Learn a new word: Asymmetric Information

Let's go with the definition first, a decent example of challenge that asymmetric information causes in a non-HR and workplace context, and then tie this up, (and this is the real reason I wanted to talk about this), with a great example of how this is playing out in HR/Talent and is being exacerbated by a recent legislative change in Massachusetts.

Asymmetric information - In contract theory and economics, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance of power in transactions, which can sometimes cause the transactions to go awry, a kind of market failure in the worst case. Examples of this problem are adverse selection, moral hazard, and information monopoly. Information asymmetry is in contrast to perfect information, which is a key assumption in neo-classical economics.

Asymmetric information plays out all of the time, in just about every negotiation or contract that most of us participate in. When sellers know more about the value of products and services than buyers do - say in the case of a used car, or even a hotel room, then often we as buyers can be left uncertain and anxious about the prices we pay. Conversely, when buyers know more about the value of an item than the seller, think of a rare baseball card discovered at a garage sale in a bin offered for $1.00, then sellers can get underpaid for their offerings. 

The internet, social networks, online sites designed to 'uncover' or reveal the true value, (or at least what other people have or would pay for a given good or service), have gone far to reduce the potential negative impact of asymmetric information in many markets. TrueCar provides insight into new and used car prices, SeetGeek aims to let you know if the tickets you are about to buy for the ball game represent a good deal or not, and auction-type sites like Ebay and Priceline put much more power, (if not always perfect information), in the hands of buyers of goods and travel services. 

But even in the age of TripAdvisor and Glassdoor, many of the markets in which we transact are still pretty far from exhibiting so-called 'perfect' information, where buyers and sellers are equally informed, (or can reasonably obtain such information), thus resulting in efficient functioning. Are you really getting a good deal on that refirgerator or car or flight to Phoenix? Who knows.

That's what takes me to the HR/Talent example I mentioned that the top, specifically, the recent move by Massachusetts to prohibit asking candidates about their current or prior salary history during the interview process. This legislation, according to Massachusetts officials, is designed to combat wage inequality - the theory being that if women or other groups have been unfairly underpaid in the past, then making their current salary an anchor point in negotiations for their next salary will simply perpetuate this wage inequality.

And the other, unspoken, impact of this legislation will be to reduce, (but not eliminate), the asymmetric information condition that exists in any salary negotiation. In any potential job offer/negotiation the employer knows certain pieces of information that the candidate has almost no way of determining on their own. The salary budget (or range) for the job, the salary of the last person who had the job, the overall financial/budget situation of the organization, and the 'wiggle room' that the hiring manager has to negotiate the offer.

In this negotiation the candidate has exactly one piece of information that the potential employer can probably guess at anyway - their current, or most recent salary at their prior job, and ostensibly, the baseline to figure out what kind of a bump (fifteen, maybe twenty percent?), it would take to get the candidate to make a move. And lots of recruiters, and even many online job applications, press the candidate to divulge this bit of information, their only potential edge in any negotiation, very, very early in the process.

Recruiters and hiring managers will line up to bemoan the Massachusetts law, (and the others like it in states like New York and California that will almost certainly follow), clinging to the 'Let's not waste everyone's time if the salary for the job is not sufficient for the candidate'. Better to find that out up front, they argue. But figuring out the ballpark range a candidate might be willing to consider is part of your job, Ms. Recruiter. And there are other, less lazy ways that simply demanding that candidates turn this information over to you before you've even spoken to them.

Asymmetric information plays havoc in all kind of markets. It's bad economics, bad policy, and bad for the person who is sitting on the wrong, or less-informed side of the table. And it doesn’t matter how rational, or well-intentioned people are, or how well the process/markets are set up - asymmetric information throws a wrench in the works, one that many candidates can spend a career trying to recover from.

Have a great week!

The Canary Trap, or, how to plug an information leak

This is possibly, actually almost certainly, my favorite story of 2014. It involves basketball, information security, organizational intrigue, and espionage tactics. And it just might be a helpful example for you if you are faced with a 'leaker', i.e., someone on the team who can't seem to keep private and proprietary information private.

So here is the story, recounted in this piece from Business Insider: The NBA Used an Espionage Trick Known as 'Canary Trap' to Catch Teams Leaking to the Media

The National Basketball Association fined Detroit Pistons President of Basketball Operations Joe Dumars $500,000 in 2010 for leaking information to Yahoo! Sports reporter Adrian Wojnarowski, according to Kevin Draper of The New Republic.

In order to catch the person responsible for the leak, the NBA set up a months long sting operation based on a common espionage method made popular in the Tom Clancy novel "Patriot Games." In that book, the protagonist Jack Ryan uses what he calls a "canary trap."

