Right Attitudes

Executive Compensation: Pay Them Well, But Not Too Well

January 23, 2020 By Nagesh Belludi Leave a Comment

Our executive compensation system is broken. Surveys show that the average public company CEO compensation is many hundred times that of the average employee. This gaping disparity in pay vis-à-vis the relative value they bring to their organizations is a moral embarrassment to our society, a point that wasn’t lost on the Occupy movement of yesteryear.

The debate over executive pay won’t die away anytime soon. As election year approaches, grandstanding politicians are vying to outdo each other with pledges to implement pubic policies that limit executive compensation, whereas theorists argue that, in a market economy, compensations should be set by supply and demand for executive talent.

The latter position is commonly echoed by company boards and executive compensation consultants—both of whom owe their cushy jobs to the CEOs and their top teams. They assert that leaders need to be provided with personal incentives to attract and motivate them.

Strangely enough, such incentives often demotivate the leaders’ followers. Financial incentives that are directed disproportionately to the leader in isolation often prove downright counterproductive.

Leadership is an outcome of the relationship between leader and follower, and excessively compensated leaders do not engender followership effectively.

This comports with financier J. P. Morgan‘s observations at the start of the twentieth century that the only characteristic common to his failing clients was a tendency to overpay those at the top. As Peter Drucker commented in The Frontiers of Management (1986,)

[J. P. Morgan found] eighty years ago that the only thing the businesses that were clients of J. P. Morgan & Co. and did poorly had in common was that each company’s top executive was paid more than 130 percent of the compensation of the people in the next echelon and these, in turn, more than 130 percent of the compensation of the people in the echelon just below them, and so on down the line. Very high salaries at the top, concluded Morgan—who was hardly contemptuous of big money or an “anticapitalist”—disrupt the team. They make even high-ranking people in the company see their own top management as adversaries rather than as colleagues…. And that quenches any willingness to say “we” and to exert oneself except in one’s own immediate self-interest.

Idea for Impact: Employees’ efforts are devalued markedly under conditions of gross inequality. Pay leaders well (if you pay peanuts, you’ll get monkeys,) but not too well.

Avoid Decision Fatigue: Don’t Let Small Decisions Destroy Your Productivity

January 20, 2020 By Nagesh Belludi Leave a Comment

Making some decisions depletes mental resources for making more important ones

Every decision you make impacts the quality of successive decisions you’ll have to make, even in totally unrelated situations.

That’s because, according to the much-debated “muscle metaphor” of willpower, your mental stamina is limited.

As Roy Baumeister and John Tierney explained in their bestselling book on Willpower: Rediscovering the Greatest Human Strength (2011; my summary,) you have a finite strength of will for making prudent choices. As you go about your day, your willpower is depleted and “decision fatigue” sets in. Consequently, you’re likely to employ one of two cognitive shortcuts in decision-making: you avoid the act of deciding altogether or make an less-thoughtful, sub-optimal decision.

Don’t get overloaded with so many pointless decisions that your cognitive productivity ends up falling off a cliff.

President Barack Obama claimed that he makes deliberate efforts to avoid decision fatigue so that he can devote his mental energies to things that matter. Michael Lewis quotes Obama in the October 2012 issue of Vanity Fair,

You’ll see I wear only gray or blue suits … I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make. … You need to focus your decision-making energy. You need to routinize yourself. You can’t be going through the day distracted by trivia.

In the same way, Facebook founder Mark Zuckerberg sports a limited wardrobe. He has previously declared that doesn’t waste time and energy to pick his daily outfits: “I really want to clear my life to make it so that I have to make as few decisions as possible about anything except how to best serve the community.”

Idea for Impact: Establish healthy routines that can eliminate unnecessary deliberation

Life is the sum total of all the mundane and momentous choices you make. Being monotonous in handling the former enables you to excel in the latter. Limit decision fatigue by

putting as much of your life as possible on an autopilot using routines / rituals and checklists,
limiting the choices you have (read Barry Schwartz’s The Paradox of Choice: Why More Is Less,) and
delegating decision-making where possible.

