. A trawl through the first thousand reveals a lot more written about organisational than agricultural silos. There’s also a far from positive meme with many tales of the frustrations felt by working in Silo’d organisations and lots of advice on how to bust them. Classic descriptions of organisational Silos refer to them in a trope like way as a mindset or a culture of a team which is somewhat isolated from the rest of the organisation, resists external ideas, is prone to groupthink and is deeply loyal and territorial. Traditionally the Silo tag has been ascribed to a place, function or division or operating unit, it might even be a board and an exec team being less joined up than they should be. Silos can also be generational groups or strategic partnerships and suppliers. At the same time, there is a general appreciation of the power of tightly focused and tight knit groups that have clarity of purpose and a high degree of autonomy. Especially when you want to get something done or to innovate. Why is the Silo meme not so positive? The short logical answer would be that it is generally felt that despite the logic of the power of focus that power is undermined by some of the more negative basic instincts of our human behaviour. It’s also possible that a deeply entrenched narrative is hard to shift and in our internet age whenever people do their research in order to write about silos they cut and paste from the mass that’s already there. So, could it be that we are in a classic groupthink Silo over Silos! Is the current context reinforcing Silo behaviour in organisations? Increased volatility and uncertainty generally increases anxiety. Reduced social interaction with colleagues outside our team combined with a combination of working from home and technological development may also be reinforcing factors. So, it’s quite possible that the current context may be boosting Silos rather than busting them. Unlikely partnerships that spell success (2022) , a paper from SAP Concur , identified a number of dream collaborations between what some might consider traditionally Silo’d functions. Yet they also highlighted that “ 71% of HR leaders are more concerned about employee collaboration than they were before the pandemic”. What are the potential costs and benefits of Silos? The costs were summarised as: The negative aspects of territorial behaviour. Unhelpful Memes and caricatures developing about groups and individuals. Silo groups being harder to join with heightened risk of organ rejection. Increased risk arising from a lack of objectivity & diversity of thought. Silo groups can easily become echo chambers with higher levels of Group think and lower levels of diversity. They may well be highly inclusive for those in the group but hostile for those who interact with them. The strong “Anchors” that Silo groups depend upon inevitably lead to greater risk of Anchoring bias in decision making. “HR are useless, Finance are the say no department” etc . There is frequently an unwillingness to share information outside the group resulting in it taking longer for others to get things done when Silo’d groups are involved. Unity and loyalty to the group are valued more highly than performance. Historically, creating reinforcing Silo thinking has been a useful tool for despots to divide and rule and can feed despotic tendencies in leaders. There was a shorter list of benefits but some of them were highly positive including: Providing a sense of Identity, Security, Unity, Safety, and Predictability for those in it. The positives of territorial behaviour and a “Stronger Together”, more supportive culture. Increased energy and conviction arising from higher levels of competitiveness. Easier to reach a common goal and alignment behind it. Easier and faster to mobilise especially for more task-based activities. Increased focus. According to Unlikely partnerships that spell success (2022) organisations are 5 times more likely to be high performing if they promote collaborative work. Encouragingly, they also highlighted that “82% of CFOs in the survey said that they collaborate more with their CIO peers than 3 years ago” and that there was “43% higher workforce productivity in companies where the CFO and HR are strong collaborators”. The bottom line feeling from the group at the FT session was that there’s a spectrum from a “ Healthy Focus” to a “Destructive Bunker” mentality and that it is far too simplistic to think of Silos as wholly negative. It’s down to the leadership to create the right culture, communications plumbing and incentives to achieve the relevant balance for the organisation. So have we got in a Silo over Silos? As a group we agreed that we have and we challenged whether “Silo Busting” was a healthy mindset. We thought that it would be better to have a “Maximin” approach to silos. Maximising the positive aspects and driving out the bad. What practical tips are there for dealing with Silos? Here are a few of the things that I and the FT group found to have worked well? Being clear as a board and executive leadership team about what culture you want and why that will lead to stronger performance and stakeholder engagement. Having the self-awareness, processes and metrics to understand what culture you have got. The more evidence driven the better. Review KPIS to ensure that they are encouraging positive collaboration between highly