According to Draper, when the NBA sent memos to teams, each team would get a slightly different version in which a few words or numbers would be changed. So when the memo, or information from the memo, was leaked to the media, the NBA would look for the small changes it had made to determine which team the leaks came from.

Dumars was one of two executives caught "red-handed," according to Draper.

Fantastic story. And probably useful as well, (at least for the more devious among us).

But seriously, who has not run into this kind of a situation at least once or twice? You are working on a new and 'secret' project and somehow, some way news and information about the project manages to reach someone who you did not want to have such information. Or maybe it is a set of financials or headcount data projections that somehow end up in the hands of a manager from another group - before you were ready to release them.

It may not seem like a big deal, especially in the modern era of transparency, aka 'oversharing', but I think sometimes it is a big deal.

If you can't trust the people and the team to keep confidential information, well, confidential, then you can't really trust them with anything. And sometimes as a leader you have to root out the source of the leak, and The Canary Trap, while sounding straight out of a Bond movie, just might help you to do that.

Try it sometime, even as an experiment. Give person 'A' one set of details, and a slightly different set to person 'B' and see which version, (if any), somehow gets leaked. Trust me, it will be fun.

Ok, that is it for the week I am out - Have a great weekend!

Knowing when it's time to stop asking for advice

We all probably read or saw some of the potential downsides of relying too heavily on the so-called wisdom of the crowds during the recent bombings in Boston, (and the intense few days immediately following). While the combination of smartphones, the web, and social media certainly did seem to help in spreading news and information, keeping people safe during the manhunt for the suspects, and even in helping to identify them in the first place, there were also some unfortunate negatives. Bad information, no matter its source, was spread far and wide, innocent or uninvolved people were put under suspicion, and for many, the sheer cacophony of updates, videos, tweets and the like created so much noise that the true signal was often incredibly difficult to find.

Frankly, at times it seemed like no one, especially the established experts, really knew anything, but everyone had something to say, me included.

If they want to truly disorient the suspect just pipe in the CNN feed. That ought to confuse the crap out of him. #bostonbomber

— Steve Boese (@SteveBoese) April 20, 2013

This is just how things work now, any important news or events, particularly ones that play out live on TV and on Twitter are going to generate a massive volumes of good information - along with almost equal parts of confusion, error, and utter nonsense. Perhaps the best advice on dealing with all this is to just tune out for a while and not get caught up trying to play amateur detective or journalist ourselves. 

The real reason I was thinking about this wasn't the Boston bombings and the aftermath though, (but they do make for pretty good illustration I think), it was from reading a piece recently authored by Philip Palaleev, a consultant to financial services companies, titled 'How I advise advisors to run an advisory business from my pulpit'. Get past the really odd title, and you get this - some of the best advice I've seen about the problems of asking for too much advice:

I once read about an experiment where the researches had the tonsils of 1,000 healthy kids in New York examined by doctors. In about 50% of the cases, the doctors recommended removing of the tonsils. The researchers then took the “healthy” kids to another set of doctors. Again, 50% of the kids received the tonsillitis diagnosis, even though they had already been declared healthy by another doctor (notice the rate is not even dropping). Researchers then took the remaining 250 healthy kids and took them to a third set of doctors. Lo and behold — again 50% of them received the tonsillitis recommendation.

You can see where this is going — go to enough doctors and you will eventually get your tonsils removed. Same is true with consultants — talk to enough consultants and you will eventually get your strategy revised, your compensation plans “fine-tuned” and your processes “optimized.”

If you spend enough time asking for opinions, ideas, and advice you'll eventually get so much of it you may forget what you were after in the first place, and even what you believe to be right or true or at least likely.

There is no shortage of people ready and willing to tell us what we should do. The thick is, I think, to know when to stop asking, stop listening, and just do what we think is right.

More advice is not always or necessarily better. But it is more noise, that we know for certain.

On phone calls and productivity

Yesterday I took a fairly easy shot at everyone's favorite communication whipping boy, email, comparing the typical send/receive ratios of email to SMS, which continues to be the most engaging two-way communication medium. Today I want to think about another method of communication that perhaps is not examined nearly as much as the many electronic means of communication at our disposal - the old-school phone call.

Yes, the phone call, a real live one person talking to one other person conversation, that (normally) requires just about 100% attention and concentration from the two participants.  The phone call - that personal connection and interaction that many of our social media and networking 'experts' exhort upon us to pursue with our online personal and professional connections - ostensibly to make the connections more 'real', (as if the millions of emails, texts, Tweets, and status updates we are sending are somehow 'unreal').