Good routines can provide structure to your day, protect you from your more effective negative impulses, and bring order and predictability to your life. Besides, according to renowned career coach Marty Nemko, “modern life, increasingly defined by unpredictability, can be anxiety-provoking, and routines provide an anchor of predictability.”

Inspirational Quotations #824

January 19, 2020 By Nagesh Belludi

What I fear is complacency. When things always become better, people tend to want more for less work.
—Lee Kuan Yew (Singaporean Statesman)

Insults should be written in the sand, and praises carved in stone.
—Arabic Proverb

Love conquers all; let us surrender to love.
—Virgil (Roman Poet)

No virtue is equal to the good of others and no vice greater than hurting others.
—Tulsidas (Indian Hindu Poet)

Nuns and married women are equally unhappy, if in different ways
—Christina, Queen of Sweden (Swedish Monarch)

People are just as wonderful as sunsets if you let them be. When I look at a sunset, I don’t find myself saying, “Soften the orange a bit on the right hand corner.” I don’t try to control a sunset, I just watch with awe as it unfolds.
—Carl Rogers (American Psychologist)

Only put off until tomorrow what you are willing to die having left undone.
—Pablo Picasso (Spanish Painter)

It is not greed that drives the world, but envy.
—Warren Buffett (American Investor)

The contest, for ages, has been to rescue liberty from the grasp of executive power.
—Daniel Webster (American Statesman, Lawyer)

A thousand fearful images and dire suggestions glance along the mind when it is moody and discontented with itself. Command them to stand and show themselves, and you presently assert the power of reason over imagination.
—Walter Scott (Scottish Novelist)

However great the work that God may achieve by an individual, he must not indulge in self-satisfaction. He ought rather to be all the more humbled, seeing himself merely as a tool which God has made use of.
—Vincent de Paul (French Catholic Saint)

Remember, happiness doesn’t depend upon who you are or what you have, it depends solely upon what you think.
—Dale Carnegie (American Self-Help Author)

In proportion as we perceive and embrace the truth do we become just, heroic, magnanimous, divine.
—William Lloyd Garrison (American Abolitionist)

Friends should be like books, easy to find when you need them, but seldom used.
—Ralph Waldo Emerson (American Philosopher)

Standing armies can never consist of resolute robust men; they may be well-disciplined machines, but they will seldom contain men under the influence of strong passions, or with very vigorous faculties.
—Mary Wollstonecraft (English Writer, Feminist)

A champion is afraid of losing. Everyone else is afraid of winning.
—Billie Jean King (American Tennis Player)

Why People under Pressure Choose Self-Interested Behaviors

January 17, 2020 By Nagesh Belludi

Pressure can put people in a state of threat. As I’ve examined previously here, here, and here, pressure can undermine people’s ability to make sound decisions.

Under pressure, people can abandon their inhibitions, cut corners, and loosen up their moral standards. In other words, they are more likely to engage in self-centered behaviors as opposed to pursuing the common good.

People adopt moral standards that dissuade them from unacceptable behaviors. Under normal circumstances, they think sensibly about the costs and benefits when making decisions. However, under pressure, people can be depleted of the cognitive resources they need to act ethically and resist temptations. See my article on the much-debated “muscle metaphor” of willpower.

When people are in that state of emotional and psychological anxiety, the brain goes into a defensive mode. With that, they are more likely to engage in self-interested behaviors that they would otherwise avoid, especially if the payoff for such behavior is high, and the odds of getting caught and punished are low.

How Can a Manager Get Important Things Done?

January 13, 2020 By Nagesh Belludi Leave a Comment

Distinguish the Variances That Require a Manager’s Attention

When critical care facilities in hospitals monitor patients’ vital signs, staff nurses are notified only when vital signs go beyond each patient’s pre-programmed range. Unless the monitoring devices sound an alarm, nurses take for granted that the patient’s condition is stable enough and will receive only routine medical attention.

The “Management by Exception (MBE)” method is the notion that a manager’s attention must be focused only on those areas in absolute need of his/her engagement.

