Recognizing Human Judgment in Economics and Performance

When I was in college, several of us would joke that you could not cheat on an economics test because each year the questions were the same, but the answers were different.  In those days, capitalist economic theory was driven by the presumption that the actors (markets and people) were fully rationale (e.g., would make decisions that would benefit them financially).  However, observing someone buy a car because of the color or purchasing a stock based on whether they like the product/service tells you that emotion plays a big role in economics.

In today’s announcement of the Nobel Prize in economics, the committee continued its trend of recognizing the impact on human decision making in the field.  They started acknowledging this in 2002 when the award was given to a psychologist, Daniel Kahneman.  Given the research of the three winners, the committee continued to concede that people are not always financially rationale.  Also, they recognized that human behavior leads to more short-term than long-term market fluctuations.

This provides us with some insight to performance at work and how we evaluate it.  We do react more emotionally to things in the near term than over the long haul.  That makes job performance seem more variable than it probably really is.  This would also lead to seeing larger differences in feedback provided on a monthly basis than on a six-month basis.  But, we want to provide frequent coaching.  How can we do this and be as consistent as possible?

1)    What are you doing to measure performance objectively?  The more objective the criteria of performance the more reliably you can give feedback.

2)    Focus on the behavior (good or bad) and how it affects the work (or others involved in the work) and not how you feel about it (unless the performance directly affected you).

3)    As always, think of the big picture.  An individual example of performance is rarely as impactful as it seems at the time.

Congrats to the Noble winners.  Who knows, if this trend continues perhaps another psychologist will win it.  In the meantime, the work recognized teaches us a valuable lesson about behavior appearing more rationale over time.  It is a good example to remember when assessing performance.

For more information on improving job performance, please contact Warren at 310 670-4175 or [email protected]

What Does Local Government Value in HR?

As of this writing it is a bad time to write about government productivity given the current shutdown in Washington.  But, in many places local government is one of the largest employers and their HR policies (and how they are managed) have a big impact.

In Los Angeles, where I live, we have new mayor, Eric Garcetti.  One of his goals for this term is to measure the effectiveness of the city’s government.  He has been going through a process of interviewing the department heads (whom he can hire and fire by city charter) and one of the things he is asking them is how they feel about having their department’s performance tracked and put on the web.  Those who are not wild about the idea get to look for a new job (now THAT is the way you start to change a culture!).

Mr. Garcetti has help up the websites of Minneapolis and Boston as examples of how this should be done.  It got me thinking: What is it that these cities value in HR?

In Boston, their HR metrics are very compliance oriented.  They measure speed of workers’ comp claims processed, reducing their costs, and hitting diversity targets.  Interestingly, the HR page says that their major initiative is in health and wellness (smoking cessation, etc), but that is not one of their metrics.  Nothing like keeping those goals and measures aligned.  Also, for being such a high tech area, they haven’t gotten around to updating their measurements since March of this year (perhaps speed up updating metrics should be a measure of their IT department).

In Minneapolis, they at least keep things up-to-date (see the October 2013 report here).  Their measures also focuses on some compliance issues, but it digs deeper.  For instance, the city tracks diversity targets, but not just in the final hires—it also shows the diversity of the applicant pool, test groups and interview groups.  The measures include business oriented metrics (calendar days to fill vacant positions), why those metrics are important (faster filling reduces overtime costs), and what steps are being taken to reduce the time (get a faster background check vendor!).  Most importantly, the results take a deep dive into hiring, retention, where successful candidates come from, etc.  Unlike the Boston site, this has some pretty useful information.  It also exposes a bit more detail than I’m sure some people were happy with, especially regarding their selection processes.

In some ways, the comparison between these two is not that different from HR departments in the private sector.  Some of them are focused on checking off boxes and ensuring compliance and others look for ways to be business partners and improve the operations of the organization.  Boston is interested in their lawsuit costs while Minneapolis is interested in those things, but not as much as operating efficiently.  This is likely to speak of the culture in the rest of each organization as well.

I hope that Mr. Garcetti continues his efforts to measure all facets of LA’s government and make the data widely available (I applaud both Minneapolis and Boston for doing so).  If this comes to fruition, I’ll be curious as to what the HR department (and Mr. Garcetti, by extension) feels are the important measures.  I hope they choose to emphasize how to make the workforce of the city more productive rather than just keeping the attorneys happy.

What are the HR metrics you want to see your city/town publish?

For more information on pre-employment testing, employee engagement, and talent management, please contact Warren at 310 670-4175 or [email protected]

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