Tag Archives: Climate

Photographs As Items for Assessment – Free Example

Photographs of people in activity is a promising newer area for development of business-relevant assessments that has been in use for years in healthcare.  Originally developed in the Netherlands to help patients suffering from fear of pain when moving the body (kinesiophobia), the University of Maastricht’s website has details on citations and free compressed (zipped file) short version of the main test.

Clearly, this same approach could be used to develop more engaging employee and organizational assessments that may be difficult to fake, have better face validity, and more workplace fidelity than other types of items.  Further, with cheap and even free video sites, video items could also play a bigger role in future assessments.

Consider these possible fruitful examples.

a) Vocational Interest Assessment

Vocational interest tests help people identify career paths for which their interests, values, and aptitudes are particularly suited.  But most all are purely text-based.  What if each career alternative had photographs of the tasks in each job or job family, with video vignettes of major tasks?  Perhaps this could be a fun way to assess what activities and careers would ultimately help the person realize their goals.  Take another look at the picture at the top of this article.  It’s an actual picture from PHODA’s assessment, but couldn’t it represent the task of lifting articles out of a trunk for the job of a taxicab driver?

b) Employee Selection

Cognitive and knowledge-based tests are often used to select new employees, but not nearly as often or instead of the ubiquitous job interview.  What if good instruments could be developed, perhaps with a combination of item types, to include pictures?  People could rate pictures like this one on the degree to which it looks similar to their desk – would you expect highly conscientious people to endorse this picture?

I would guess that highly conscientious and prudent people would be unlikely to indicate that this picture reflects their own office.  Sales Convention pictures would be good for the high-end of extraversion; Police taking down violent offenders for low levels of agreeableness.  The potential for pre-hire selection, especially using to add to Computer-Adaptive Testing item banks is tremendous.

c) Culture & Climate

Static pictures may be difficult to identify that reflect various organizational cultural differences, but videos could certainly be used to assess these. 

As optimistic as I am about the potential for picture-based items to take a larger role in organizational assessment, I recognize there are also downsides.  First, while digital cameras are cheap, actors may not be.  If you can find existing workplaces where you can take these pictures, it may help you avoid hiring actors for static pictures, but perhaps not for videos that could really suffer with amateur actors.

Second, one New Zeland user of the PHODA complains that if the photographs are context-specific, they can loose value in other contexts.  I remember once when I worked for AT&T Microelectronics, we hired Wally Borman to redo his 1970’s era rater training videos because while the content was good, the actors wore sideburns, bell-bottoms and leisure suits.  This was never going to be very persuasive as “cutting edge” to managers in a bleeding-edge semiconductor factory (computer chips).

Do you see the same potential for photograph-based items as The Scientific Leader?

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Ironic Freddie Mac Risk Management and Funny Reputational Risk

Pre-Crash Video Describes Freddie Mac’s Risk Management Approach

As an Industrial/Organizational Psychologist and practitioner of Evidence-based Management, I’ve been increasingly interested in the organizational and leadership risks accounting for the recent financial collapses.  As a sort of virtual business autopsy, I watched this video with interest about Freddie Mac’s Enterprise Risk Management approach, obviously recorded before the recent collapse of this government-backed mortgaged lender.

He described a multifaceted organizational structure and process to assess the probability and severity of risk, but only from a point of view that risk is one sided (down only); as opposed to the modern Real Options view that risk has downsides that should be mitigated; and upsides that should be exploited.  The items I noted seemed to be missing, at least in his brief discussion included:

a) Opaque derivatives – risk due to lack of transparency of the awful sub-prime loans
b) Leadership and other HR risks – unethical executives who cook the books, like Ken Lay at Enron
c) Reputational risk – brand and public opinion about a firm that collapses

It’s this last for of risk that was particularly interesting, when I saw another video that YouTube recommended after finishing the straight-laced Risk Management overview; I couldn’t help but watch this other tongue-in-cheek Freddie Mac video “Musical”:

Is there any doubt that Freddie Mac’s Enterprise Risk Management failed to mitigate all sorts of catastrophic risks, including humiliating reputation hits like this funny video?  How can Evidence-based Management minded folks help expand the Finance, Audit and Actuarial professions’ scope to include so called “intangible” risks like culture, climate, brand, leadership and HR sources of variation?

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Two Roots of Operational Risk Failures

Ken Lay and Dick Fuld

Ken Lay and Dick Fuld

The origin of the Enterprise Risk Management movement began with the failures of Enron, Worldcom, Lucent, Adelphia, and Tyco where unethical executives cooked the books and nurtured a climate of covering up malfeasance. One professional body, COSO, defines ERM as:

a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.

This first wave included human resource risks (e.g. leaders who cook the books), and organizational culture and climate around candid transparency about fiduciary concerns.  Industrial Organizational Psychologists studying these sorts of human behaviors in the workplace have a long history of assessing and mitigating these sorts of risks.  For individual differences, these include personality traits such as conscientiousness and integrity, and there are a variety of good instruments to assess these.  Culture and Climate on the other hand have good methods to assess, however, this entire universe of I/O Psychology was historically under leveraged by auditors, and since Enron has gained more attention than ever before.  The Scientific Leader publishes the modern, Rasch-based Computer Adaptive Testing approach (Computer Adaptive Measurement) that is much faster, and deeper than traditional leadership due diligence approaches.

I think we’ve come upon a second era of Enterprise Risk Management where the catastrophic failures of Lehman Brothers, AIG, Merrill Lynch, Fannie Mae and Freddie Mac were not due so much to unethical behavior, but rather poor decision making, inappropriate appetites for risk, and perhaps a healthy dose of arrogance.

If the poster child for the first era was Ken Lay of Enron , then perhaps the second should be Dick Fuld of Lehman Brothers.  In Fuld’s case, did his inappropriate disrespect for uncertainty and his ability to know everything cause him to approve the taking on a fatal level of risk tolerance?   It appears so, and it also appears that Dick and his board were culpable for the same sorts of errors.  Industrial and Cognitive Psychology both have a half-century of applied science to help select leaders who will make better decisions, manage their teams effectively and grow their ability to use sophisticated decision making methods.  This includes addressing biases that creep into individual and group/team decision making and the use of quantitative methods for addressing a portfolio of uncertainty such as Real Options decision making in probabilistic finance.

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