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Monthly Archives: January 2014

Recent posts about why people work* unneeded extra hours, staying around work when there isn’t anything to do, covered workplace culture and competitive concerns but didn’t talk nearly as much about ambiguity and lack of understanding of job characteristics. This ties in with a notion of permission.

Job ambiguity varies greatly from role to role. In a lower level position, say a front line call center rep, the tasks are pretty concrete: answer call, update records post call, take next call. If there are no calls, there is a fallback task. A new policy or procedure to learn or outbound calling. There isn’t much ambiguity and tasks need to be performed until the end of the period. In most organizations, there may be some number of these types of roles (low ambiguity) but ambiguity exists, normally in increasing degrees the further you move away from the highly delineated task type roles. Ambiguity typically, but not necessarily, increases the higher you move in the firm.

An important factor, mentioned above, is the tendency to perform tasks for a set period. That set period notion is deeply embedded both in employee and management behavior. This is the root of the conflict of remote workers. It also has to do with what can be measured versus what is much harder to measure. It is easy to measure time at work. Even without a formal mechanism, anyone can at a glance know who was at work before them and who was there after. Much harder to measure is value of work done. For management the failure is in falling back to time based measurement and not building something that is value based tied to job characteristics particularly, but not exclusively, for higher ambiguity jobs. This creates a situation where the employee has incentives to ‘fill up the period’, however that period may be defined (Sometimes informally – everyone stays late) at the company. Additionally, there is the ‘always something to be done’ factor. Most jobs get Christmas treed (keep loading on ornaments) with all sorts of additional stuff, often much lower value, that the employee is supposed to be doing over and above the stated main role. This has the effect of informally making sure there is never a point where things are done and so stopping work is just a pause at incomplete before picking things back up. This may be thought of as a plus for management if more work is squeezed out in a task sense but normally means those items just keep getting pushed and/or eventually done in a poor quality way. Employees fail on this front, particularly high value employees, by not challenging this. This is something of a failing of human nature of questioning whether ‘enough’ has been done. A more understandable failure for employees is that if nothing valuable is being done then why does the job exist?

The upshot is a lower trust environment where employees signal that they are working by being present and management does what it can to monitor presence and try to stuff as much possible into those hours. Both sides sort of look the other way as to whether the job is understood and making sure valued task/activity is the core of what is done uncorrelated or much less correlated with the time and/or periods spent.

* work is a misnomer here. It is more accurate to say hang around the workplace to be present and/or appear to work.

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Both Scott Sumner (guest blogging at econlog) and Steve Randy Waldman going back several posts have some things to consider in the inequality debate. The current debate has been bouncing around along a number of different lines. Is inequality getting worse. Are the steps on the ladder getting wider. Is the US worse relative to other countries on inequality.

One point that isn’t clear enough is that income inequality is the wrong place to look. A better place to look is asset inequality.

Define assets for the moment as anything that either directly throws off cash or increases in value, with more weight towards the former. Let’s call that asset(i). This is NOT the standard definition of an asset. In this definition, many many people only have one asset: their labor. Notice that this cuts across the conventional definitions about where you are on the ladder. Consider a simple example of a lawyer at an established firm. She makes sufficient income from her labor to be considered well off by persons lower down on the ladder. She may own or eventually own her house. She has a car and other lessor goods. Apart from her labor, the only other thing that might be an asset(i) is her house. That may throw off cash in the future as a sale where any increase in value then comes in as part of that sale. (401K etc are left off to keep the example simple.) In this scenario, in most ways this person isn’t significantly different than a person that is much lower on the ladder. The main difference in their income inequality comes down to what they can get as the price of their labor. Greatly dependent on their standard of living either person (the lawyer or someone down the ladder) may have a longer or shorter time from loss of their labor asset(i) to running out of money. Both share the risk and uncertainty of this single asset(i). This phenomenon extends quite a ways up the ladder.

There is a tipping point that happens either purposefully or organically where a given person begins to accumulate different assets(i). In the purposeful example, the lawyer uses some of her income (and likely time) and buys a second house and rents that out or buys a laundromat and starts running that. Now she has a second asset(i). The organic example occurs when a person achieves sufficient cash where it becomes an asset(i) in its own right. For this to be the case, there has to be sufficient cash where the cash itself throws off enough cash to be at the same standard of living. (I’m deliberately confusing the fact that the cash would have to be in some sort of interest bearing or other account/investment to do that). Say the person has 10,000,000 in cash that is earning 1% yearly which is 100K. So labor asset(i) and the other 10,000,000 asset(i),this person also has multiple assets(i). The tipping point occurs when either enough assets(i) get strung together OR one of the asset(i) becomes such a cash machine that the thrown off cash regularly exceeds what the person spends. At this point the asset(i) become self sustaining and unless something changes will continue to add assets(i) – because the cash has to go somewhere.

