Monday, November 20, 2017

"Money can't buy your best workers' loyalty"/ The Principles

Aug. 12, 2017 "Money can't buy your best workers' loyalty": Today I found this article by Virginia Galt in the Globe and Mail:

Managers must focus on getting the most out of high performers, keeping them engaged, in the loop and ensuring they’re recognized

Canadian employers plan to be a little more generous with raises next year – but money won’t be enough to keep good employees on board if managers fail to support them through ongoing organizational change, according to new research by Morneau Shepell.

“There is so much change now, it is so rapid and some of it is fairly disruptive in certain industries,” said Paula Allen, vice president of research and integrative solutions at the Torontobased human-resources consulting firm.

Salaries are expected to increase by an average of 2.3 per cent in 2018, up from the actual 2.2-percent average increase in 2017. “The expected 2.3-per-cent increase compares favourably to the current rate of inflation, which is about 1 per cent,” Morneau Shepell said in a report on human-resources trends. The report is based on a survey conducted in July of 370 organizations employing almost 900,000 Canadians.

At the same time, 55 per cent of those employers “identified helping their organizations better adapt to ongoing change as a top priority,” the firm reported.

“It’s not just about the salary. It’s about the environment and the workplace, it’s about your reputation, it’s about when you hire that person, are they going to stay or are they going to bolt?” Ms. Allen said in an interview.

An earlier study by Morneau Shepell found 30 per cent of employees who had experienced organizational change – such as restructuring, downsizing, job redesign and mergers – reported that their job performance had suffered.

The global professional-services firm Deloitte LLP said in a recent report that too much change, too fast – without advance training and preparation – can lead to “change fatigue.”

The most successful companies “are calculated risk-takers and make brave business decisions that contribute to their sustained success, year over year,” Deloitte Canada said in announcing the winners of its 2017 best-managed companies awards.

But they don’t neglect the human factor. The companies most adept at innovating and adapting to changing market conditions demonstrate a strong commitment to continuing professional development and promote a culture of change by involving their employees in discussions about business challenges and emerging opportunities, Deloitte Canada said.

It takes skilled managers to create conditions where employees are resilient enough to ride out challenging situations and contribute to their organizations’ continued prosperity, Ms. Allen said.

“The kind of manager who coordinates work is still very important, of course, but it’s more about how you get the best work out of people, that’s actually the more sought-after management skill now. And it needs to happen on an ongoing basis.

“So managers who can communicate well, managers who know their employees well and if an employee is in distress, managers who can problem-solve, managers who help take away some of the barriers that mire people down [are most in demand],” Ms. Allen said.

On the salary side, “employers are relatively optimistic about the coming year,” said Michel Dubé, a principal in Morneau Shepell’s compensation consulting practice. “Those expecting better financial performance in the coming year outnumber those expecting weaker performance by four to one.

Despite this optimism, employers are still cautious about salary increases, perhaps reflecting a concern that rising interest rates might dampen economic growth next year.”

Sectors expecting higher-than average salary increases include utilities at 2.9 per cent, with increases of 2.7 per cent projected for manufacturing and wholesale trade, finance and insurance. The lowest increases, of 0.8 per cent, are expected in mining and oil extraction as those sectors recover from adverse market conditions.

More than half of the organizations (56 per cent) surveyed by Morneau Shepell said attracting and retaining employees with the right skills is an important goal for 2018. Almost two-thirds (65 per cent) said improving employee engagement was a top priority.

“From the perspective of an employer, you are looking to make sure you have the right talent,” Ms. Allen said.

“But it’s more than we just need people. The good news is that employers are recognizing they need to invest in people not only financially, but also beyond that. There’s the skills building for a more resilient work force and helping people through organizational change so they can keep their best [employees] as the organization is growing and adapting to the market environment.”

Even – or especially – those high performers who appear to be managing just fine need to know where the organization is going, where they fit in and what their future looks like.

“The one thing that makes high performers leave more quickly than anything else is lack of recognition,” Ms. Allen said. But feeling that they will not enjoy continued success runs a close second. “A high performer does not want to fail.”

"In Dalio's quest to outlive himself, principles become law": Today I found this article by Katherine Burton and Saijel Kishan in the Globe and Mail:

No book has resonated with Ray Dalio quite like Joseph Campbell’s The Hero With a Thousand Faces. The work, which Mr. Dalio’s second-oldest son, a filmmaker, gave him a few years ago, explores the archetypal hero’s journey – think of the myths of Prometheus and Odysseus – and his eventual return.