focused groups and not reinforcing the negative aspects of Silos. Acknowledging and rewarding positive behaviour as well as acknowledging and sanctioning negative behaviour. Seeing investing in connecting activities for highly focused tight knit teams as a critical investment and doing so with a “Return On Investment” mindset rather than a “Budget” one. This will also help focus on the things that make a difference and help drive out superfluous, superficial and unproductive activity. Two decision aids which help where you have Silo chiefs making a collective decision. The aim being to encourage Silo leads to set an example by being more transparent, resolving differences more quickly and being more supportive of each other: Instead of simply saying “Yes” to a decision, or what has become common in virtual meetings a “Thumbs Up”, use the “Fist of Five” approach. Use a closed fit to indicate “No Way”. An index finger (and absolutely not your second one), to signal that you see major issues. Two fingers (palm side!) to say you see some minor issues but they need to be resolved now. Three fingers to show that you see some minor issues but they can be resolved later. Four fingers to indicate that you are fine with the decision and Five to show you are very enthusiastic and will champion it. Use “Decision Dens” , effectively a version of the classic “Dragons Den” but more supportive. Here you assemble a small group of leaders from different functions and places at short notice to make a decision which matters a lot to one of the group. My simple aim in writing this article was to stimulate thought and comment on the many perspectives and ways to manage Silos for maximum impact and minimum damage. Please share and add your thoughts to the conversation. Patrick Dunne OBE Experienced Chair and author of the award-winning book Boards . This article has been sponsored by SAP Concur – industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to Leap Confronting Conflict which provides young people with the skills to effectively navigate the conflict in their lives.

Many years ago we were visiting South African township schools to select some more for Warwick in Africa to support. The entrance sign to one of them proudly proclaimed an 80% matriculation pass rate. This’ll be quick, we thought, doesn’t seem like they need us. Yet, our antennae were up. The results seemed far too good to be true. After an enthusiastic greeting from the Principal, we congratulated him on his uplifting results. Then after building enough rapport and bonding over Pythagoras, we asked him how the pass rate was calculated. His demeanour changed and with a look of withering disdain, he asked what we meant. Taking our second step on the escalator of constructive challenge we gently enquired whether it was a percentage of children in the year group, of those entering the school, or of those taking the exam. “ Those taking the exam ” he replied, politely omitting to express the “ You ****ing idiot ” glare on his face. “ Thanks, guessed it must be. And what proportion of the year group take the exam? ” . “ It varies year to year. ” “ Thanks and what was it last year? ” “ 25%, well up from the 20% when I took over.” “Congrats that’s a big achievement and is the matric pass mark still 30% in the district ”. “ Yes ” was the response. With that we moved the conversation on to his favourite topic, teacher training and development. All the information we needed came from five simple friendly questions. 80% of the year group got less than 30%. A lot of good came from this awkward moment. They really could do with our support, the Principal and his team accepted it enthusiastically and over the subsequent years they achieved considerably better results. This tiny example of the power of scrutiny and constructive challenge leading to better decisions and better outcomes is just as relevant in the Boardroom as it is in a township school and is about a lot more than data savviness. I love my triangles and when it comes to this topic, two in particular: “ Culture, Character and Craft ” and the ever-handy board effectiveness triangle “Purpose, People and Process” . I would point out that these are equilaterals not right angles! It’s tempting to prove the Purpose of scrutiny and constructive challenge with the negative. Simply by using a few of the countless examples throughout history and today, where the absence of it has led leaders and their organisations to destroy lives, livelihoods and value through catastrophic decision making. Yet sadly that seldom does the trick, especially with the overoptimistic or the asymmetrically sensitive who make a decent proportion of those who need it the most. It’s as much about maximising upside as provoking the thought, insight and creativity to make better choices. Increasing the likelihood of successful implementation through deeper consideration of risks and upside. So, there’s far more value to be had than simply stopping a howler. Greater buy-in and empowerment and avoiding the inevitable silent or noisy seething later is achievable because people feel they have been able to have their say. All of which reinforces a positive board Culture. Yet all of this is academic unless there is accountability and action and something good comes of it. So how come, if it is so beneficial, that it’s so often lacking? Usually because one or a combination