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The HR Danger of Overconfident Leadership

March 31, 2020 by rmcfadden

Leaders, from supervisors to CEOs, are crucial to any organization’s successes, but the research is showing that overconfidence in leaders can have a detrimental effect on organizational performance. This overconfidence problem in leadership has two main factors to consider:

Overconfidence does not equal ability.
Overconfident leaders are prone to “ideator’s bias.”

Let’s review overconfident leadership in a little more detail, based on the two ideas above. Overconfidence not equaling ability can be seen in the following examples, which were some of the biggest disastrous business decisions of all time that led to organizational downfalls:

Western Union rejecting the patent on the telephone.
Kodak creating the digital camera, then killing the idea as not feasible.
Blockbuster passing on buying Netflix.

We know these decisions were critical mistakes for these organizations, but here is a quote that may take the cake on poor leadership decision-making, from Michael Lazaridis, founder of Blackberry. The creator of the smartphone said this, as he pointed to a BlackBerry with a keyboard:

“I get this,” he said. “It’s clearly differentiated.” Then he pointed to a touchscreen phone. “I don’t get this.”

Blackberry at its peak had 75% of the mobile phone market. The company no longer even makes Blackberry phones now. Where would Blackberry be today if its leadership had made some different decisions?

Not all disastrous organizational decisions are caused by an overconfident leader, but in the examples above, it must be admitted that the leaders’ decision-making was flawed.

In a Talent and HR Management article by John Hackston, a well-researched phenomenon known as the “Dunning-Kruger effect” (D-K effect) is outlined. This is a theory that posits that the less a leader knows about a topic, the more confident the leader is in making a decision about the topic. This is also known as the “Dunder-Mifflin effect,” which anyone who has ever watched Michael Scott on The Office, as he makes a series of blundering decisions, will understand. Click here to see some of Michael Scott’s worst decisions.

The second problem of overconfident leadership is closely tied to the D-K effect, and it is called “ideator’s bias.” Ideator’s bias occurs when the individual believes that their own ideas are better than the ideas of those around them. Leadership is about bringing out the best in your people, not believing you are the best in your organization. Leaders and organizations should try to remember Jim Collins’s ideas of leadership from his book Good to Great, and his concept of the Level 5 leader:

“At Level 5, you have all of the abilities needed for the other four levels, plus you have the unique blend of humility and will that’s required for true greatness.”

A quality that leaders need to adopt to become a great leader, and avoid the two pitfalls of the D-K effect and ideator’s bias, is to bring humility into their skill set as leaders. If a leader is prone to combining the phenomena of the D-K effect and ideator’s bias, one can only believe that it is just a matter of time before a leader’s decision becomes disastrous.

Discussion Questions:

1. Complete more intensive research on the D-K effect, ideator’s bias, and a concept called “optimism illusion” (not discussed in this post). Create an executive summary comparing these three concepts.

2. Imagine your VP of HR has just read your executive summary and now wants you to create a PowerPoint presentation. Create a five-minute PowerPoint presentation explaining how to prevent the D-K effect, ideator’s bias, and optimism illusion from occurring in your organization.

3. Review Jim Collins’s Level 5 leadership concept, and think about the supervisors you’ve worked with. What level of leadership would you place them at, and how did their leadership level affect your job performance?

Independent versus Dependent

March 10, 2020 by rmcfadden

When HR professionals see the words “independent versus dependent,” it may give many of them vague flashbacks to a psychology or statistics course that they took, but all HR professionals should brush up on these terms, because they are vitally important in the new world of gig employment.

Let’s refresh our memory banks on what an independent versus dependent contractor is in the HR world. According to the Ontario Ministry of Labour (MOL), an “independent contractor” is defined as the following:

“An independent contractor is someone who is in business for themselves. An individual may be considered an independent contractor, and not covered by the [Employment Standards Act], when at least some of the following applies:

the business can end the individual’s contract for services, but cannot discipline the individual
the individual:
- has the opportunity to make a profit and has a risk of losing money from the work
- determines how, when or where the work is performed
- decides whether to subcontract some of the work”

It is important that HR professionals know the status of individuals doing work or providing services for their organization. They need to determine if the employees are independent or dependent contractors, as each category has significant laws and liabilities that pertain to them.

According to the Ontario Labour Relations Act, 1995 (LRA), a “dependent contractor” is defined as:

“A person who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor.”

The key wording to note from the definition above is “more closely resembling the relationship of an employee.” It is that wording that makes all the difference and places legal liabilities on the employers to the employees, such as ensuring minimum wage, vacation pay, and safety.

There was a recent ruling by the Ontario Labour Relations Board (OLRB) that Foodora Workers were to be considered dependent contractors and not independent contractors.

This was a case with a ruling that was precedent setting, similar to the one in California, where Uber drivers were to be considered employees and not independent contractors.

This new OLRB ruling allows Foodora workers the right to unionize, and if the union is successful in organizing Foodora workers, it may drastically change employees’ rights and benefits, not only for Foodora workers but all gig economy workers in Canada.

All HR professionals should brush up on the legal definitions of “employee,” “independent contractor,” and “dependent contractor” in their jurisdiction, and conduct an audit to see if there could be potential liabilities in the near future for their organization.

Discussion Questions:

1. Research the Labour Relations laws in your jurisdiction. Identify the definitions of “employee,” “independent contractor,” and “dependent contractor.” Prepare a three-minute presentation, which highlights the differences.

2. Imagine you have just been hired by Uber to review the latest OLRB ruling on Foodora workers. What recommendations would you make to the senior leadership HR team at Uber to help them reduce their legal HR liabilities?