As a rule, lower-level managers should handle recurring decisions. Only problems concerning extraordinary matters should be referred to higher-level managers.

This “exception principle” emphasizes that executives at the upper levels of an organization have serious restrictions on their time, capacity, and willpower. They should refrain from being caught up in minutiae that can be handled just as effectively by their junior managers.

A case in point: many companies establish protocols that designate the level of authorization required for purchases. Companies delegate authority carefully, prescribing spending limits for each level. For instance, a team leader’s approval is necessary for purchases of over $1,000. A department manager must approve purchases of over $5,000, the divisional leader for purchases of over $10,000, and the CEO for purchases over $50,000.

Managers Just Can’t Do Everything

The exception principle helps managers focus their attention on more worthy matters that justify their attention. Most managers hesitate to manage by exception because of the very human predisposition to focus on the immediate, tangible, and well-defined problems as against the distant, high-priority, challenging, and abstract problems.

In other words, mangers must distinguish programmed decisions from non-programmed decisions. Programmed decisions are routine activities that are well-defined and can be dealt with by using an established protocol. Non-programmed decisions are exceptional or significant endeavors that involve unfamiliar, one-time, and unstructured problems needing higher-level decision-making.

Idea for Impact: Don’t Get Lost in the Thicket of Trivia

As a manager, there are only a few things that you must do. Focus on those and delegate the rest. But keep an eye on how things are going; you are still accountable for any work you delegate.

Decentralize as much decision-making as possible. Establish protocols and standard operating procedures (SOPs) that empower your staff and enable your organization virtually to run itself.

Identify what deviations constitute as an exception and intervene only to solve significant problems.

Inspirational Quotations #823

January 12, 2020 By Nagesh Belludi

Where force is necessary, there it must be applied boldly, decisively and completely. But one must know the limitations of force; one must know when to blend force with a maneuver, a blow with an agreement.
—Leon Trotsky (Russian Revolutionary)

He who influences the thought of his times influences the times that follow.
—Elbert Hubbard (American Writer)

Change your life today. Don’t gamble on the future, act now, without delay.
—Simone de Beauvoir (French Philosopher)

If you have ability in a certain area, why not capitalize on it and improve it and use it?
—Wilt Chamberlain (American Sportsperson)

One does not fall “in” or “out” of love. One grows in love.
—Leo Buscaglia (American Motivational Speaker)

Our tendency is to be interested in something that is growing in the garden, not in the bare soil itself. But if you want to have a good harvest, the most important thing is to make the soil rich and cultivate it well.
—Shunryu Suzuki (Buddhist Monk, Author)

Appearances often are deceiving.
—Aesop (Greek Fabulist)

Man is an embodied paradox, a bundle of contradictions.
—Charles Caleb Colton (English Clergyman, Aphorist)

When building a team, I always search first for people who love to win. If I can’t find any of those, I look for people who hate to lose.
—Ross Perot (American Businessman)

The obstinacy of cleverness and reason is nothing to the obstinacy of folly and inanity.
—Harriet Beecher Stowe (American Abolitionist)

Love makes your soul crawl out from its hiding place.
—Zora Neale Hurston (American Novelist)

Getting ahead in a difficult profession requires avid faith in yourself. You must be able to sustain yourself against staggering blows. There is no code of conduct to help beginners. That is why some people with mediocre talent, but with great inner drive, go much further than people with vastly superior talent.
—Sophia Loren (Italian Actor)

More tears are shed over answered prayers than unanswered ones.
—Truman Capote (American Novelist)

Nobody should trust their virtue with necessity, the force of which is never known till it is felt, and it is therefore one of the first duties to avoid the temptation of it.
—Lady Mary Wortley Montagu (English Aristocrat, Poet)

The barrier between success is not something which exists in the real world: it is composed purely and simply of doubts about ability.
—Franklin D. Roosevelt (American Head of State)

The Boeing 737 MAX’s Achilles Heel

January 7, 2020 By Nagesh Belludi Leave a Comment

Two thousand nineteen was one of the most turbulent years in Boeing’s history. Its 737 MACS (pardon the pun) troubles went from bad to worse to staggering when aviation regulators around the world grounded the aircraft and a steady trickle of disclosures increasingly exposed software problems and corners being cut.

