On February 12, 2008 Muir is scheduled to discuss with students at Northwestern University's Business Institutions Program how to improve decision-making. Based in large part on the information contained in "Promoting an Effective Board or Management Group," the discussion will explore, among other subjects, optimal personality traits for good decision-making and how to avoid extreme decisions.
"We evaluate 'courage' as a behavioral characteristic of our lawyers, and we link this evaluation to compensation," says John P. Donahue, Senior Vice President, General Counsel and Secretary of Rhodia Inc., in the July 2007 issue of InsideCounsel. Rhodia has "embraced professional objectivity of its in-house lawyers as a core value" and Donahue wants to make sure that "our lawyers can deliver bad news to clients," with whom they are often closely aligned.
Valuing Courage
Given the data we have about the strong tendency of lawyers to avoid rather than confront conflicts (yes, even those feisty litigators, oddly enough) (see my article "The Unique Psychological World of Lawyers"), Donahue's goal is one that can't be lauded enough. Hospital administrators contend that a ratio of 1 conflict avoider in 4 employees results in a "dangerous workplace"--think: "I don't want to get so&so in trouble over reusing needles" or "Maybe she'll start writing down dosages after she gets used to our procedures".
Left to their own proclivities, lawyers' much higher rate of avoidance than hospital workers risks being just as dangerous. Avoidance not only fails to resolve firm and client issues, but at the extreme, failure to report and confront violations of Sarbanes-Oxley, insider trading and discrimination laws, to name a few, can not only crater a career, but also a firm or a company. Add in malpractice, fraud and the range of criminal possibilities (see, for example, Enron and other corporate demises and the unfolding saga of Milberg Weiss Bershad & Schulman) and silence should never be considered golden.
Hence Donahue's laudable efforts to support and promote courage.
Which is where our thought for today could end.
Evaluating Courage
But Donahue goes further than suggesting putting in place environmental supports like "constantly talking" about maintaining objectivity, creating a culture that embraces bearers of bad news and rotating lawyers among client departments. He wants his lawyers' courage to be evaluated and then to compensate them accordingly.
Evaluating courage or any other personal characteristic as it relates to their work is a radical idea to many lawyers. Basing compensation on that evaluation is outlandish. They don't know what a "behavioral characteristic" actually means, don't trust the evaluation process, and certainly don't think their compensation should be linked to so un-rigorous a process. They are, after all, good lawyers, and good lawyers average in the top 10% on the characteristic "skepticism" in personality assessments (see again my article "The Unique Psychological World of Lawyers").
In this case, they should get over it. Whether Donahue is using structured assessments or more unstructured evaluation techniques, these behavioral and personality evaluations are likely to be the key for law firms and law departments to break their recruitment and retention quandaries and, as icing on the cake, help solve the diversity dilemma. (See my January 5, 2007 blog entry "KPMG Model Delivers Risk Management, Teamwork, Client Satisfaction and Diversity Too," reporting on KPMG's use of the Birkman Method assessment to revamp its business model and achieve retention and diversity goals.)
This is not a new position, at least for me. (See my article "The Case for Assessment: Using Discrimination for Better Hiring," which outlines all the uses of assessments in the non-law firm world and how law firms might profit from them.) And now the tipping point is in sight as more law departments and law firms inch towards greater use of evaluations and assessments-- and trumpet the benefits.
General Counsel Scott Terrillion, of Boehringer Ingelheim Pharmaceuticals Inc, uses an "evaluative selection method" to find the best attorneys for his company, with diversity being a natural consequence. Roland Dumas, director of diversity for the legal recruiting firm Major, Lindsey & Africa, points out that "if a law firm screens candidates based on what law school they went to and how well they did there, it won't achieve much diversity. There simply are not enough African-American and Latino law students in the top law schools who would survive the 'top quarter' cut." Instead, Dumas recommends "capabilities" interviews, which use rich conversations to probe candidates to find those who have the talents the firm values.
Struggling to complete with bigger firms, Kansas City, Mo.-based Blackwell Sanders developed a system for selecting and assessing associates that is more behaviorally evaluative than most firms use, and it found that using these behavioral evaluations, starting with the initial interview, enabled the firm to spot talent it might otherwise miss. The firm has documented its efforts in a handbook, From Classes to Competencies, Lockstep To Levels, which, according to the foreword by Ida Abbott, is "an act of remarkable candor and leadership ... [that] will enable law firms to expedite the design and implementation of competency-based evaluations and performance-based advancement."
The proof, as they say, is in the pudding. Blackwell Sanders doubled the total number of minority associates, tripled the number in recent incoming classes, and increased by 22% the number of females associates. Perhaps even more notable, a "high" minority attrition rate declined to "0" within four years.
