Monthly Archives: September 2008

New LinkedIn Groups: Evidence-based Management & Rasch Measurement

I have found LinkedIn to be a very useful professional networking tool.  When I failed to find a Director of Lean Six Sigma at Sutter Health, it helped me find the fantastic Andreea Hurduzeu.  I’m also starting to use it to network with others who value science-based practice.  To connect with those of you who are also interested in evidence-based approaches, I started two new groups on LinkedIn:
  • Evidence-based Management is a group inspired by Pfeiffer & Sutton’s “Hard Facts, Dangerous Half-Truths & Total Nonsense: Profiting from evidence-based management”.
  • Rasch Measurement is a group inspired by J. Mike Linacre, one of the premier living psychometricians who taught me about modern, objective human measurement.

If you’re interested in joining, I would be very pleased to include you.  Drop me a note requesting to join, and I’ll send you an invitation.

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Prioritizing Workforce Risk Appropriately?

I read with interest the blogpost by InfoHRM writer, Mick Collins, on “Identifying Workforce Risks…Right Now“.  He notes that a recent survey of employer perceptions of leadership talent availability indicate that the majority felt there is already a shortage of qualified leaders.

I worry about how employers know this.  I’ve worked in many industries, for over 20 years, and it is surprising how little sophistication some employers use to define the leaders job requirements (e.g. job analysis), develop appropriate instrumentation (even Classical Test Theory, let alone Computer-Adaptive Measurement based on the Rasch Model); and use these data in succession planning forecasting models.

I’ll never forget a situation about a year ago, when three of the major HR consulting firms approached my employer with a proposal to sell software and consulting services to help forecast workforce supply and demand, at least for executives.  None had even a basic understanding of uncertainty and risk – the fact that I can predict tomorrow with less error than I can predict the next decade’s forecast.  Instead, I partnered with Paul Squires of Applied Skills and Knowledge to create a Monte Carlo simulation, based on both historical business data, and Bureau of Labor Statistics estimates on the probability of retirement by age.   Today, I recommend using a combination of discrete event and Monte Carlo methods, but the model I created with Paul was still far better than anything the consultants tried to peddle.

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Psychometrics Way, Way Down Under

I’ve heard of good psychometrics being used to select all types of people, but never undertakers in Australia, until The Australian newspaper covered this funeral company in the wonderfully named Toowoomba, Australia.

It’s always curious when a newspaper either misquotes or misconstrues an expert.  The Australian reports on a faculty at the University of Queensland’s business school that seems to confuse psychometrics with personality, cognitive ability and skills testing.  The reality is that measurement can include these instruments, but is certainly not limited to those “psychological” applications.  Measurement in a structured behavioral-event interview, for example, can be achieved with the same Rasch measurement methods.  Ideally, uncorrelated predictors such as tests, assessment centers, and structured interviews, all correlate with the job performance outcomes desired.  It’s a combination of these facets that will help leaders sort the wheat from the chaff.

I was particularly interested that all of this sophisticated evidence-based management is being done in a funeral business.  It’s nice to see that they too care about good customer service just like any other business.

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Government Risk & Executive Skill

The announcement of Sergey Brin’s new blog, highlighting the value and challenges of his wife’s new genetic testing firm highlights one sort of risk in Enterprise Risk Management.

The California Department of Public Health caused feelings of terror in genetic testing services when they announced that they would shut them down if they didn’t first pay the government tribute. Brin’s wife is a cofounder of 23andMe, a genetic testing service.

This made me wonder – if 23andMe’s leaders were sufficiently savvy with influence skill, and relationship management with regulators, would they have a higher probability of surviving an encounter with the CDPH?  Robert Cialdini‘s research suggests they would; and it suggests that a portion of managing business risk includes ensuring relationships and the skills that create them are sufficiently high as to weather these types of unforeseen government threats.

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Bank of America Robust to Financial Whirlwinds?

Milton Jones, Chief Quality and Productivity Officer, Bank of America

Milton Jones, Chief Quality and Productivity Officer, Bank of America

The catastrophic financial collapses of recent weeks are nothing short of breathtaking.  It’s particularly noteworthy that in spite of Freddie Mac, Fannie Mae, Lehman Brothers, and AIG; Bank of American has weathered the storms.  Earlier, they purchased struggling Mortage Banker, Countrywide and this week they bought Merrill Lynch


What is it about the Bank of America that enabled them to weather storms that are sinking other financial institutions?  Do they have a more holistic view of Enterprise Risk Management?  Are they more conservative about risk taking?  Do they have a better set of methods to manage their risk profile?  Perhaps it is a combination of these things.  Did their application of Lean Six Sigma given them a better, companywide appreciation for using science to reduce risk and increase returns?  Did their Chief Quality and Productivity Officer, Milton Jones, or Amy Woods Brinkley, Chief Risk Officer, among others, inculcate a culture, management system, and set of methods that helps them survive?

Whatever the answers, I suspect the quality of their leadership exceeds that of some of their now bankrupt competitors.  I suspect their portfolio of actions with varying risk / return profiles were better.  It wouldn’t suprise me if their culture was relatively more respectful of uncertainty, and proactive risk mitigation than their imprudent counterparts.  What are your thoughts?

Anna Woods Brinkley, Chief Risk Officer, Bank of America

Anna Woods Brinkley, Chief Risk Officer, Bank of America

Massive Financial Risks – Root Causes?

The last few weeks remind me of the recent past with Enron, MCI/Worldcom, and Lucent Technologies catastrophies.  With Freddie Mac, Fannie Mae, Lehman Brothers and AIG hit by a financial tsunami, it amplifies the need for effective Enterprise Risk Management more than ever before.

Is there any doubt that leaders are partially culpable for these failures?  Could science-based methods have helped avoided these leadership risks by selecting, growing and managing executive talent as a process, with measurements and controls from Industrial Psychology and Industrial Engineering?