“[T]he hero comes back from this mysterious adventure with the power to bestow boons on his fellow man,” Mr. Campbell wrote. Those words spoke to Mr. Dalio, the founder of the world’s largest hedge fund, who knew exactly what he wanted to pass along: his Principles.

The Principles are about 200 rules that Mr. Dalio, 68, has refined over the past four decades and began committing to paper during the mid-2000s. They outline a process for living and managing a business, often with banal catchphrases – “Don’t try to please everyone,” “Clearly assign responsibilities,” “Don’t bet too much on anything,” etc. – and include footnotes, flowcharts and even a few doodles.

The Principles, as Mr. Dalio has said before, are “being lived out” at Bridgewater Associates, where about 1,500 employees on the company’s pine-forested campus in Westport, Conn., must check their egos and speak their minds while managing $162-billion (U.S.).

“I believe what we’ve done is magical, that it is wonderful,” says Mr. Dalio, who, wearing a blue-checked shirt that’s loose on his lanky frame, looks more Mister Rogers than Wall Street billionaire.

He’s so full of energy at the beginning of our interview this summer that his hands tremble. Mr. Dalio says he hates the limelight, but he’s recently started tweeting, just gave a TED Talk and will publish the Principles as a 600-page book for the first time this September. He’s also planning a second title that will detail his economic and investment principles, which he’s closely guarded for years.

“I believe in the idea-meritocratic process,” Mr. Dalio continues. “I believe in specifying one’s principles clearly. I believe in radical truth and radical transparency to achieve meaningful work and meaningful relationships. I wish it existed all over. I wish it existed in Washington. It’s the reason for our success – not me. I want to make it clear to pass it along, and then disappear.”

Before he can disappear, though, Mr. Dalio has a succession plan to see through. Even before reading Mr. Campbell’s book, he had initiated a decade long transition to hand over Bridgewater’s reins and step out of the picture.

(Mr. Dalio plans to relinquish his co-chairman title within the next five years, but he says he wants to be involved in the company’s investments until he dies.) As if that process weren’t daunting enough, the ultimate goal of Mr. Dalio’s successors is nothing short of monumental:

Not only to ensure that the firm’s culture lasts for the next 100 years, but also that Bridgewater become an “everlasting institution.” Although Mr. Dalio prizes his
Principles, getting the world to accept his boon is another matter. Bridgewater isn’t for everyone.

Most meetings are recorded. Employees must rate one another on one of about 75 attributes – some with funnysounding names such as “Designing the Movie Script” and “Willing to Touch the Nerve” – about 15 times a week to create data to confirm that the right people are in the right jobs and to help them better interact with one another. Mr. Dalio says that as much as 30 per cent of the population couldn’t tolerate a Bridgewater-esque environment.

To make sure everyone absorbs the Principles, new employees go through a three week boot camp. Even long afterward, staffers have a weekly quota of homework that includes watching case studies and answering how they would solve a problem based on the rules.

Their answers are compared with those of other employees and their ratings adjusted accordingly. That emphasis on reinforcing the company’s culture through technology is where things might get even more interesting. Mr. Dalio says he’s thinking about open-sourcing the computer code Bridgewater has developed, an artificial-intelligence program dubbed Principle OS that does everything from summarize meetings to analyze reasons a person might be feeling anger, confusion or embarrassment when interacting with a colleague.

The programs could automate about three-quarters of Bridgewater’s management decisions within the next five years, according to the company.

Mr. Dalio is leaving nothing to chance. In Bridgewater’s glass-and-stone buildings, a 20-person team has been toiling for the past year on what until now has been a secret project: the company charter. If Mr. Dalio is the founding father and the Principles are the constitution, the charter will turn the latter into law. Setting them in stone guarantees that everything from who sets compensation to how the Principles can be changed is governed by a legal system.

All this work, the algorithms and the charter and getting the right management in place, is to help close what Bridgewater insiders call the Ray gap, or the difference between how Mr. Dalio has done things and how likely it is the staff he leaves behind can do the same.

Bridgewater’s success matters more than most hedge funds because of its size. Along with the $83-billion in Pure Alpha investments, the company in 1996 was one of the first hedge funds to add a long-only strategy to its offerings with All Weather, which today oversees $56-billion. Bridgewater manages an additional $23-billion in its Optimal Portfolio that does a bit of both.

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