Jeffrey N. Berman, managing partner at Berman Fink Van Horn, says that for the last 10 years his firm has taken an even more radical step--using individually administered psychological assessments as part of their hiring process. Determining assessment traits important to the firm has given the firm "a handle on the type of attorney that is going to be happy and successful here," Berman says.
The firm tells all prospective hires, lawyers and staff, that they will be required to take a personality test if an offer is made. Contrary to the fear of many hiring partners, Berman reports that no one has ever objected to the assessment or refused to proceed, in part, he believes, because everyone in the firm has participated and also because it has been so accurate in predicting success. "It never ceases to amaze me how accurate the testing is," he adds, noting that it has never proved inaccurate with anyone they've hired, even when the results contravene the impression of interviewers.
So diversity is not the only benefit firms can expect from the targeted use of evaluations and assessments--law turnover and high satisfaction and performance result as well.
Our firm offers law departments and law firms state-of-the-art advice on identifying the characteristics that produce happy, productive lawyers in your environment and designing evaluations and assessments to use in hiring and promoting those candidates. Don't be left in the backwash. This is a wave that can do much to move you forward.
One of the requirements of the Sarbanes-Oxley rules for publicly traded companies is that they demonstrate that they are promoting an "ethical culture" in the workplace. What does that mean?
"The Manager's Book of Decencies: How Small Gestures Build Great Companies" by Steve Harrison, chairman of Woodcliff Lake, N.J.-based Lee Hecht Harrison, the employee outplacement arm of Adecco Human Capital Solutions, a division of Adecco SA of Glattbrugg, Switzerland, is an attempt to answer that question.
Mr. Harrison's contends that an ethical culture is the result of many small, and sometimes large, gestures made over a long period of time, with the driving force coming from the top.
"Being decent isn't about being nice... or spending more money-- it's about treating people fairly," Harrison claims. He also believes that good role models at the top have certain common traits. Those Harrison acknowledges as outstanding role models are Colgate-Palmolive Co. chairman Reuben Mark, Nucor Corp.'s former CEO Kenneth Iverson (who died in 2002), Campbell Soup Co. president and CEO Douglas R. Conant, Southwest Airlines Co. chairman Herbert Kelleher, and Dial Corp.'s former president and CEO, Herbert Baum.
These five leaders exhibit what Harrison calls a high level of "moral intelligence," which is marked by humility and honesty during both good times and bad.
If employers can pay attention to the issues that matter to their employees, "like finding some kind of fulfillment in the job they come in to day after day...then they're on their way to creating a culture of decency which is critical to attracting, retaining and engaging employees."
Behavioral science is not often invoked in the halls of law departments, but maybe it should be. Two recent articles highlight the importance to a GC's success of understanding why people think and act as they do.
General counsel are in the position of having to reconcile two jobs: being both a business partner in the management of the company's business and the guardian of the company's integrity. One aspect of their work requires creativity, risk-taking and far-sightedness. The other requires careful scrutiny of every corporate action in the short and long term for potential regulatory, liability and just plain reputation pitfalls. Achieving high productivity with high integrity might strain even Superman's talents.
An article in Corporate Counsel by Ben W. Heineman Jr, former GE senior vice president-general counsel, entitled "How GCs Can Avoid Being Caught in the Middle" recites some of the recent scandals that attest to how difficult that balancing act can be: the fraudulent financial practices at Enron, the pretexting at Hewlett-Packard Corp, and the wave of options backdating.
Perhaps what chilled GCs to the bone most recently were the guilty pleas by Purdue Pharma L.P., its president, GC and former chief medical officer to misleading the public about the drug OxyContin's risk of addiction. They have agreed to pay a total of $634.5 million in fines. Rather than relaying focus group concern about potential for abuse, Purdue Pharma gave false information to its sales representatives that the drug was less addictive than other painkillers.
Heineman mentions a number of attributes that can help GCs successfully straddle their two roles. Vis-a-vis the other corporate managers, the GC must have the ability to stand his/her ground on clear illegalities and to make sure he/she has enough time to assess those situations that are not clear cut. And GCs must be able to take those stands in the pressure-filled environment of a board meeting where the CEO is likely to be a ferocious skeptic and many board members will side with the CEO. See our July 18, 2007 entry on Promoting an Effective Board about the importance of personal attributes in good decision-making.
The Texas Lawyer article "It's All in Your Head: Cognitive Theory Can Help GCs Lead Organizations to Better Decisions" by Michael Maslanka, a managing partner at Ford & Harrison in Dallas, contends that a GC's real power--the ability to influence decisions-- comes from understanding the way people think, which requires tapping into cognitive science.
