Communication

Position Your Board And CEO For A Corporate Governance Win 1

Position Your Board And CEO For A Corporate Governance Win

There have been enough inquiries, reams of paper, and stacks of books written, yet we still see shocking headlines outing bad (often criminal) behavior in the corporate world. With so much information available to address corporate governance, why is there still no understanding that the behavioral styles of executives and the resulting actions are central to the issue?

Corporate Governance includes practices and procedures by which a company is guided, balancing the interests of its many stakeholders, and ensuring there is a framework to attain agreed-upon objectives while adhering to all laws and regulations. In recent years, the U.S. Federal government has turned the spotlight on corporate governance (e.g., Sarbanes-Oxley).

Corporations rushed to find solutions to demonstrate their governance was strong. They seemed to be addressing risky behaviors. But many continued to miss the point. It’s not cynical for boards to question the rapid growth and success of a business; sometimes success has a direct correlation with rogue behavior. Yet questions aren’t asked, because success often equals bonuses.
Micro-management is not necessary. What is required are clear value statements, sound governance and risk management practices. Also needed is a board with a majority of independent and experienced directors asking tough questions, and a culture of risk-taking that is balanced. Most importantly, corporations need the behaviorally smart insight to know people before numbers. In other words, get to know who is likely to go rogue.

Position Your Board And CEO For A Corporate Governance Win

(Hear Behavioral Strategist Hugh Massie talk about Operational Risk Management.)

Board members are required to be even more accountable than employees regarding their oversight, and to hold key executives to account. The day-to-day running of the organization belongs to the CEO and management team.

Two crucial relationships in the governance debate are between the CEO and board, and the other between the CEO and CFO. The latter, in some respects, will feed into the former in that, if the CFO is vulnerable to bullying by an intimidating, strong-minded, and willful CEO, information flowing to the board will be compromised. A behaviorally smart CEO will know the value of a good relationship with their CFO, and ensure their skills and behavior complement each other. The board has a responsibility to ensure both CEO and CFO have access to and a trusting relationship with the directors.

When inappropriate due diligence has been applied to these two relationships, managerial functions will, if not watched closely, endanger the business. The CEO is responsible for overseeing the execution of the board’s directions and policies. If the board has, for instance, hired a CEO whose credentials shine but whose behavior is questionable, they will have difficulty building a transparent relationship and establishing trust.

Boards need to be ever-alert to CEOs who adopt risky practices as new business opportunities arise and the business environment improves. Likewise, they need to be alert to the CEO who is unduly pressuring other key executives. Has your business got the governance structure in place to deal with a CEO who fails the transparency test or becomes the rogue employee?

The more the board members understand the strengths and behaviors they bring to their roles, the better able they will be to ensure there is a robust strategy in place to handle inappropriate behavior.

Potentially 5 percent of the workforce includes employees that are a high-security risk. The cost of all types of fraud is a staggering 5 percent of turnover, per the 2014 Global Fraud Study by the Association of Certified Fraud Examiners (ACFE).

While larger businesses are investing more in cybersecurity and other monitoring programs, virtually nothing is being put toward identifying and monitoring costly employee behavior risks from the CEO down. The problem is that many of these insider threats are already in your business and the situation is stealthily gaining momentum. The Global State of Information Security Survey 2015 recommends that 23 percent of the annual spend on business security be directed to behavioral profiling and monitoring of employees.

Research shows that the following problems are caused by human behavior:

Combinations of human behavioral factor outliers and external environmental factors (e.g., financial difficulty) trigger emotions causing negative behavior toward the company.
Combinations of employees with too similar or too different styles working in a high-risk environment cause internal control issues.
A key part of the solution is the deployment of a validated personality discovery process, providing insights into hidden, hard-wired traits and a reliable prediction of where security or compliance risks exist.

The employee behavior review using personality assessment methodologies should be uniformly applied to every employee in the business from the top down to distill hot spot areas. The high-performing leaders down through the sales and operations teams to the disgruntled bookkeeper are not exempt – new hires, or old guard – every individual including board members.

Using behavioral insights, management can dynamically match employees with specific environmental conditions to determine their potential response. They can also discern the degree to which such responses could create rogue behavior and negative actions toward the business. Lastly, management can apply these insights towards talent re-allocation, employee evaluation, team development, and improved hiring processes.

Effective corporate governance begins with the directors in the boardroom. It includes the relationship between the board and the CEO. Understanding behaviors and interrelationships could actually be the key to delivering high-quality governance in any organization, rather than being seen erroneously, as it often is?as a soft approach not worthy of investment.

The advantage gained by institutionalizing the behavioral insights process combined with strategic oversight processes and procedures can and will deliver an environment that minimizes or eliminates rogue behavior. Don’t be part of another headline heralding: Corporate Governance Fails Again!