The flaw in this aircraft, its anti-stall mechanism that relied on data from a single sensor, offers a particularly instructive case study of the notion of single point of failure.

One Fault Could Cause an Entire System to Stop Operating

A single point of failure of a system is an element whose failure can result in the failure of the entire system. (A system may have multiple single points of failure.)

Single points of failures are eliminated by adding redundancy—by doubling the critical components or simply backing them up, so that failure of any such element does not initiate a failure of the entire system.

Boeing Mischaracterized Its Anti-Stall System as Less-than-Catastrophic in Its Safety Analysis

The two 737 MAX crashes (with Lion Air and Ethiopian Airlines) originate from a late-change that Boeing made in a trim system called the Maneuvering Characteristics Augmentation System (MCAS.)

Without the pilot’s input, the MCAS could automatically nudge the aircraft’s nose downwards if it detects that the aircraft is pointing up at a dangerous angle, for instance, at high thrust during take-off.

Reliance on One Sensor is an Anathema in Aviation

The MCAS was previously “approved” by the Federal Aviation Administration (FAA.) Nevertheless, Boeing made some design changes after the FAA approval without checking with the FAA again. The late-changes were made to improve MCAS’s response during low-speed aerodynamic stalls.

The MCAS system relied on data from just one Angle-of-Attack (AoA) sensor. With no backup, if this single sensor were to malfunction, erroneous input from that sensor would trigger a corrective nosedive just after take-off. This catastrophe is precisely what happened during the two aircraft crashes.

The AoA sensor thus became a single point of failure. Despite the existence of two angle-of-attack sensors on the nose of the aircraft, the MCAS system not only used data from either one of the sensors but also did not expect concurrence between the two sensors to infer that the aircraft was stalling. Further, Lion Air did not pay up to equip its aircraft with a warning light that could have alerted the crew to a disagreement between the AoA sensors.

Boeing Missed Safety Risks in the Design of the MAX’s Flight-Control System

Reliance on one sensor’s data is an egregious violation of a long-standing engineering principle about eliminating single points of failure. Some aircraft use three duplicate systems for flight control: if one of the three malfunctions, if two systems agree, and the third does not, the flight control software ignores the odd one out.

If the dependence on one sensor was not enough, Boeing, blinded by time- and price-pressure to stay competitive with its European rival Airbus, intentionally chose to do away with any reference to MCAS in pilot manuals to spare pilot training for its airline-customers. Indeed, Boeing did not even disclose the existence of the MCAS on the aircraft.

Boeing allows pilots to switch the trim system off to override the automated anti-stall system, but the pilots of the ill-fated Lion Air and Ethiopian Airlines flights failed to do so.

Idea for Impact: Redundancy is the Sine Qua Non of Reliable Systems

In preparation for airworthiness recertification for the 737 MAX, Boeing has corrected the MCAS blunder by having its trim software compare inputs from two AoA sensors, alerting the pilots if the sensors’ readings disagree, and limiting MCAS’s authority.

One key takeaway from the MCAS disaster is this: when you devise a highly reliable system, identify all single points of failure, and investigate how these risks and failure modes can be mitigated. Examine if every component of a product or a service you work on is a single point of failure by asking, “If this component fails, does the rest of the system still work, and, more importantly, does it still do the function it is supposed to do?”

