LayoffHow much is your value Worth?

The scenario… a best place to (not?) work

““

- CEO, major company

More is… Less?

Following layoffs or hiring rejections, statements such as the above can leave highly capable people somewhere on a spectrum between being mystified and cynical, sitting out-of-work and out-of-place despite proven track records.

These are people who, where they most recently worked, may have routinely been:

• expert practitioners in required internal processes;

• notable change agents under management teams advocating innovation;

• high-scorers in performance evaluations;

• acknowledged thought leaders or domain masters;

• or any combination of the above.

Yet somehow they failed to “make the cut”. Why?

What is it that suddenly failed to fit? Was it the culture, the strategy, or both?

Six Flavors of Separation

Hypothesis: most employees cannot take for granted most of what they assume is “prized” about their inclusion in the organization.

All of it has constraining circumstances:

• Performance versus Authority

• Value versus Worth

• Strategy versus Culture

• Alignment versus Impact

• Effort versus Achievement

• Status versus Risk

Much of that constraint can mean a far lower degree of “security” than is needed to stay on staff.

The following notes look at how these circumstances can compromise job security if they are not acknowledged and addressed.

Performance versus Authority

Most employees work on a performance basis.

Expectations arising from that focus may face periodic adjustment.

But sometimes an organization makes significant structural changes, because the model of success that validated the significance of the performance has stopped proving to be correct.

That change of model provokes a re-evaluation of whether the prior obtained performance has future significance.

Typically, authority must implement and defend the new model – otherwise, gaining significant new performance (i.e., appropriate value) is considered to be speculative.

Under that pressure, authority overrides past performance.

Value versus Worth

One of the major sources of confusion about performance assessment is the difference between value and worth.

Value is a recognized established distinction having a known type of significance.

Worth is the level of benefit of a desired type, that is obtained from the value.

This is why the same given value may not be equally important to two different parties: one party may gain, from the value, a different level and type of benefit than will the other.

The problem here is not usually that people can’t understand the difference.

Rather, the problem is that a party being evaluated will typically want their worth to be effectively synonymous with their value; whereas, the prevailing terms of worth may be incompatible, may be unstated or unclear, or may have changed.

As a result, the importance of “performance” can become ambiguous and can be misleading.

It may not be properly evident or communicated that demonstrated value will not equal what is necessary to be retained: perceived worth.

Value for WorthFour general differentiators describe how the beneficial gain (“worth”) relates to an enabling significant distinction achieved (“value”).

If these differentiators are removed, a strategy and an operation basically cease to have any positive meaning.

“Management” presumes that intentional effort is necessary to realize these differentiators with both preference and reliability.

Certain things are done to get value, then value is used to get worth.

Operations support strategies, in a measurable way. But the support may be seen in a variety of forms, such as a correspondence, a correlation, or a cause.

The consistency of support requires mediation. Typically, authority provides the mediation. The mediation applies to policies, performance and people.

©2015 Malcolm Ryder / Archestra Research

Strategy versus Culture

Companies typically change strategy faster than they change culture. Meanwhile, the conventional wisdom, in many important management circles, is that “culture eats strategy”. Does that make culture a safer haven than strategy? And what do they really mean by “culture”?

This challenge of culture specifically applies to strategy’s struggles with the problems of: implementation (organized for and defaulted to the required enablement); and, execution (acting appropriately with the enablement).

To help strategy succeed, managed organizational change directly concerns itself with whether the strategy can be “performed” by each party held responsible. The performance is in supporting or inhibiting implementation and execution.

Responsible parties take on the intentions of the implementation and execution as the key operative values. In that way, alignment – the potential for performing the strategy – is produced by those values.

These values typically represent their culture, but they are only half of the picture: operational values. The other half – strategic values – completes the cultural landscape.

The Culture of Values

Plans

Implementation

Execution

Outcomes

Organizational readiness

Process competency

Assessment methodology

Research and Development

strategy

operations

Culture is reflected in intentionality of various kinds, covering both concepts and actualities that distinguish the current culture from past and from other concurrent cultures. An envisioned future culture can provoke change in every area of value – both conceptually and actually.

©2015 Malcolm Ryder / Archestra Research

Systemic Culture

Plans

Implementation

Execution

Outcomes

EffectsRisks

Resources

Impacts

Assignments

Objectives

RequirementsAuthority

strategy

operations

Requirements predicate plans which generate authority.Authority constrains resources which predicate implementation.Implementation generates risks which constrain assignments.And so on. Cultural fit requires compatibility with constraints.

©2015 Malcolm Ryder / Archestra Research

Alignment versus Impact

The popular belief is that strategy sees performance as movement in the right direction; that is the generic understanding of “alignment”.

But both implementation and execution are more sensitive to a different interpretation of performance; for them, the right state (status) is the target of their perspective. That is the generic understanding of “impact”.

Alignment: go the correct direction

Impact: be on the good side of the direction

bad

bad

good

good

Start

continue

continue©2015 Malcolm Ryder / Archestra Research

Effort versus Achievement

To most employees, strategy provides prescriptions that appear to announce the most important kind of “value” to employees.

Strategic values are distinctive positions and conditions that represent the path to the strategy’s goal. Because strategy is prescriptive, a party may assume that acting in compliance to the strategic values will be generally synonymous with “high performance”, if compared to irrelevant or non-compliant acts. That sense of performance therefore carries an expectation of inherent high worth.

However, the worth of individuals is primarily to operations, not to strategy. Compatibility with strategy is simply expected of people and is not interpreted as “performance”.

Meanwhile, operational performance is mediated by authority and may be entirely independent of strategic performance. Its effects are asked to be strategically responsive but they are not responsible for strategy.