Maslanka lists a number of biases that people in general and managers specifically can suffer from if they aren't on the alert:
Maslanka encourages GCs to be open to all possibilities and to question rather than dictate. Heineman also points out the importance of maintaining within the law department a culture that welcomes, even requires, lawyers to raise concerns about financial, legal, ethical or reputational issues. We refer to this as a "culture of dissent"-- one that invites concerns, follows up on them and does not punish anyone for raising them, but rather praises them. See our March 16, 2007 entry on the article Handling Conflict and Dissent in Law Practice (and Life).
While it may not be mind reading, being cognitively aware of your own personal attributes and biases, as well as others', can help steer you toward that Superman performance to which all GCs aspire.
An article by Ronda Muir entitled "The Importance of Emotional Intelligence in Law Firm Partners" appears in the July/August 2007 issue of the ABA Law Practice Management Section's Law Practice Magazine.
Among the attributes that emotionally intelligent partners bring are better judgment, higher productivity, enhanced business development skills and better client relationship management. Most importantly, high emotional intelligence fuels the kind of leadership-- one which promotes collaboration and teamwork-- that is critical to excellence in the 21st Century, and that can provide firms with a competitive edge.
Oddly enough, where it is most needed, Boards and other management groups may be the last frontier for achieving enhanced performance management.
Historically, the perceived advantages of relying on a managing group, instead of one individual, include access to the group's collective wisdom –"several heads are better than one"–as well as the ability to spread an increasing management workload over a number of people.
A recent Center for Creative Leadership study identified an additional advantage. Effective management these days requires the resources of several people, rather than the lone hero, in order to meet the global challenges of collaboratively connecting across boundaries of all kinds—geography, language, culture and expertise.
Avoiding "Extreme" Group Decision-Making
Yet there is a well-documented propensity for groups to drift toward "extreme" decisions, that is, a committee often makes a decision that none of the individual members of the committee, acting alone, would make. These group decisions can be extreme by being either extremely risky or extremely conservative, and you see lone Directors routinely disavowing their cohorts’ actions after the fact. There seem to be a number of reasons for this tendency:
Diffusion of Responsibility. An individual's part in a group's decision evidently weighs less heavily on him/her than an individual decision would, the implication being that not as thorough an evaluation of the issues is made when the decision is attributed to the group.
Ignoring the Lone Voice. Often groups do not properly take into account the most relevant expertise in the room. Most small groups tend to make decisions based on the information all members share about a topic, overlooking important facts that one or several people bring. Although management committees are usually looking for creative, out-of-the-box strategies, a solitary opinion is often taken lightly or ignored in the flow of debate within the group.
Social Pressure. The more bonded the group, the more committed they are likely to be to reaching a decision, particularly one that pleases most of the members, even if a decision should be delayed or a less pleasing one would in fact be best.
Competition. When committee members agree on the parameters of an issue, individuals may try to one-up each other by suggesting more and more extreme solutions, then promoting their solution as the best.
Stress. Groups under pressure act very much like individuals under stress, only more so. They often procrastinate, calling for further information, or become committed to bad decisions primarily to protect themselves and each other against criticism. This effect may account for the popular notion that committees tend to "split the baby," resulting in a less controversial solution that does not in fact work very well.
Seeing What Others Say
The impact of psychological factors on group decision making may go even further, to actually alter each person’s perceptions. A study using advanced brain-scanning technology shows that, in effect, group members often in fact see what the group tells them they see. In an exercise involving mentally rotating images of three-dimensional objects to determine if the objects were the same or different, subjects were assured of an incorrect conclusion by confederates and then agreed with those wrong answers 41% of the time. The brain activity of those who went along with the group was markedly different from those who took independent positions. When subjects concurred with wrong answers, activity increased in the area of the brain devoted to spatial awareness, meaning that their actual perceptions were being influenced. Those who made independent judgments showed activity in the region of the brain associated with conflict management, signifying an emotional toll for going against the group's perception.
Based on the results of this study, one of the potential major advantages of a group decision—"several heads are better than one"—can disappear if the group successfully, even if unintentionally, co-opts individual insights. The most problematic aspect of these results is that not only does the group lose the "lone voices," but also the lone voices lose their very awareness of their differing perspectives. The change in their perception makes them incapable of raising their idiosyncratic flags.
A Case In Point
The turmoil at Morgan Stanley a few years ago and the decisions made by its board of directors illustrate the impact of some of these tendencies. Composed of strong-minded, business-savvy individuals, the board nonetheless, through months and months of defecting key personnel, intense business and media criticism, embarrassing legal imbroglios, disappointing financial results and stalled stock performance, closed ranks around Philip J. Purcell, the Chairman and CEO to whom most were closely allied, repeatedly refusing to consider the reassessments urged on the board by varying stakeholders, including its star performers. The clear impression was that management at Morgan Stanley did not promote or value dissenting viewpoints that (as it turns out) could have provided a useful counterpoint to the "group think" that held sway.
