Why top MBA students should pursue a career path in Operations instead of Finance.

Business school students generally head in one of two directions almost from their first day of school: finance or operations. The all important question is which one to pursue because it makes all the difference.

The allure of finance is working with money to buy and sell companies. Success is when a small stake in a large transaction generates a healthy payday in a short time.

The attraction of operations is working with people to build and run something of value that is eventually realized through a sale, financing, or public offering.

Finance looks like the fast track to great wealth and has attracted the best students for decades.  Operations looks like a long, hard road with a massive payday only for the few with enough dedication, talent, time, and luck to pull off a successful start-up from scratch. While the economy needs both financiers and operators, the promise of quick and large returns has left the world short of the talent it needs to drive growth and scale of quality organizations.

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How to head off unwanted voluntary attrition and what to do when it happens.

Exit Interview Form Icon - unwanted voluntary attritionWhen an employee departs voluntarily it is almost always unanticipated and unwanted. Too often, though, leaders rationalize that employees who leave voluntarily were marginal and will not be missed.

To keep the best on board, and to head off after-the-fact rationalizations, ask managers now to identify employees they would least like to lose. Go on to also ask what is being done to keep each and every one of them engaged and on track to success in the organization. Follow up to make sure what needs to be done is actually done.

When any employee leaves of their own choosing, assign a senior person with no stake in the case to speak with the departed. Use the survey questions in the form linked to the above graphic to draw out what happened, why s/he has decided to leave, and to be sure whatever needs to be unearthed and learned is brought to light. Continue reading

What to do when an employee no longer cuts it.

Two PeopleBefore terminating an employee for poor performance, first double and triple check that the real problem is not that  expectations are undeveloped, unclear, or not understood and aligned with abilities and interest.

Resist the temptation to reassign the person to another part of the organization in order to not have to deal with the matter. Instead collect, consolidate and review input from the team with respect to what s/he is good at doing, what s/he has recently contributed, how s/he has grown, and what s/he should focus on doing and accomplishing next.

Validate that the assignment is a good match with employee skills, interests, and experience. If it is, but performance lags, it may be due to distractions or lack of drive. Talk through with the person, tweak incentives if needed, and, if lack of attention and effort is the problem, insist s/he focus on what has been asked. Continue reading

Paying Fair: Four paths to fair pay and succession for private venture executives.

Synthetic Equity Cover - Paths to fair pay and successionBackground

Public company equity-based pay practices, such as stock, restricted stock, and employee stock options are often a poor fit for private companies committed to reward leaders for performance and growth and to motivate leadership and capital succession.

Equity based programs that make sense and work well in a public company come with many ills for private companies: they can be costly, tax-inefficient, static, ineffective, and sometimes downright unfair. In the worst case, equity pay practices can derail the owners’ plans for growth and succession.

Dynamic synthetic equity presents a more tailored solution for private companies interested in leadership and capital succession. Restricted stock and employee stock options often distort outcomes for private companies. Consider that:

  • The underlying stock price in a private company gyrates as owners enter and exit from, for example, a living or a death buyout or even a recapitalization. Stock price can jump 50% – unjustly rewarding the owners of true equity awards.

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How to reduce risks on important projects.

Background on Managing Risk on Important Projects

Reduce Risk on Important ProjectsIn the context of any strategic initiative involving a significant evolution in systems, process, or organization, risk is the chance that the effort will be less than a complete success … that it will be late, over budget, perform unacceptably when completed, fail to realize the expected business benefits, or even never be completed.

There are so many factors that can contribute to a less-than-successful project.  How is a project manager to decide which to focus on and how to address them?

Approach

Milt Hess, in his paper Reducing Risk on Projects, presents a strategy for deciding which risk factors deserve attention and for integrating risk reduction into the project holistically instead of treating it as a separate activity.  This strategy turns the traditional approach to risk management on its head.  Instead of thinking about all the things that can wrong, it focuses on what has to go right.

The strategy requires that a project first establish a clear definition of success – its success targets.  The paper describes concrete steps that the project can take to increase the likelihood of meeting the targets and the questions that senior management and sponsors should ask to ensure that the project stays on track.