 

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit Business DNA.

Why not complete your own complimentary profile and see how to leverage your behavioral profile for success? Click here.

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Advisors: Are You Fooled By Your Own Bias?

Pioneering research in the psychology of investing, now known as behavioral finance, by Nobel Peace Prize winners Daniel Khaneman and Amos Tversky, and other leading academics, has highlighted key investment behavior insights. These insights are all a dimension of a person’s financial personality.

Understanding a person’s financial personality, whether advisor or investor, informs the degree to which each is biased in their decision making and the way in which advice could more effectively be delivered.

There is a clear connection between these investment behaviors and natural behavior and identifiable traits. As each person, whether advisor or investor, is different, the extent to which each of these investment behaviors exists in any one person will be different depending on their strongest natural behavioral trait. Usually, each person will clearly exhibit several investment behaviors depending on their natural behavioral style.

DNA BehaviorWithout clear understanding of each other’s financial personality and life goals, advice will always be skewed from the advisor’s point of view and, similarly, from the way the investor receives the advice.

These 16 behaviors can be revealed and managed. See those here.

Everyone, whether advisor or investor, are all subject to various forms of behavioral bias that lead us away from rational decision making and, in this case, result in less-than-optimal investment and money management decisions. An honest, transparent and successful advisor-investor relationship is one in which both parties admit and own their biases, always working to manage them.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior.

Why not complete your own complimentary profile and see which behavioral biases may affect your financial decision-making? Click here.

 

Measure Behavior for Better Hires

Measure Behavior for Better Hires

Whether your organization is up and running or you are an entrepreneur facing your first hire, you may have valid questions around the hiring process. Is this the right time to hire? Do I have a recruitment process that fosters ongoing employee engagement? And if you really want to be poised for hiring success, youll hopefully include behavioral insights in your hiring equation:

  • Have I benchmarked the typical behavioral characteristics needed for specific roles?
  • Am I clear about the talents and the behaviors I expect from the hire?
  • Do I have quality behavioral questions to use during interview?

The cost of making the wrong hire is clear. One study cites 69 percent of employers in 2012 reported that a bad hiring decision placed a strain on their company. Twenty-four percent of companies reported that a bad hiring decision cost them well over $50,000, with a larger 41 percent of businesses reporting a figure of over $25,000. Other findings put the figure at over $40,000 to replace an executive employee, and anything from $7,000 to $10,000 to replace an entry- to mid-level employee. According to Entrepreneur magazine, citing a Robert Half survey of financial professionals, in 95 percent of cases a bad hiring decision can affect office morale. Likewise, Gallup estimates that there are 22 million actively disengaged employees costing the economy as much as $350 billion per year in lost productivity. These costs are in addition to the cost of replacing a bad hire. When you know 87 percent of business issues are people-related, its not hard to see how important the hiring process is. According to a Deloitte Insights article from 2015, culture and engagement is the most important issue companies face around the world. Consequently, the hiring process must include:

  • Benchmarks of inherent natural behavioral talents and communication styles.
  • Benchmarks of talents required for different roles to the candidates talents
  • Benchmarks of the typical behavioral characteristics needed for high performance in specific roles, so the right people can be hired for that role.

This insight would not only deliver the right people for the job, but also enable more effective matching of individuals to teams and line managers. This same sort of matching also can provide value by aligning customers with your organizations representative(s) who can best serve them. Too often, people are employed for their skills and knowledge, with little or no attention paid to identifying a candidates true talents – those natural behaviors which continually and predictably repeat over time and are often not easily seen in an interview. When a highly-validated discovery tool is introduced into the hiring process, it not only reveals talents, behaviors and communication styles – all of which are measurable,it also reveals how the individual will respond under pressure. This insight allows the interview process to include specific behavioral questions that drill down to a candidates masked behavior, which likely only surfaces under the weight of a busy workload or, worse, in conflict with colleagues. Without a behavioral discovery process, over time and with pressure, the natural behavior emerges, and the candidate may not perform as hoped. Anyone involved in the hiring process also has blind spots and biases that likely form part of any failure to uncover the natural behaviors of the interviewees. Having a strong hiring process supported with robust discovery processes and strong behaviorally based interview questions will flag warning signs around an otherwise talented candidate. It could be that their moral compass when tested is lacking. It might be that under pressure or in a season of fast change to the organization they get left behind and this opens the potential for them to go rogue. Smart employers will know the value of having this information up front.

 

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email?inquiries@dnabehavior.com, or visit?DNA Behavior.

Pioneer

How Not to be Named and Shamed in the #metoo Movement

This article first appeared on HR Management.

