Redefining Bureacracy
Journal Entry - December 2019
When I started my career as a manager, a large part of my job was to shield my team from the twin tyrannies of bureaucracy and constant change. Twenty years later, my “executive remit”– two expensive words that really just mean job– is to actively and planfully change that same bureaucracy– to lighten its burden on our employees (and here’s the word that I use unironically) constantly.
I see my younger self in our up-and-coming managers because they too have their shields up, blissfully unaware that there is a corporate equivalent to turning into your parents.
Good for them! They’re right. I am the problem.
And– paradoxically– I always have been.
Journal Entry - 2021
Even with the core values of a humanist– as someone who believes in autonomy as the path to both dignity and productivity– I fall short as a manager.
Perhaps I fall short because of that humanist tendency; because it makes me focus on values and behaviors; because it frames the answer as culture.
Perhaps I fail because the problem is structural. And it always has been.
The Actual Blog
There are problems– intractable ones– that culture can’t fix. We don’t use words like structural when we talk about them– probably because it’s not a common word in the aggressively can-do, ruggedly individualistic lexicon of business– but maybe we should.
Here’s an example of a structural problem.
Over time, most if not all the banks in NY and London have moved to an annual pay cycle that pays your bonus in Q1 (Feb/March). That means very few people are hired into banks in Q4 — because if they’re coming in from another bank (and most are), they’re prohibitively expensive in November and December, given that the inbound employee needs to get paid out for the bonus they’re potentially missing.
As a result, most hiring conversations begin quietly in Q4 and land as start dates after bonuses are disbursed in Q1. And that hiring builds through Q2 to a peak in Q3, after which it falls off the Q4 “you’re too expensive” cliff.
(So far, not a problem. Just an industry practice.)
Next comes the concept of an effective date– i.e., the time it takes for a new employee in a company to become good (or effective) at their job. Outside of management, no one expects a new hire to “hit the ground running” so it’s common practice for the rest of the team to lean in– both to train the new joiner and to cover for their expected contributions.
In other words, each new hire is actually a suck on the team’s productivity.
For how long? It depends on the role but in banking, this “honeymoon period” is usually between 3 and 6 months.
(Again, not a problem. Just a reasonable learning curve.)
The third bit of context is that most banks are still doing their program/delivery planning annually— what any good engineer would call waterfall finance. That means all new programs kick off in January and like clock-work, end in December.
And even though everyone is clear and diligent about tying delivery to all necessary hiring being done, expectations around the delivery of those programs are still (inevitably) anchored in that January start. So if the program doesn’t hit the ground running in January, the team will likely miss their delivery dates.
And if the program needs new headcount (and most do)...
And if the new hire can’t land until after they’re paid out at their last bank…
And if that early joiner isn’t effective until half a year later…
And if their team is taking a productivity hit for having a new team member (or 10)...
… then the probability of missing program delivery dates is… well, it’s not a probability. It’s a certainty.
[Now take a breath.]
None of this would be that painful… but… many times the business problem doesn’t get framed as structural but rather, cultural. Words like ownership and accountability get thrown around. Governance and transparency get questioned. It becomes a front line problem.
And because we’re not rooted in thinking about structural fixes, the institutional answer that emerges gets framed as a need to focus on values and behaviors– on culture. Which *is* an important part of the answer but not particularly satisfying for people dealing with the resulting bureaucracy.
Our tendency to frame culture as the fix (exclusively) is frustrating to the creative systems thinkers that drive business direction and unfair to the front line folks busting their humps to compensate for structural challenges.
Maybe that should be the definition of bureaucracy: an organization’s coping mechanisms for structural problems. It would certainly challenge our thinking on what needs to change.
How To Solve Structural Problems
Let’s take the example above because it demonstrates an important dimension of the Noah Principle: that it’s infinitely harder to build the ark during a low-visibility hurricane.
Institutional problem: we miss more delivery commitments than anyone is comfortable with.