Protect Your New Employees

March 10, 2020 by rmcfadden

One certain way to protect your recruitment investment is to protect your new workers.

Many HR professionals are aware that younger workers get workplace injuries more often than older workers, and because of that, many HR departments have young worker awareness (YWA) training programs. Many HR professionals, however, are unaware that all new workers are more susceptible to injuries, and not just young workers. In fact, some research states that not only do young workers and new workers get hurt more often, but they get hurt earlier on the job as well.

According to the Infrastructure Health and Safety Association (IHSA), “New and young workers in Ontario are four times more likely to be injured during the first month of employment than at any other time.”

Four times more likely to get injured in the first four weeks! This is an incredibly alarming statistic, and it is not just applicable to young new workers; it is all new workers that are getting injured at a higher rate (click here to read in greater detail), and HR departments must take notice.

Some jurisdictions are taking note of this safety concern and are addressing it in their provincial Occupational Health and Safety (OHS) legislation, such as in British Columbia, under sections 3.22 to 3.25 of their Workers Compensation Board (WCB) safety regulations, which specifically address what is required for young and new workers’ safety training. Click here to learn more about the safety requirements for young new workers in BC.

Employers are concerned about how hard it is to recruit and retain good employees, but perhaps if employers did more OHS training during employee orientation and on-boarding, they would not be losing their young and new workers in the first month of their employment.

Discussion Questions:

1. Research the OHS legislation in your jurisdiction. Identity if there are any specific laws or regulations regarding the specific training of young and new workers.

2. Review the BC OHS regulations that pertain to young and new workers (click here for link). Review the requirements and develop an outline of a safety orientation program that would meet its legal requirements.

Bring Back the Boomerang

February 27, 2020 by rmcfadden

When one hears the word “boomerang,” the first thought that comes to mind is usually an Australian hunting tool, or a toy. The interesting thing about a boomerang is that it always comes back.

Now the word “boomerang” has been used to conceptualize ideas about returning children and returning employees. “Boomerang kids” are children that come back home to live with their parents after a period of independence. Similarly, “boomerang employees” are employees that come back to a workplace they left to work somewhere else for a period of time.

For many employers, the thought of bringing back a former employee is abhorrent; the immediate reaction is to think of the former employee as being disloyal for leaving in the first place. Research, however, is saying that there is value in re-hiring employees that have left an organization.

According to research by Robert Half, a company that has been providing recruitment and staffing solutions for over 70 years, 94% of senior managers would re-hire former employees, and 52% of former employees would consider returning to their previous workplaces. These are interesting statistics that HR professionals should consider.

In addition to the research above, another study out of the University of North Carolina Kenan-Flagler Business School and Texas A&M University found the following list of advantages that resulted from re-hiring former employees:

Boomerang employees save costs and allow a company to recoup some of its investment in recruiting, training, and developing new staff.
Boomerang employees bring new perspectives acquired in other work environments, some of which may have come from working for a close competitor.
Boomerang employees bring more social capital back to the firm.
Boomerang employees tend to be more loyal upon their return than those who have never left.

While there is research that supports the value of boomerang employees, there may be some risks to consider as well. These risks are outlined in an article in the HR Daily Advisor: the employee may not be a good fit for the organization, they may be a job-hopper, or there may be an unresolved issue with them that was not adequately addressed or resolved in the past.

These potential risks must be weighed against the possible benefits of re-hiring a former employee. In a time of low unemployment, which North America is currently experiencing, HR departments may want to align with the thoughts of 94% of senior managers, and consider developing a formal boomerang re-hiring program.

Discussion Questions:

Your HR Department has decided to consider developing a formal boomerang re-hiring program:

What would be the first step in that program?
How would you stay in touch with former employees?
Develop a set of specific interview questions that you would ask to assess the prospect of re-hiring an employee. How would these questions differ from interview questions for a new candidate?

Wage Forecast Going UP!

February 20, 2020 by rmcfadden

All HR professionals have to strategically plan the potential and actual costs of wages every year. There are many factors that affect the business cycle of wages, such as the economy, the Consumer Price Index (CPI), and the unemployment rate:

If one considers these factors, what does the upcoming 2020 forecast look like for employee wages? Here are some perspectives based on these economic indicators.

The North American economy has been booming for over 10 years. There is always global uncertainly with circumstances that are difficult to predict, such as trade wars, changing politics, and possible pandemics, but most economists say the business fundamentals in Canada are sound. Inflation, although stable, has been trending upward in recent years, and one of the most important economic factors to consider—unemployment rate—has been down in North America. The US unemployment rate was at 3.5% in 2019, which was the lowest it had been in 50 years. In Canada, the unemployment rate was the lowest it had been in 43 years in 2019 at 5.8%.

The low unemployment numbers will be the biggest contributor to wage increases in 2020. A recent wage survey predicts the average wage increase for Canadian employees will be approximately 2.7%, which is just above the current rate of inflation, which means employees’ actual wages will also increase.

All of these factors are going to put great pressure on HR departments. As wage demands increase, it will be more difficult to recruit and retain employees as job openings will outpace the supply of employees.

2020 will be an interesting year for HR departments, which will have to be at their sharpest to maintain their compensation budgets, and still be able to hire employees without too much upward wage pressure.

Discussion Questions:

Review the interactive wage survey from Normadin-Beaudry, and find your provincial data. Identify your province’s predicted wage increase for 2020 and compare it to the average wage increase in Canada. Once you have identified the wage increase, research and identify your province’s CPI and unemployment rates. Using all the data collected, create a 5-minute presentation for your VP of HR on developing a new compensation strategy for your organization.