these five things is not strong enough: People, Character, Craft, Culture and Process. Creating a Culture where scrutiny and constructive challenge is not just accepted but is encouraged and expected and seen as highly positive is vital. Good Chairs focus on ensuring that the Board has the right People. Right meaning that they have a Character and Craft to be effective. They set expectations, lead by example and ensure that that there is a healthy amount of trust, respect, candour, reflection and feedback to keep levels of individual and group self-awareness high. In this way it’s more than a psychologically safe space, it’s a space where challenge is valued. When it comes to character confidence, courage, humility, resilience, calm and excellent interpersonal skills, especially with respect to managing conflict, are the prerequisites. The “ irritatingly right ” and the “ sycophantically wrong ” pose real danger. The former through not having influence and the latter for having too much. The best board members have finely tuned antennae and pick up signals quickly and accurately. They know that if a CEO is “bull*******” it’s usually all over the CFO’s face and they don’t just know the organisation well but also the context in which it operates. They have the ability to listen to what people think as well as what they say. With heightened senses and the confidence to express their views, they are able to compensate for confirmatory bias softballs from colleagues with deftly worded enquiry and points that go to the heart of things. They are good at spotting scrutiny avoidance tactics and spotting the chaff that’s thrown out to distract. They know when a topic is introduced as a no brainer its usually far from it. When the clock is being run down as all the time is used upon presentation so there’s no time for questions and so on. Being a board member is a serious business and you need to put the work in and have a command of the facts. Not just to be on it and in the zone but also to be taken seriously when it matters. In Getting In The Zone I drew on some of the things that top performers in other spheres do to ensure peak performance when it matters. Critically they aren’t just focussed on their own performance but that of the team as a whole. An aspect of the craft of constructive challenge that is frequently overlooked is the ability to get into the conversation and in the right way. In a culture dominated by extroverts and when Board meetings are a bit of interrupt fest this can be challenging for introverts. Good Chairs will put extra effort in to ensure that their more introverted colleagues are supported. Conversations pre-board meetings to ask what they think, what points they’d like to raise will not just help them to feel more able to make their points but also for the Chair to solicit their view on the day. I have found that probably the most powerful word to use first to get into a conversation which is going full steam ahead in the wrong direction is “I”. This is because our first objective is to get into the conversation and this usually prompts a pause. It is also the case that generally the words which naturally follow tend to be helpful “I’m not sure I understand that could you go through it again” “I wonder what the effect on XX would be ” “I feel it’s really important we understand all of the consequences here” and so on. Obviously “I think you’re mad, bad or sad” would be less helpful! Good scrutiny and constructive challenge shouldn’t be a solo sport. Mobilising others makes the job a lot easier. Body language can be a powerful tool here. A look across the room, an outstretched hand inviting someone who is well respected to comment can be highly effective. As can simply saying “I’d be really interested to know what Mary thinks about … ” The escalator approach of moving from a gentle enquiry to a deeper probe to increasing levels of challenge is well known and generally effective. Worth remembering though that there’s no point using an escalator approach if you get off and have a wander about on the first floor, get distracted and then run out of time to get to the thing you really came for on the third floor! In creating the right culture and conditions the Chair will need to encourage inclusive language, nudge things in the right way if they feel like they are becoming personal and encourage as well as support board members to challenge outside their domain expertise. They also need to manage the pressure helping to raise and lower it to achieve maximum effectiveness spending the right amount of time in the zones of comfortable and uncomfortable debate. Sub-Committees can be used powerfully to enhance scrutiny as well as to maximise efficiency. Increasingly Horizon or Nextgen boards are being used also as sense checkers as much as idea generators. Socrates said that: “The first step to knowledge is recognition of one’s ignorance” And for me the first step to effective constructive challenge is to listen to this and to put the work in to prepare. Patrick Dunne Experienced Chair and author of the award-winning book “Boards”. This article has been sponsored by SAP Concur – industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to Leap Confronting Conflict a charity that designs and delivers highly impactful programmes to help young people and the adults in their lives to successfully navigate conflict.