Some answers (and this is meant to be illustrative– i.e., not a comprehensive list):
Easiest answer: hire from outside the industry. You avoid the Q4 expense at the cost of industry depth. You’ve changed the problem from not having people to needing your new hires to quickly learn a lot about your industry, product and in the case of banking, the regulatory context. You’re adding months to each hire’s effective date but you can offset that by hiring them in early Q3 (to hit the ground running in Q1). Hidden benefit: diversity. Huge! Hidden challenge (at least in banking): convincing talent from cooler, more purposeful industries to switch… and once they’ve joined (and really understand their decision), having them convince their tail to follow them (because no one succeeded at their last place on their own).
Can we do that at scale? Doubtful. But if it’s worth doing, it’s worth doing poorly.
Slightly harder answer: pay the iron price – the Q4 price for talent. This one’s a no brainer if you can afford it. I’d normally snark about whether it would scale but given the Great Resignation, everyone’s cost is now the Q4 price.
Much harder answer: change your annual planning practices at the Firm level. I don’t know of any process within Banking that’s hated more than annual planning. And the idea that any industry is sleepy enough to still be planning annually is hilarious. Fintechs won’t eat banking’s lunch because they’re better technologists or more innovative. They’ll move the time for lunch up a couple hours and casually enjoy brunch.
Moving to “agile finance” solves the problem by reframing delivery expectations; by completely changing both the question and the answer.
Even harder answer: change the industry practice of bonus disbursement from the arbitrariness of Q1 to whenever real business value is delivered. Compensate for the unintended negative consequences of this approach– the inevitable drift into short term thinking– by dramatically increasing the pay for longer-term outcomes.
–
These are all hard, structural problems.
With this specific example, the ark we build revolves around three solutions: hire continuously, plan continuously, learn continuously.
The Normal, Hopeful Ending
Given the bureaucratic burdens that weigh our employees down daily (if not hourly), we need a healthy discourse on where problems are not– at their core– cultural. That doesn’t diminish the idea that there will always be a cultural dimension to intractable problems. After all, everything is easier with the right values and behaviors.
Let’s also acknowledge that all structural problems require a long time and great effort to fix– the irony of course being that long term fixes demand constant change (one of the two tyrannies).
If we can build consensus around the core breaks in our many interconnected systems (in the larger sense of the word).. if we can get more people involved and organized around the harder, longer-term, structural fixes… if we can tap people who bring unique perspectives and people who don’t (because we can’t all be unique)... then we have a chance at making real progress on eliminating the symptoms we all call bureaucracy.
As for constant change, it is both a constant pain and a real sign of progress. It’s a commitment to iterating into a better, less frustrating future.
The Surprise Ending
If the example in this piece doesn’t resonate, then think about the progress we need to make with eliminating sexism and racism (if you’re on one side of the political spectrum) or with safeguarding religious liberty (if you’re on the other).
Imagine a world that thinks that the answer to that structural embeddedness– that complexity– is entirely cultural. Imagine a world that thinks changing values and behaviors alone will get us different outcomes.
Oh wait.
No need to imagine that. That’s where we are.
Same thing at work.
LinkedIn Tease:
Meta-analysis was my favorite word of 2021 (narrowly beating out adulting). If you’re unfamiliar with the term, it’s when a researcher researches research.
An important piece of meta-analysis was published by HBR this month about how the most well-run large companies operate. Five themes emerged that might seem like common sense but are actually quite instructive. Leaders at large companies should:
* Establish clear lines of authority (i.e., not just who reports to whom but who has decision rights).
* Identify and document the specific decisions and actions required for all key processes (and establish machine learning and AI to automate those decisions).
* Systematically define all roles in the organization (paving the path to provide a learning architecture and mindset training) for these specialized roles.
* Hire and promote meritocratically based on the strictest definition of those roles.
* Make management (i.e., leadership) a full-time role and set clear rules for those managers.
I’m kidding of course.
Take out all the stuff in parentheses and you have a 100+ year old definition of bureaucracy by the German sociologist Max Weber (1864-1920).
Smart guy, that Max. He wrote the book version of Idiocracy.
And a whole lot of people just never got the joke.
#HappyHolidays!