Instead, individual worth is highly calibrated to operations regardless of strategic compatibility. Its responsible parties are mainly assessed per their affect on validating operational values.

Accounting for Value and Worth

Despite strategy prescribing general responsibilities to be taken, strategy does not make the operational assignments and does not account for them.

Instead, authorities that actually make the assignments are the parties that logically are most accountable for the supporting performance.

Accountability is the meeting ground of strategy and culture, but only some people have authority and, therefore, have significant accountability.

This means that if culture is not going to be allowed to subvert strategy, organizational change for strategy must focus on theactive distribution and exercise of authority.

Moreover, those having authority decide how a person’s demonstrable value is going to have worth.

Authority accounts for the worth of a value.

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Projected Worth

Because of the implications of strategy, displaced or un-placed workers (who are responsibleparties) can be confused, or simply mistaken, about the way they have been evaluated.

They may encounter apparent paradoxes and outright contradictions in what seemed to be:

• their “requested” (to date) worth as marketed per strategy; versus…

• what turned out to be their “real” (to date) value in making operations compatible with authority.

The problem: strategy is actually not the context in which the worth of the person’s operational value is directly calculated, and therefore only loosely drives retention.

Instead, under pressure of accountability, authorities decide worth by associating the person’s current operational value with the intended (forecasted) operation (by which an impending strategy will be supported).

In doing that, the decided worth tends to factor in operational trends more heavily than it does strategic relevance; and it also prioritizes expectations over prior accomplishments.

Status versus Risk

In general, future alignment is more important to worth than current alignment. But a current out-of-alignment state can trigger a review of operational worth that includes the influence of risk.

Status, which represents impact, reflects operational worth; on its own it is necessary to strategic worth yet is insufficient.

There are three measurable aspects of status to consider: relevance (including requirement), risk (including readiness), and results (including trend).

A party may have the means, motive and opportunity to have a given operational impact; but without that party having adequate authority, there can easily be a disproportionate level of risk associated with that party’s effort.

Risk affects the perception of whether a trend of results is beneficial, detrimental, or neutral to an objective. A risky party is an at-risk party; an at-risk party has inherently less operational worth.

A protection from the above is that a Sponsor may provide a party with “authoritative cover”, but this means that the sponsor is to some degree “taking risk” to provide a “safety net”…

Assessment Limits

Assuming that a party has responsibility through strategically appropriate assignments, there are still several “performance” issues that should be openly noted, about how the responsibility may not translate beyond value to worth. For example, inhibitors to worth can exist in cost, impact, quality and purpose:

• Assignments normally reflect authoritative decisions tied to resource constraints, not to activity results. Under-resourcing and/or inefficiency can outweigh even good results.

• And as part of implementations, assignments represent operational requirements. But meeting operational requirements is not an advantage status (getting ahead); it is merely a completion status (not falling behind).

• Meanwhile, for performance evaluators, the experience of risks is one that is fundamental to their process. In effect, operational risk is seen as an indicator of an implementation defect. Because of that, it affects the perceived worthiness of the status of things.

• Additionally, when evaluations are conducted by the same parties that have authority, a legitimate concern exists about whether evaluations avoid a conflict of interest in cultivating strategy versus validating existing authority.

Net Worth

“Net” worth is a measure of any activity-based benefits versus any activity-based risks – even at a personal individual level.

The most well-tracked benefits are operational ones. As performance indicators or success factors, observed operational benefits are commonly associated in a consistent way with potential worth.

However, except in bureaucracies and factories, operational risk is one of the factors of assessments leastconsistently associated (pro or con) with potential worth. In evaluating individuals, the calculation frequently uses mainly perceived risks.

What often goes insufficiently acknowledged is that authority creates or allows the risk. Additionally, under insufficient authority, out-of-alignment impact on the organization’s overall position it can more easily occur but then is usually not tolerated.

Those problems may not be recognized until after actions have already been taken on operational requirements, and impacts are already being felt and attributed to the responsible party (pro or con).

For that reason, the connection between responsibility and authority should be validated. Accountability of the authority should be established before an evaluation is conducted. Otherwise, the individual may have inadequate protection from appearing to be a mis-fit with the intended authorized culture.

Organizational Risk Avoidance

For a responsible party, a layoff can happen despite alignment to strategy.

How?

Any intended future implementation exerts great pressure to determine the projected risk to prescribed operations.

Operational risk is seen as an indicator of an implementation defect that can hurt strategy.

Because of that, risk affects the calculated worthiness of the status of things, including the party’s currently perceived performance levels.

A layoff is an authoritative correction to a perceived implementation defect.

A logical authoritative alternative to a layoff is an alternative culture – namely, a spin-off. However, that is unlikely to occur unless it too carries very low new risk.

Because of projected risk, past operational performance (impact status) is not the only success factor for retention. Meanwhile, a model of future impact defines the opportunity for a party’s value to translate into worth.

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Conclusion: Fitness Criteria

A checklist of generic protective characteristics can be drawn from the preceding notes.

Each may have influence ranging from being a recommendation to a requirement.

All of them would be significantly notable, and potentially detrimental, by their absence.

Consequently, they are potential success factors for retention; but they are noted here only for assisting awareness retrospectively, not for any predictive purpose.

• Performance versus Authority: recognizes management’s role as an opportunity agent

• Value versus Worth: emphasizes accountability

• Strategy versus Culture: prioritizes opportunities to provide support

• Alignment versus Impact: strengthens effectiveness of operations

• Effort versus Achievement: solves the right problems

• Status versus Risk: responsible for outcomes not just outputs

©2015 Malcolm Ryder / Archestra Researchwww.archestra.commryder@archestra.com