Inspirational Quotations #822

January 5, 2020 By Nagesh Belludi

Too austere a philosophy makes few wise men; too rigorous politics, few good subjects; too hard a religion, few persons whose devotion is of long continuance.
—Montesquieu (French Political Philosopher)

Of the things men give each other the greatest is loyalty.
—Ben Hecht (American Screenwriter)

Throw out an alarming alarm clock. If the ring is loud and strident, you’re waking up to instant stress. You shouldn’t be bullied out of bed, just reminded that it’s time to start your day.
—Sharon Anderson-Gold (American Philosopher)

In prosperity we need moderation; in adversity, patience.
—Lee Iacocca (American Businessperson)

He who does not accept and respect those who want to reject life does not truly accept and respect life itself.
—Thomas Szasz (Hungarian Psychiatrist)

Much of the messy advertising you see on television today is the product of committees. Committees can criticize advertisements, but they should never be allowed to create them.
—David Ogilvy (British Advertising Executive)

I believe that traditional wisdom is incomplete. A composer can have all the talent of Mozart and a passionate desire to succeed, but if he believes he cannot compose music, he will come to nothing. He will not try hard enough. He will give up too soon when the elusive right melody takes too long to materialize.
—Martin Seligman (American Psychologist)

People are twice as biased as they think they are, which is precisely why biases are dangerous.
—Morgan Housel (American Financial Journalist, Investor)

Not to be able to bear poverty is a shameful thing; but not to know how to chase it away by work is a more shameful thing yet.
—Pericles (Athenian Statesman)

Heaven is at the feet of mothers.
—Persian Proverb

Many have had their greatness made for them by their enemies.
—Baltasar Gracian (Spanish Philosopher, Prose Writer)

You can’t wait for inspiration. You have to go after it with a club.
—Jack London (American Novelist)

If someday they say of me that in my work I have contributed something to the welfare and happiness of my fellow man, I shall be satisfied.
—George Westinghouse (American Engineer)

Labor is a pleasure in itself.
—Marcus Manilius (Roman Poet)

Charity and personal force are the only investments worth anything.
—Walt Whitman (American Poet)

Memory is a complicated thing, a relative to truth, but not its twin.
—Barbara Kingsolver (American Novelist, Essayist)

How to Develop a Vision for Year 2020?

January 2, 2020 By Nagesh Belludi Leave a Comment

Four Rules for Priority-Setting

As you think about what you want to achieve in the New Year, consider these four rules for priority setting laid down by the original management guru Peter Drucker in his seminal The Effective Executive (1966; my summary):

Courage rather than analysis dictates the truly important rules for identifying priorities:

Pick the future as against the past;

Focus on opportunity rather than on problems;

Choose your own direction—rather than climb on the bandwagon; and

Aim high, aim for something that will make a difference, rather than for something that is “safe” and easy to do.

How to Develop a Vision for 2020?

The first thing to do before thinking too far ahead in the future is to identify what success really means to you. Ask yourself, “It’s 31-Dec-2020 and the year 2020 is almost over. I am getting ready to celebrate the turn of the year with a tremendous sense of accomplishment. What have I achieved?”

Visualize a year 2020 wherein everything has turned out the way you’ve wanted. You have given it your best, worked your hardest, and achieved all your goals. Now write down what you imagine.

Take the time to think through and develop a clear picture of where you want yourself and your work- and personal lives to be in three months, six months, and one year.

This exercise is generally effective at helping folks differentiate between tasks that simply feel urgent or top-of-mind from those that are truly important.

Idea for Impact: Getting clear on your vision will help you create a path that feels the most meaningful, stimulating, and fulfilling to you.

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Making some decisions depletes mental resources for making more important ones

Don’t get overloaded with so many pointless decisions that your cognitive productivity ends up falling off a cliff.

Idea for Impact: Establish healthy routines that can eliminate unnecessary deliberation

Wondering what to read next?

Wondering what to read next?

Distinguish the Variances That Require a Manager’s Attention

Managers Just Can’t Do Everything

Idea for Impact: Don’t Get Lost in the Thicket of Trivia

Wondering what to read next?

Wondering what to read next?

One Fault Could Cause an Entire System to Stop Operating

Boeing Mischaracterized Its Anti-Stall System as Less-than-Catastrophic in Its Safety Analysis

Reliance on One Sensor is an Anathema in Aviation

Boeing Missed Safety Risks in the Design of the MAX’s Flight-Control System

Idea for Impact: Redundancy is the Sine Qua Non of Reliable Systems

Wondering what to read next?

Four Rules for Priority-Setting

How to Develop a Vision for 2020?

Wondering what to read next?