Here are a few of the key elements of the approach:

  • Periodically develop a forecast of the expected outcomes for the success targets. If the forecast for a target is ‘I don’t know’, the project is at risk.  Include resources in the project plan to reduce uncertainty about the outcome.
  • Dependency on external events and agents introduces risk. Explicitly identify dependencies during the planning process, document assumptions, and monitor them regularly.  Include resources in the project plan to reduce uncertainty about the dependencies.

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How to make good decisions even in the face of unresolved issues.

Background on Tough Decisions

How to make good decisionsIn any organization progress can be stymied by unresolved issues.  It’s counterproductive to keep rehashing the same question from week to week, perhaps making a decision today only to have it reconsidered and undone tomorrow.  An organization needs both a reliable method for making good decisions and the willpower to stand by them once made.

Milt Hess’s paper, Decisions – It’s a Tradeoff, offers a repeatable method for making good decisions even in the presence of ambiguity.  (Sorry, but no help here with the willpower thing.)  It includes techniques for identifying the best options and the relevant evaluation criteria, and for objectively characterizing the options in terms of the criteria.  Since a decision almost always represents a tradeoff among competing objectives, the emphasis is on presenting the decision-maker with the basis for making a decision that reflects his or her priorities.

Key elements of the approach

  • When evaluating the options, avoid vague terms like Excellent/Good/Fair/Poor. They’re subject to variable interpretations.  Instead, treat each criterion as a continuum from best to worst, and select four points along the continuum that can be described unambiguously.

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How a top team spent a little time and took a big step to the next stage of growth.

Skills by stageBackground

Leaders of fast growing, early-stage organizations operate at a fast pace. Often the last thing there is time to do is assess the top team’s performance to determine how to prepare them for the next stage of growth.

Most team members know each other pretty well. They have a good idea what each other is good at, has contributed, how they have grown, and what each should focus on next for success. However, team members rarely have the time, energy, training, or nerve to share what they know in a forthright, supportive conversation with one another.

Yet there are serious consequences to not providing feedback when it is needed most. A recent article in the Wall Street Journal entitled “How To Tell If You Are a Jerk in the Office” (C-Suite Strategies, Journal Report, Feb 23, 2015), for example, highlights the importance of confidential feedback for executives. Not only are leaders and co-workers affected adversely by dysfunctional behavior but business performance and customer service can be damaged, often permanently, if poor behavior continues.

IntelliVen, a San Francisco-based organization improvement firm, uses a proprietary approach to help leaders and their top teams address top executive feedback head-on. Early this year, for example, IntelliVen worked with a rapidly evolving, $10M financial analytics firm serving Freddie Mac, US Treasury, and Capital One among other leading US financial institutions. The IntelliVen approach was used to assess the top team of senior executives relative to norms for successful organizations at a similar stage of evolution and to identify individual and team opportunities for learning.

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Six Power Skills to Manage Organization Politics and Make the Most Out of Any Job.

Organization Politics GroupOrganization politics make a lot of people uncomfortable. The untrained hope is that if politics are ignored, and if a job is done well, then well-earned rewards will come. Things rarely play out that way.

Organization politics is defined as anything done at work to increase the odds of success that has nothing at all to do with the work itself. Master executive coach and workplace psychologist, Dr. Dory Hollander, presents three unassailable truths about how things work in organizations and Six Power Skills for mastering the art of career enhancement.

Three Unassailable Truths:

Truth 1 — There is Insider-Outsider Sorting

  • All organizations continuously sort people into insiders or outsiders.
  • There are things that distinguish insiders from outsiders among various stakeholder groups.
  • Insider/outsider status is subject to change.
  • Being an insider in one group is no guarantee of being an insider in another.
  • Leaders can help newcomers transition to insiders or let them struggle. The former makes more sense

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How one CEO decision pays off six ways.

Peer group iconEvery leader stands to benefit from the opportunity to meet monthly in a professionally facilitated session with about a dozen others in similar roles, in similar organizations, at a similar stage of evolution, and that do not compete.

CEO’s who make the one decision to join, as long as they show up, get six distinct benefits that are hard to achieve any other way:

  • CEO’s can be genuinely open to input and be vulnerable, even wrong, in front of each other; no need to put on airs or skirt around the hard stuff.
  • Peers really know and understand each other, personally and professionally, and the challenges each faces in meeting associated goals; feelings of loneliness and depression are less common among participants.

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