The world is in flux. As are many organisations when it comes to staff churn with rates of over 25% becoming more commonplace. These higher churn rates may also stimulate further churn as workloads rise to cover gaps and staff hear tales of happier times elsewhere from former colleagues still in their honeymoon periods.  The costs of churn go well beyond the immediate replacement costs, impacting productivity, customer satisfaction, momentum and ultimately performance. Yet learning from churning is also great opportunity and can be a catalyst for change. Let’s be clear what we mean by churn? – The rate of staff turnover. It is typically calculated as the number of people who leave in a period divided by the average number of employees throughout that period. Some might feel churn is an operational matter. Therefore, not something the board should be concerned with. I take a different view. If the purpose of the organisation is clear then the Board’s role is to ensure that it has the right strategy, resources and governance to fulfil that purpose. Higher or lower than optimum churn impacts a key resource for any organisation – its people. High churn may also indicate that there is an issue with the culture and is likely to impact culture itself. So, it should be something of interest to the board in terms of oversight and support. They should know what the churn is and what’s driving it, as well as consider the impact and the consequences of churn in the decisions that they take. The drivers of churn are both varied as well as specific to each organisation. It’s important for a board not to be a victim of “Average Thinking” . The overall average may be at an acceptable level, but a board also needs to know the variability, the trends and where the hotspots are. As well as what the executive are doing in managing it. The following cocktail of statements convey a sense of some of the common drivers at the moment: “The only way to get on here is to get out”, “I didn’t want to leave the company, but I was desperate to leave my boss”, “Both the job and the prospects to develop were massively oversold”, “It was far too transactional for me. They weren’t one bit interested in my potential.” “I loved the job but hated the culture”, “Their processes made it impossible for me to meet my objectives.” “The pandemic made me think a lot about work life balance and how crazy my life was before”. “I really liked it but just couldn’t afford to work there anymore.” “There was a loyalty discount rather than premium” “There are loads of better jobs out there, I really kick myself for not looking before. “They keep banging on about how lucky we are to have a job with purpose but the most important purpose for me is to be able to pay my bills. “ Poor leadership and culture, low pay and conditions and lack of development are perennial drivers. The Chartered Management Institute believes that there are still too many “ Accidental Managers”. Those who have not had the benefit of quality management development. Moreover, although unsurprising in the current context, too many organisations have a “budget” rather than “return on investment” mindset when it comes to their people and don’t take account of the value created and costs saved in investing in such activity. When it comes to the issue of pay and conditions, it’s important to remember that this will tend to apply across the organisation. Not just at the lower pay levels, who face proportionately the largest falls in their income due to cost escalation. As a number of professional service firms have learnt to their cost, sharply increasing the pay of more junior staff and destroying differentials can create higher churn in the high producer categories of staff. SAP Concur’s forthcoming Employee Experience Research Report provides some fascinating additional insights into what’s going on. The first insights aren’t so surprising with 70% of the 1500 HR and Finance decision makers and 2,500 other employees whose views were sought being concerned about the impact of cost of living increases. I thought it might be even higher than that. Aren’t the other 30% listening to the news? Unsurprisingly for 65% of the sample, a pay rise was the most popular way to boost their job satisfaction. Yet this also indicates that it is not solely about the salary. Many in the sample, some 45%, were concerned about another trend - employers encouraging them to work from home to save office utility bills. At the same time 47% of employees surveyed said that they will spend more time at the office if their employer didn’t adjust their expense policy to meet rising costs at home. There may be some nudging going on here to encourage staff back into the office. The research also highlighted another issue – late reimbursements for expenses. Some 58% of the employees surveyed worried about delayed reimbursements impacting them. 46% also say that the process of reclaiming is so difficult and/or time consuming that they don’t bother to expense smaller amounts. 