Building the Optimal Management Group
As a practical matter, then, group members need to be able to listen carefully to lone voices yet not give in to the peer pressure of what others on the committee think. It is a complex balancing act.
There are certainly some strategies that leadership can employ to help groups avoid some of the “group think” forces that produce less than optimal decision-making. Leadership can make sure everyone is heard, that those speaking from particular strengths and expertise are identified and that their ideas are clearly articulated. Leadership can invest responsibility in individuals for evaluating, spearheading and implementing new initiatives, and they can allow sufficient time for each person to bring the full benefit of their analysis to the issues.
Leadership need not be "feel good" cheerleaders, though. While it is pleasant and in many ways beneficial to maintain a collegial atmosphere among the management group, it is not necessarily a matter of “the more friendly, the better.” Both a healthy dose of confidence in one’s own contribution and a respectful “show me” skepticism towards others’ viewpoints can be useful.
But there is only so much leadership can do once the group is composed. These studies highlight the importance to an organization in the first place of placing in these high-powered groups the types of individuals least likely to be swayed by the psychological forces in play.
One attribute that can make a strong contribution to these groups is emotional intelligence. That may come as a surprise to lawyers steeped in the virtues of analytical thought, but the data on this front is incontrovertible: rational decision-making is significantly impaired if the area of the brain relating to emotions is damaged or excised. And the ability to identify, use, understand and manage emotions—both one's own and others'—produces better decisions.
Another attribute of a "good team player" in this context is the ability to effectively make an individual opinion known to the group without creating a counterproductive backlash. Conflict in this situation may be inevitable and is often essential, acting as the crucible that purges the chaff from the wheat. After the dust settles, however, members should be able to find a collegial balance until the next set of issues arises.
Who are the optimal candidates for these high-powered positions? Those who:
• exhibit the character strengths of honesty and bravery,
• are high in emotional intelligence,
• are aware of their unique expertise and perspectives,
• are willing to speak out and promote their viewpoints,
• are committed to applying the same rigor to making good group decisions as they would apply to
making individual ones, and
• possess the collaborative conflict skills necessary to wrangle effectively over a highly charged issue without seriously undermining his/her relationship with other committee members.
How do you find management candidates with these specific characteristics? Most corporations evaluate their operational personnel through a combination of reviews and assessments to determine those who are likely to possess the qualities they want. But those same corporations rarely ask existing Board members or Board of Director candidates to undergo similar testing.
In law firms, nominations to a management group are often made on the basis of seniority, revenue-generation or availability of time, none of which takes into account any of these desirable traits. While attorneys often contend they "know" their partners, rarely have any assessments been conducted to verify those "hunches."
The good news is that, if an organization wants to improve its decision-making at the top, there are reliable methods to do so. Existing management group styles and the roles that individual members play can be assessed and developed and those most likely to be able to contribute to better decision making can be identified.
Accounting firms have long been ahead of law firms in innovative management strategies for personal service firms-- and as law firms head toward numbering thousands instead of hundreds of lawyers, there is much we can learn from how accounting firms manage people.
At a two-day ARK Group conference in December on Women in Professional Service Firms, Sandra Bushby, KPMG's national director of Women's Initiatives and other Workplace Solutions, recounted how KPMG uses workstyle assessments, particularly the "color-coded" Birkman Method, to put together successful client and project teams. The firm-wide assessments were undertaken primarily as a risk management strategy-- to build teams that have the varied talents to insure that everything from technical details to interpersonal skills to long-term visionary considerations are fully dealt with. But by balancing teams with accountants with red, green, yellow and blue workstyles, KPMG is finding that it is also acieving an unexpected bonus:solving the diversity puzzle-- creating culturally, gender and racially diverse teams.
Law firms, whether big or small, have a world of insight available to them from the use of assessments, which they often do not take advantage of. Lawyers will contend that law is too "technical" or "expert' a service for personal or work styles to have any impact on success. Yet accounting is no less technical, and accounting firms have had to become expert in drilling down to the most effective risk management tools available-- which style assessments unquestionably are. To have the additional bonus of effectively producing diverse teams without resorting to "affirmative action" add-ons is ground-breaking-- a one-assessment-for-all-purposes bonanza.
Enter keywords:
Muir Conducts Associate Compensation Audioconference
On Wednesday, March 12, 2-3:15 pm EST, Muir will be conducting an audioconference for the Center for Competitive Management on Associate Compensation: Remain Competitive Without Breaking the Bank. Included in the discussion will be a review of current trends and out-of-the-box ideas for dealing with the impact of escalating associate compensation, how to find the best strategy for your own law firm and overcoming the problems and pitfalls in making that strategy work.