As leaders, we have a responsibility to understand the impact our behaviour has on the people we have the responsibility (and the privilege) of leading.

No longer is it acceptable to bully, manipulate, harass, individuals just to achieve our goals. No longer is it acceptable to take risks that compromise the business and alarm and unsettle staff. No more can position, authority or power be used to compromise a colleague.

Leaders need to have significant insight into their leadership style, their communication approach, their bias, and yes, we all have biases. Further, successful organizations invest in knowing its leaders and individual employees are attuned to these things.

Aggressive and controlling management styles are no longer acceptable. The greatest and most effective leaders know how to guide, mentor, and invest in their people, knowing that this sets individuals and teams up for success.

Leadership is complex; it takes character and self-awareness. It requires a level of vulnerability and re-thinking if leaders are to be effective. Allowing bottom-line results, aggressive deadlines and demanding stakeholders to style your approach to leadership is a recipe for disaster.

The leader who is behaviourally smart is the winner. When you understand the importance of getting below the surface of yourself and the people you lead and understand how best to invest into them, businesses flourish.

Inherent behaviour is fixed: Its who a person is; its the foundation. Its the raw material that informs how the world is viewed. It cant be learned. It drives talents and personality. It is fundamental hardwiring.

Personality is driven by behaviour: Its the mask worn; its a persons outward character. Its what we let others see on the surface. Personality is formed and revealed from circumstances, social pressure, education, social environment and family influences. Its the sum of the physical, mental, emotional and social characteristics of an individual and can change as circumstances dictate.

Having a revelation about the difference between inherent behaviour and personality not only educates, but, more importantly, it paves the way for leaders in business to understand what their role is in revealing behaviours which will remain constant over time. It gives insight and understanding into knowing when they are viewing the mask. Behaviour is the real person. Personality is the outward appearance an individual chooses to reveal.

Uncover this knowledge about yourself and you will quickly understand the importance of knowing it about the teams you lead.

The responsibility for effective team functioning and dynamics lies with you, the leader, and as such, demands a level of self-awareness that ensures your legacy will not be crossing boundaries and becoming named and shamed in the #metoo movement.

Using a highly-validated discovery process can deliver insight into both inherent and learned behaviour all of which is measurable.

It can reveal communication styles. This above all creates powerful leadership and team development. With this kind of insight, messages are appropriate and clear. Individuals understand what they are being asked to do and why. Great communication insight is especially crucial in times of pressure, when blunt exchanges can surface.

Examples of key communication insights that are powerful both for leadership and the team are shown in the quadrant graphic. There is powerful value in leadership learning how to connect with each style and stay connected and then use this knowledge and insight to build optimally functioning teams.

Learn what lurks beneath, and use it to your advantage.

 

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To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior.

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HIRING – What You See May Not Be What You Get

Hiring is not an exact science, but there are ways to mitigate getting it wrong.

Twenty-seven percent of employers in the U.S. who reported a bad hire said that a single bad hire costs more than $50,000. (According to a CareerBuilder survey of 6,000 hiring managers and HR pros worldwide, 2013.) The internet is rife with tales of how expensive a bad hire can be.

But the bigger issue, and the one that has the potential to cause long-term damage to any organization, is the impact a bad hire has on productivity and morale. Matching candidates talents to the specific role, the team culture and conducting behavioral interviews to get below the surface, is more likely to get you to the right candidate for the role.

Sixty percent of hiring managers report that bad hires dont get along with co-workers, according to the Society for Human Resource Management.

Keep in mind that candidates will have a mixture of natural, learned and cognitive behaviors. These insights are measurable and, using a validated tool, can be revealed at the outset of the hiring process. Still, it isnt enough to fill a vacancy. The fit to the team, the organization, the culture and the up-line management, are significantly more important than the skill set a candidate brings to the table.

The lesson for CEOs: Dont hire yourself. Just because the interview went well and you connected does not translate to a fit for a role. Hire to the job. Hire to bring the talents you dont have to the organization.

And for you Recruiters? If you want to hire well, make sure you have a benchmark of the typical behavioral characteristics needed for high performance in specific roles. Not only do you need benchmarks for the role, you also need them for the team, department and decision makers. Without this information, the hire will be based on resumes, references and gut instinct.

Your reputation is riding on it. Candidates will be watching for vacancies at organizations who are known for their integrity, culture and treatment of their people. They will be more interested in the role than the salary. They will want your company name on their portfolio of work. They will want to boast they work for you.

Assessment Centers should take recruiting seriously too. Spend time with candidates. Its not enough to hire those that look good on paper and fit all the benchmarks; they also need the right character traits. If you are recruiting to a highly-pressurized role, you need to know their potential to manage others under pressure. Is there risk associated with the decision making in the role? How will the candidate respond under pressure? Are they going to become a rogue trader (for example)? Time spent in an assessment center provides insight into the extent a job applicant meets these qualities.