49% of them also worry that their managers might think badly of them if their claims are too high. So, what can we learn from what’s happening? How can we adapt to healthier levels of talent refreshment and how can we avoid the downsides of churn? The starting point is to recognise the importance of knowing what’s happening within the organisation and in the markets for your talent. It is also important to finely tune your “Churn Antennae” , to know where the major risks lie, to have robust “Flight Risk” analysis and to get behind the real reasons why people are leaving. Engagement and pay surveys, Glassdoor and other social media analytics can provide some clues but highly effective leaders who know their staff well, understand what really motivates them and can interpret signals that are likely to be the most effective radar. Exit interviews can be as variable in accuracy as engagement surveys. Yet, done well they can provide a rich source intelligence. With possibly 5 generations, defined by their behaviors as much as their ages, working in many organisations, it’s important that any retention strategies are flexible enough to be effective to these different groups. The growth of Horizon or Nextgen boards is one way some organisations are better connecting across the generations and convincing younger generations that they have a voice and can influence direction and culture. An element of “Grow your own” in the people strategy, recruiting as much for potential as to fit the current need, combined with progressive induction and development processes will also help. It would seem that some organisations have got a little confused as to where they are and where they want to be on what I call the " transactional to familial" spectrum. Sometimes transmitting nice warm familial pitches when recruiting but operating in a jarring transactional way once people have signed up. On other occasions they get disappointed when they discover that staff appear to have no loyalty to them when their recruitment communications and processes lack humanity and convey an obviously transactional culture and a precarious nature of employment. This is back to the Board and culture and being clear what sort of organisation you want to be and ensuring that’s what you are in practice. Snatching at people is as risky for employers as snatching at jobs is for employees. Many recruitment processes seem soulless and designed to recruit for minimum cost rather than to hire the best people. The work ESSA-Education Sub Saharan Africa has been doing with artificial intelligence business Quilt.AI to understand What African students think of the transition from study to work and the world of employment has been really illuminating to employers who can be shocked how well intentioned signals can be received so differently. A degree of churn is inevitable and healthy but on top of all the other volatility that we face it can create tipping points. It is however, unlike many of the other variables, one that we can influence if we choose to learn from churn rather than just churn and churn. Patrick Dunne Experienced Chair and author of the award-winning book “Boards”. This article has been sponsored by SAP Concur – industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to ESSA- Education Sub Saharan Africa a charity focussed on transforming educational outcomes through turning evidence into action.

When talking about the impact of the pandemic on boards in an article to accompany the launch of the second edition of Boards a few weeks ago, I noted that: “There has been the acceleration from what I call a “Maps world to a “Satnav” world when it comes to decision making. The “Maps” world consisted of incredibly detailed and lengthy strategic plans and annual budgets. The “Satnav” world, which is more common in early stage and venture backed organisations, consists of strategic frameworks and parameters and dynamic budgeting. i.e. Making decisions, at the best time, with the very latest information.” The trend for larger organisations to adopt these methods has been given a boost by increased uncertainty and the availability of data analytics tools. However, it hasn’t all been plain sailing. As many board members and finance teams have found, such adjustments hard in practice.” The analogy resonated with a lot of people. So, a three-minute video was produced in my car to say a little more about what I meant. Governance Publishing then held a small Linkedin event on the topic to gain other views on the topic. Here’s a snapshot of what I and others think is going on when it comes to the Drivers , the Dream and the R eality of the changes that are underway and how “ Smart” boards seem to be adapting: Before we start, I should say that in using this analogy I placed more emphasis on the mindset shift rather than the enabling technologies, for they are only a part of the story. So, please don’t assume I am suggesting a judgement or thinking by-pass or a handover to the robots just yet. This is about how we might better inform our judgements and how and when we make them. The Drivers: Big Data and live data: A range of technologies from processing power to mobile devices and storage combined with societal change driven by online purchasing, social media, the easier than anticipated acceptance of the subscription models, almost instant news and other factors have combined to produce vast quantities of information. Big data analytics, the rise of Algorithms, Artificial Intelligence, Infographics and communications technology: As importantly, big data analytical capabilities have grown significantly. Developments in their use in Particle Physics, the use of algorithms, artificial intelligence and infographic tools combined with the ability to produce and distribute data and communications ever faster and clearer have changed the game for many, as well as created substantial businesses providing these tools and advice in the process. Shrinkage of the time taken to gather and distribute information : The technological and societal changes referred to above are enabling this and being reinforced by an almost herd like “Need for speed” which carries dangers as well as thrills. Daniel Kahneman’s brilliant “Thinking Fast and slow” is worth reading again! Increase in significant external events and resultant uncertainty: Numerous profound geopolitical, natural and societal events have led to increased uncertainty as well as reduced reliance and confidence in established institutions and ways of doing things. Then there’s the growth of an “Influencer” susceptible society where social media influencers can shift markets both ways with a post. Shifting Risk and resilience mindsets: These significant events have had a profound