The different framework becomes clear:
1) Those who have no assets for whom even their labor doesn’t throw off cash. The young, the old, the sick, those without enough skills – note that this generalization is to spark thought about who might fall in the category of no assets.
2) Those for whom labor is their only asset
3) Those who have labor + assets(i) but aren’t self sustaining
4) Those who have self sustaining assets(i)

This highlights where income inequality is the wrong way to look at it. When the discussion turns to the top 1% and/or the top .1%, these are people in the self sustaining assets(i) category. It isn’t interesting to talk about why wealth is accumulating with them. It is self explanatory. If the stated problem is inequality (of income) how do you address that problem? Even with a scalpel sharp imposition of burdens you would only hold the line at inequality. Insufficient burden would continue the increase in inequality, too much burden would decrease inequality with unknown consequences. This assumes that such a burden can be crafted to only impact those in the self sustaining category BUT it never is looked at this way. The normal thinking is to impose a burden on those who have more than some arbitrary amount of income.

Flipping to asset inequality, the problem to solve is how to move folks from not having assets in the direction of self sustaining assets. For those in certain categories of no assets like the young the issue might be obscure such as education about asset(i). For some, the long term sick/disabled it might be guaranteed income. For those without skills it is creating/improving their labor asset(i). That may also be the case for those that have the labor asset(i) but insufficient income to move to other assets(i). (There are a couple important factors in regards to saving or combining labor (sweat equity) in a venture.) Part of the problem space is also the opportunities for asset(i). There are the traditional ways like small business and real estate and how to finance the first step. Also of interest are examples like Airbnb which provides opportunities at a pretty low entry point; renting a room of a house that you are renting potentially becomes an asset(i). Low entry point opportunities are definitely important. Apps are interesting in a similar way (though much tougher entry point).

This isn’t to suggest that the labor asset(i) is in some way insufficient or of lessor standing but if the goal is to reduce inequality than the idea is that a lot more people need to become owners of assets(i) or more people have to have a higher price for their labor.

If you were to map all of your social connections out and then categorize them as either friends or acquaintances and then set aside the acquaintances and categorize all the friends into economic categories (Top 1%, Top 10%, Top 25%…Bottom 25%, Bottom 10%, Bottom 1% or whatever) how many people do you think you know from the categories that are widely divergent from your own? I think you’d need a friend definition that narrowed things down to a higher implied level of social commitment, say people that you have dinner with at your home (or theirs) from time to time. I don’t think being super accurate about exactly which economic category is all that important.

My suspicion is that most people would see a normal shaped curve of number of friends with the peak being in their own economic category. Nothing too earth shaking about that. The reason I’m interested in the more close social ties is that these seem like the people most likely to impact your thinking or maybe better said awareness about any given issue. If that is true, to broaden your perspective you need more friends further away from you in economic categories. The question then is what are the most likely means where you would come to be friends with people that aren’t in your own economic category? Some possibilities might include church, charitable or social organizations, sports associations. Those are all mights though. Churches can be pretty insular as can sporting activities (especially the more the sport costs). What about other areas where we spend more time? Work – seems mostly like people who are similar. Neighborhood – seems mostly like people who are similar. It may seem a silly question but what exactly is the normal method or methods for becoming friends with those who are of widely divergent economic circumstances than your own?

A while back I was poking at things that I take for granted. That is a failure area for me. All kinds of things are unusual if you turn them on their head. One area was why do we work 5 days a week? There are all kinds of answers to that question and, as part of a societal convention, it might be challenging to try to implement an alternative.

Holding a number of things as constants just to reshape things, let’s assume that 40 hours a week of work are necessary. Why not more or fewer days to accomplish that 40 hours in? The shortest possible work week (duration wise) would be to go for 40 hours straight. One form of longest week (duration wise) would be to work all 7 days but work roughly 5.5 hours per day.

There are pro’s and con’s for everyone involved for each approach though some approaches seem like they will be suboptimal (Like working 1 hour every 4). On a loose tangent, there was an article recently about how a work 10 days, take 3 days off would sort out all the weird calendar issues of some months being longer and shorter etc.

Not too long after I started thinking about it, I had the opportunity to see if I could migrate to a seven day schedule. Work in various forms was flexible enough to allow for doing a set chunk of work each day, every day, and then have a larger portion of the day available. I thought the 7 day thing would tend to even out my days. If chores/errands that I would normally do on the weekend were being accomplished during some of the extra hours available each day that seemed like a win. If things like exercise weren’t before day/end of day and sort of tightly packed in, maybe it would be less stressful and more fun. It wouldn’t have to be as time constrained. ‘Weekend’ type activities technically can happen on any day.