Regardless, I caught a really interesting piece recently on the Big Picture blog, where the author Bob Lefsetz calls out the phone call as a colossal waste of time for anyone whose business is information or data or even 'Big Data'.  Here are the key passages from the piece I want you to think about:

Prior to the Internet era, an entertainment titan would make in excess of a hundred phone calls a day. Do you think he was making deals? No, he was learning things. Extracting information that would help him proceed.

Now most of this information is available to everyone.

Yes, I’ve established a Grand Central of information. If you say you talked to me on the phone, you’re lying. Because I almost never do. Maybe one business call every other week. Usually to an oldster who is not net-savvy. You see just like the Wall Street traders I know it’s about speed. I haven’t got the time to waste on the phone, where you take twenty minutes to talk sports, kiss my butt and then ask for the favor. Let me know in an e-mail, instantly.

'If you say you talked to me on the phone, you're lying.' That is probably my favorite line of 2013 so far.

But think about it, maybe your job or most jobs even are not completely about gathering, categorizing, analyzing and making decisions based just on data. But as the level, complexity, volume, and speed of data about business, people, markets, customers, candidates, etc. continues to accelerate it makes at least logical sense that time carved out of your schedule to talk on the phone, (or sit in a meeting) with only one other person is going to impact and possibly detract from your ability to see, gather, and understand all this data.

The person you are talking with might have something you need, or, you might have something they need, but can you afford in the words or Mr. Lefsetz the 'twenty minutes to talk sports' in order to get to those needs?

Data might kill the phone call I suppose, if more people take Lefsetz' 'I don't have time to talk to you because I might miss something' approach, but then I suppose better tools to automate and synthesize the oceans of data that are important to us today then it might actually save the phone call as well.

I'd have the time to spend with you one-on-one if after I hung up the phone and could look at a dashboard or a consolidated activity stream or a report that told me exactly what I just missed, what I need to look at, what actions I should take, and why it's important to me.

If you know of that kind of a tool and how I can get access to it, give me a call.

I promise I will pick up.

You probably already have plenty of data, Big or otherwise

I really wanted to title this post - 'There is almost certainly too much crap on your iPhone', because that is what I was actually thinking about before writing this post. This was in recollection of a few wasted moments the other day when I simply could not find the particular app on the phone that I was looking for. But then a blog post about my frustration with my inability to properly operate a phone seemed the most dire kind of post - self-indulgent, inconsequential, and worst of all - boring.

But this silly little example, the fact that I've put too many apps on my phone, combined with a lack of organization or semblance of order, with a sprinkle of 'I had a BlackBerry for so long, I am still trying to figure out how to use this thing', and I've ended up (at times) squandering the opportunities that having access to an incredible resource and range of applications should represent.Remember how your phone once looked?

The best project manager I ever had, when trying to run a year-long, 50-person plus, and technically complex systems integration and implementation project had a general rule of thumb he followed to help manage what threatened to be an impossibly growing 'Issues list.'  His rule?  No project team member was allowed, after the initial requirements discovery period was complete, to add a new issue to the list, unless he or she could prove an existing issue was closed, or was no longer an issue after all.

This rule, and the discipline it instilled in the process and the team, served to force the team members to think really critically when new potential issues arose, and kept us focused on making consistent progress against what issues had already been raised. It was not a perfect system, and the project manager did make an occasional exception to this rule when it was essential, but it basically worked. 

Why bring up an old project manager's quirky practice in a post that seems to be about my inability to use my iPhone and with a title vaguely alluding to one of 2013's 'You might already be sick of it' terms, Big Data?

Well, because for the same reason you and I have too many apps on our phones and belong to too many different social networks and sites, and spend way too much time checking for likes, follows, and retweets - Big Data at work threatens to create even more complexity, confusion, and chaos if we are not careful.

So as 2013 starts here is my first recommendation for how to approach Big Data for HR - start by figuring out just what data you already have, have been routinely collecting either by design or as a by-product of another process, and take some time to consider what kinds of insight and value could be gained by simply asking some simple questions about this information.

My guess is just like you already have 'enough' apps on your iPhone, (or at least have a few you can happily set free), you probably have plenty of internal data to commence your own version of a Big Data project without launching some kind of new initiative to collect even more data.

So that's my advice. Take an inventory. Ask around to see what data folks are collecting on their own spreadsheets. Talk to the creepy guy in IT once in a while. See what additional information is locked up by your Payroll and Benefits providers.  Start there.

And after that, and only after that, start looking for more data.

Now, I need to run I have a few more screens of Apps to delete.

Have a great week all!