impact on the way boards think about risk and resilience. The financial crisis almost 15 years ago caused a seismic shift in approaches to risk and resilience in the financial sector. The pandemic has had a deeper and wider effect and climate change is likely to have an even greater one. Regulators across many sectors have become more demanding of boards in terms of assurance and reassurance that they have robust enough resources, systems, processes and culture in place to withstand major shocks. The Risk Coalition is doing some very interesting work in this space The upside in getting it right in an increasingly winner takes it all world where margins between success and failure are fine. A few words capture this Zoom and Test and Trace. Fear of the downside in getting it wrong This has both a positive and a negative effect. Really good downside analysis and understanding the consequences of different choices is powerful. Yet prevarication and paranoia are unhappy partners when making decisions. Boards of organisations who haven’t kept pace will reflect on their choices and how they made them and think about what to change. Or more likely their successors will. As an aside it’s odd that we don’t do as much “black box thinking” on boards as we should given the importance of some decisions. For more on this Matthew Syed’s brilliant “Black Box thinking is well worth a read. Growing popularity of “early, mid, late” approaches to the big decisions: This is where a decision-making process for a major decision, where there is the time, is split into three stages: “Early”: Where the board considers and discusses what are the issues that need to be taken into consideration in the decision, confirms who needs to be involved and when, as well as what the process will be from here including when a final decision will be made. “Mid” A longer discussion with supporting papers which confirms the issues and considers the choices and consequences as well as the outline of implementation plans then provides input on preferences . “Late”: Essentially a finalisation meeting where the formal decision is made. This time the emphasis is on the board being satisfied that not only is it the right choice but that it endorses the implementation strategy, resourcing plan and risk mitigation strategy to achieve it. Heightened awareness of interdependencies, logistics and decision consequences leading to more system thinking in decision making. One of the striking things to come out of the pandemic was a greater appreciation of interdependencies whether they be with suppliers or team members who were previously undervalued for their contributions and criticality. In the UK, BREXIT has also led to a heightened awareness of these things and highlighted a lack of system thinking across society. Not everyone seems to have got this yet, but many have, and it is leading to more thought on not just the choice, but how it might be implemented and its consequences. Increased focus and transparency around purpose, values, diversity and inclusion and relationships with stakeholders Understanding the implications of decisions for stakeholders and how they may respond or react has rightly had an increasing role to play in decisions. Lack of attention and care in this can quickly unravel what initially looked like a sound decision. The stakeholder strategy and the metrics in place to help the board understand stakeholders and what they think and feel about the organisation are central to finding the right balance especially when there are competing stakeholder interests. Do all of these drivers and others I haven’t listed add up to a tectonic shift or are they simply producing superficial changes to how we describe what we were already doing? It feels much more like the former to me. The Dream: In a nutshell, better decisions. Why? Because we are able to make them at the best time with more and better information. The payoff is that we will capture more of the potential upside when it comes to making choices and also that we will be more resilient and better able to adapt when things go wrong or circumstances change. The Reality: Is that we are not quite in dreamland yet. The art as well as the science is developing and just as with the early days of the use of satnav in cars and boats adaptation takes time, pragmatism, discussion and good judgement to strike the right balance. I don’t have the data to know, but would reckon that many organisations and boards have been “Satnav” thinking for decades. Yet they were, or are, probably only a small proportion of all boards. The nature of the organisation, its stage of development, type of ownership and resources available to it will all have a big influence. Those at an earlier stage or who are in faster moving markets with shorter term paybacks on investment cycles are probably more likely to be further down this route. In general, I don’t think we talk enough about how boards make decisions and when we do, we tend not to system think. Instead, we might focus on one particular aspect for example bias or diversity and inclusion, or perhaps a new strategic modelling tool or a technique another board has found helpful. This is as much about behaviours as about data. Alignment within the board on this topic can also be a challenge. Some might have almost a religious difficulty with aspects of these changes and fear the loss of the comfort blanket of the more traditional plan and budget that has been with them all of their exec and Board lives. Good chairs will know that it is as important to listen to what people think as what say and be cautious with superficial proclaimers who hide behind catch phrases like “We are following the science or the data” when the data supports what they want to do and only challenge the assumptions or the competence of who produced it when it doesn’t. Which brings me on to another reality.