It turns out that the 5 day a week thing was more of a habit than I thought. Weekends came and I wanted to keep my weekends. I had real trouble breaking out of that mindset. In terms of loss aversion, it seemed much more like I was losing my weekends rather than gaining extra time spread through out the week. It had a lot less to do with being boxed in by everything else being on that schedule which going in I had assumed would be the problem. I wonder if this is specific to me or whether most folks would struggle with this type of change, particularly if you don’t have a work structure that forces you in to an alternate week to act as an anchor.

I’m thinking this is largely a habit thing that we start out with pretty young. It is broken during summer months through schooling but then the most common pattern in work seems to be the 5 day a week thing (with all the normal caveats and exceptions.) 5 days isn’t a historical necessity as it hasn’t been around that long. I’m curious as to how folks who make a change like this do it successfully and if folks may have experimented with multiple options and found an optimal result.

Yesterday or the day before there was an article on too big to jail. It was another case of a settlement where a corporation paid a fine but the Justice department (I believe) declined to pursue charges against specific people at the corporation in the case. The happiest interpretation of this is that amongst all the murk at the corporation there is insufficient evidence to get a conviction against some person or persons. There are unhappier interpretations.

This headed me off on an odd notion. Why not prosecute and jail the corporation? Not examining the idea seemed like a failure of imagination.

What is a corporation? Well, we know some characteristics about them. They exist in our society as entities. They can own property and assets and incur liabilities. They can sue and be sued. They exist in a physical sense though not in the form of a body. They are created. They die.* Sometimes they commit criminal acts.

What is jail? Conceptually jail is a taking out of society or a suspension of freedoms**. We basically say that for having done X we remove an individual from society or suspend the individual’s freedoms for a period of time commensurate with their action.

So why can’t we jail a corporation?
Maybe it’s the case that it would be too hard to prosecute. But would it be? When you look at prosecuting individuals inside the corporation, establishing beyond a reasonable doubt seems pretty hard. The CEO says hey, this happened way down below me by some bad apples and I didn’t know what was going on. The lower level folks say hey, we were directed to do this by our bosses. Unless there is some pretty good found evidence (and found is important) it is pretty hard to not have a reasonable doubt that it might be on somebody else. The corporation on the other hand doesn’t have this ability to blame shift. We are sure, beyond a reasonable doubt, that the crime happened by/at the entity that is the corporation.

Maybe you can’t sentence a corporation. This seems improbable. Judges make sentencing decisions all the time and incorporate a variety of factors. We define severity of crimes and mitigating factors.

Maybe you can’t jail a corporation. Really? Assume for a moment a conviction and a sentence of say a month. As of the date of starting to serve the sentence the corporation is removed from society. All communications external to the corporation are shut down both physically and with the threat of any corporate activities taking place on say personal equipment (or by any counterparties) being punished as aiding and abetting a fugitive. No business is done, no sales are made, no product ships, no materials are received, no trades are performed, no contracts are created or performed. Any activity to occur from inside the corporation is managed through a third entity (a jailor if you will) that decides if that activity can occur.

Damaging, Devastating, Destructive? Absolutely. Going to jail is all this things. Hurts innocent people? Absolutely. Jailing impacts a swath of dependent and interrelated parties. Different scale? Yep. But the scale of the crimes are different as well. Ultimately killing the corporation? That depends both on the type of corporation and the sentence. You could see circumstances where a day or a week or a month might be survivable. You could also see where the same durations might be fatal.

Unimaginable? Why? Because things would be different? This mostly changes the risk landscape and frankly we are pretty good at adapting to that. Parties already deal with the possibility that a counterparty may up and disappear. There are risk mitigations for that. Maybe terms of employment would change. It seems to me that most of the countervailing issues are solvable.

Some additional thoughts:
1) You’d seriously change the dynamics of who was going to ‘take one for the team’. It might be in the best interests of the corporation to help prove that certain individuals committed the crime. To get the corporation off the hook with a prosecutor involved how high do you go? Those individuals have now had their incentives to commit the original crimes altered.
2) Charges being filed and a trial would likely cause the market (depending on severity and probability) to lop value off the firm. It creates uncertainty about the firm. That does several things. Your shareholders are not going to be happy. Management’s compensation as reflected in shares is going to take a hit. This seems like it would change the incentive structure for engaging in activities where you count on paying a fine as being the worst outcome and on finding activities in the firm that may be criminal.
3) Corporations on the one hand are able to act like a super individual doing things and acting in ways that normal individuals can’t. (Look at the resources they can bring to bear when someone infringes on their property) When it comes to culpability though they are able to act as non individuals and non entities. Whether the jailing the corporation is a good solution or not, this is a problem space worthy of attention.

* I’m certain there are more characteristics I should be mentioning. My strong temptation at this point was to call them artificial entities and I think there is an interesting parallel to other artificial entities like artificial intelligence.
** At a surface level those associated with an individual’s physical condition, though this only scratches the surface of the ultimate effects beyond the physical on the individual.

Who do you have to worry the most about misleading you? People who are smarter than you.

*****

Recently there was a debate in one of the areas I follow where a person who by most definitions falls in to the very smart person category was being called to task for something they had said. Who and what it was doesn’t really matter; choose your own example. What struck me about the whole thing was precisely how dangerous this person was. By dangerous in this context I mean able to get you to believe in their point of view. When compounded by a lot of people this represents a form of power. Ideas have consequences. That sort of thing.

People who fall in to this category don’t generally whack you over the head with direct and easily testable/falsifiable statements. They speak in complexities which is a triple winner for them. First, it signals and reinforces that they are very smart people. Second, it opens the door to being able to claim being misunderstood/misinterpreted. Third, it limits the number of people who might be able to call them on it.
Another tool is hedging their bets. This involves using enough caveats to provide easy outs for them later by claiming some condition or another hadn’t been met. Claim astonishment that others don’t see that their idea was never really tested. Belittle the people who raise questions. If all else fails, deny deny deny and wait for the storm to pass.

Apparently, the worst possible thing is to admit having ‘been wrong’. It seems to be a form of Kryptonite. It is infinitely better to go down guns blazing and in staunch opposition. This makes sense in terms of the status loss because, when compared to other very smart people, how could you have allowed yourself to be caught without a way out? Smart people are too smart to let that happen so maybe you aren’t smart enough to be part of that crowd. Notice that it doesn’t have that much to do with whether the original idea was right or wrong. Smart people are too smart to ever have wrong ideas, and certainly too smart to have others determine they were wrong.

The dangerous part about all of this is that very smart people can move from place to place and exist as voices that are listened to indefinitely without ever being tested or facing consequences. It takes a concerted effort among other smart people to challenge them. Even when challenged, they are typically successful in diverting the challenge such that it doesn’t represent a problem for them. Equally problematic is that the ideas continue on with some sort of radioactive half life; they continue to influence long after they should have been set aside.

PS: I suspect that part of this is developmental. When growing up, smart people are right (or aren’t proven wrong) often enough to learn that as a normal outcome. Sufficiently reinforced, the important part becomes being right and sharpening a skillset devoted to protecting being right. This fits with some recent ideas about the human capacity for reasoning developing not as some amazingly tool of objective mental effort but rather as a means to defend and promote your objectives within a group.

A recent article was applauding a particular company’s approach to HR. One item the company felt differentiated them was their values. Specifically their stated values versus observed values. They feel that many companies stated and observed values are not identical. That got me to wondering how possible/accurate it is to identify your company values from the inside and what that exercise might look like if you could find the right scientific skillset (anthropology?).

In regards to how possible it is internally, think of it this way: how many corporate items like values, mission statements, visions aren’t subject to public relations type constraints? Those are the kinds of things that may wind up in all kinds of publicly accessible places. When would you wind up with a list of values that was accurate but negative? I think the argument you would hear is that the stated values are aspirational and that is why there is a gap between stated and observed. Another item is in-group behavior. As a member of the company (the in-group) how likely is a person or group tasked with identifying company values going to be to objectively call out values and not soften or change them if they seem to be negative? A mechanical item is whether the people tasked with identifying values have the tools to perform the task. The exercise doesn’t normally seem to be one where identifying current values is even a normal step. Identify current values -> identify stated or aspirational values -> identify the gap -> identify plans for eliminating the gap and measuring progress does not seem to be the process. Rather, identify aspirational values -> state them -> say “look we have values” (publish them) seems a lot closer to the process. If you have never actually done a process like the first one, who will have the skills to perform ‘identify current values’?

If it did turn out to be the case that doing this internally was problematic it seemed to me that if you could find the right folks, those who have an awareness/sensitivity to maintaining distance with the subjects and who need to tease out behavioral characteristics of the observed you might come out with some interesting findings. Thus, anthropology. I’m curious to know if there are tools that anthropologists apply that could be reworked to ‘identify current values’. Also, how anthropology approaches field work; how do you keep the observing from being impacted by the act of observation? Going back to the time and motion days, just watching people can produce a result. It could be expected that knowing that someone was observing values would cause people to alter their behavior.

If this or any other discipline looked like it had tools applicable to the problem, it would be interesting to run a test project at an organization and see what came out of it.