What to do?

  • Use a validated talent discovery system to get under the surface and discover the natural strengths and struggles.
  • Compare the outcomes to understand the candidates team fit and how they will interact with the leader and team members.
  • Have a list of powerful questions for conducting a behavioral interview based on the candidates natural strengths and struggles.

The most effective investment that a business can make into the hiring process, is to devote time and energy into benchmarking the talents and behaviors required for different roles. This makes for a smoother and more effective hiring process as you match candidates to roles.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

rogue

Preventing Rogue Employees Circumventing the Board

Corporate boards can drive process to minimize rogue employees

Does your business have the governance structure in place to deal with a rogue employee? If you havent, then dealing with the fallout and getting the organization back on track and refocused on business will be slow and painful.

No longer is the outlier employee just the one kicking against management, stealing corporate intellectual property or actual property. Its the one destroying the company reputation on social media. Its the one sitting at home and trashing individual executives reputation using inappropriate language. Its the one setting up unauthorized and potentially damaging hashtags.

Those people responsible for the oversight of governance in your organization must be across every area where rogue employees can find a destructive playground.

Generally, its the board that has overall responsibility for oversight of the company being governed. Therefore, its important to make sure board members are empowered to take such responsibility and that they have the credibility to so. The board structure itself is important for achieving the goal.

Further, the information flows cannot be blocked by the CEO and executive team as that itself is a problem. The board needs to know whats going on; in fact, they have an obligation to know.

Once the structure is there, find out where the board members draw the proverbial line in the sand in terms of behavior, both in the workplace and in their personal life. Establish their ability to identify potential fires in the business and understand if they have the skills to extinguish them. Ensure they ask the right questions of business executives.

Experienced board members intuitively know when information is being withheld or massaged. Still, there should be checks and balances so that heading off your company’s next potential crisis is not left solely to intuition.

The more the board members understand the strengths and behaviors they bring to their own roles, the better able they will be to ensure there is a robust strategy in place to handle rogue behavior.

You see, potentially 5 percent of your workforce includes employees that are a high-security risk. The cost of all types of fraud is a staggering 5 percent of turnover, per the 2014 Global Fraud Study by the Association of Certified Fraud Examiners (ACFE.) So, what’s the cost of rogue employee behavior to your business?

Simply identifying the personality type most likely to cross the line and the triggers that push them there could save you big dollars and your reputation. Or better yet, how do you help an employee to align their strengths to a given role and avoid rogue behavior altogether?

While larger businesses are investing more in cyber security and other monitoring programs, virtually nothing is being put toward identifying and monitoring costly employee behavior risks. The problem is that many of these insider threats are already in your business and the situation is gaining momentum without anyone being the wiser. The Global State of Information Security Survey 2015 recommends that 23 percent of the annual spend on business security should be directed to behavioral profiling and monitoring of employees.

Research also shows these problems are caused by human behavior:

  • Combinations of human behavioral factor outliers and external environmental factors (e.g. financial difficulty) trigger emotions causing negative behavior toward the company.
  • Combinations of employees with too similar or too different styles working in a high-risk environment cause internal control issues.

A key part of the solution could be the deployment of a validated personality discovery process, providing insights to hidden, hard-wired traits and a reliable prediction of where security or compliance risks exist.

Based on external research, employees with certain measurable behavioral traits are more likely to engage in rogue behavior when emotionally triggered:

  1. Innovative -bright mind, which turns into curious and devious thinking.
  2. Ambitious – desire for success, leading to cutting corners.
  3. Secretive – working under cover and not revealing key information.

The reality is that any person with a weak or temporarily broken character in the wrong team or facing external pressure can make flawed decisions, thus becoming the source of costly negative behavior. The employee behavior review using personality assessment should be uniformly applied to every employee in the business from the top down in order to distill the hot spot areas.

No one should be exempt from these assessments, whether they are new hires or part of the old guard. Include high-performing leaders down through the sales and operations teams to the disgruntled bookkeeper and, yes, board members.

Using behavioral insights, management can dynamically match employees with specific environmental conditions to determine their potential response. They can also discern the degree to which such responses could create rogue behavior and negative actions toward the business. Management can even apply these insights toward talent re-allocation, employee evaluation, team development and improved hiring.

Understanding behaviors and inter-relationships is not a soft area, unworthy of investment. On the contrary, it could be the key to delivering high-quality governance in any organization. Behavioral insights paired with oversight processes and procedures can and will deliver ongoing performance minimizes or eliminates breeding grounds for rogue behavior.

 

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To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior