On November 17, 2016, FMI Edmonton hosted: CPAs and the Public Service. Now that CPA Alberta is almost a toddler (16+ months old at time of writing), it is time to ask the question: How Can CPA Alberta help the members who work in the public service?
Continue readingHeuristics or rules of thumb are of great benefit in formulating approximations and quick decisions. They can just as easily lead one astray through over simplification. In thinking about heuristics as they apply to organizations, I have been pondering three: the 80/20 Rule, the 90 Rule, and the 99 Rule.
The Pareto Principle is a heuristic that estimates cause and effect, it is defined as:
Also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity; states that, for many events, roughly 80% of the effects come from 20% of the causes. Named after Italian economist Vilfredo Pareto (adapted from wikipedia).
While the Pareto Principle has reasonably good statistic evidence of its validity in estimating cause and effect, it does not do so well in predicting effort. In other words, 20% of your future actions will yield 80% of the future value. Which of the four out of five things will you do that will have no or limited impact on the 80%?
This rule is based on the observation of contributions to social media sites.
In Internet culture, the 1% rule is a rule of thumb pertaining to participation in an internet community, stating that only 1% of the users of a website actively create new content, while the other 99% of the participants only lurk (adapted from Wikipedia).
It may seem strange to invoke an internet rule but compare this to an organizational structure. What is the relative proportion of shop floor workers to middle to senior managers? Typically there is about a 1:10 ratio of doers versus managers.
Consider an organization of 1,000 people; a reasonable sized government ministry or medium-sized enterprise. Within such an organization, there would be about 10 senior leaders (Assistant/Deputy Ministers, CEOs, Vice Presidents), 90 middle level managers (Directors, Managers, Assistant Managers) and 900 shop floor staff and immediate supervisors (clerks, sales people, workers, supervisors, etc.).
In other words the 90 rule is a reasonable heuristic to predict the allocation of resources and effort. 1% or the allocated resources will have a disproportionate effect on the next 9% which in turns controls or influences the final 90% of an organization.
A more lean view of the 90 rule is that 99 rule. The 90 rule is accurate in the allocation of operational resources but I believe underestimates the effect of more strategic or exceptional events. The CEO’s decision to close an unprofitable factory is not made by 10 people in the above fictional organization, but instead by 1 person. Certainly the other 9 people support and (hopefully) validate the decision but the impact is then disproportionate to the remaining 990 individuals in an organization.
The 99 rule is a better tool to estimate strategic decisions within an organization.
What are your thoughts? Are the above heuristics reasonable and valuable tool when allocating organizational resources? Is there too much variability and the rules are a meaningless average? Do you have any anecdotal experience with any of the above rules in either their cause or effect?
Early season snow storms are dangerous things. Not only for driving but also when you take a long walk and your brain slips into thought experiments. For example, when you are walking along and your brain says – hey you could potentially retire in a few years and do something outside the public service where you currently work.
In other words the snow and my brain conspired to ponder the question, ‘How do you monetize your career as a public servant?’.
First a definition, what is monetization? There are a swack of definitions but they all generally boil down to trying to convert something to ready cash. The following extract from Wikipedia’s definition provides a good example:
… attempting to make money on goods or services that were previously unprofitable or had been considered to have the potential to earn profits.
So, what exactly are we monetizing in this context? How to have a career post public service that commands a similar level of pay, respect and respect. Not to put too fine of a point on it, but public servants have a (not)/justifiable reputation of being unemployable post government.
So, after a career of say 25, 30 or more years, how do you convert that experience into a second career or even part-time income? The obvious answers that came to me include:
This is the most obvious method is that you enjoy the government backed annuity otherwise known as a public sector pension. Sure, maybe you will do some greeting at Wal-Mart or try to convert a hobby into a paying proposition – but generally you don’t monetize the experience.
There is of course a cliché here that public servants have gold-plated pensions and to certain extent it is true (to learn more about this subject, see the post-conference notes on public sector retirement by the FMI). The other side of this cliché of course is the lack of stock options, bonus and other non-monetary factors related to be a public servant. Nevertheless, a thirty-five year pension is a pretty sweet bit of monetization!
The fellow who spent his career as a spot-mountain-frog-lip-taster-technician may discover that he has a very unique skill set. Governments do things that business and organizations don’t so this is definitely a consideration for monetization – assuming there is a market for the specialization – and there is the rub. No other organization may want to pay for (thus monetize) frog-lip-tasting. However there are some less obvious examples of converting experience into post-retirement careers.
If you work in an administrative function, likely the experience can be monetized – to a point. A human resource consultant, accounting clerk or procurement specialist can find (if they want) post-retirement employment. Unfortunately, the more senior the public sector experience the less likely of making a lateral leap. As an accountant, I have managed to avoid dealing with taxes, shareholder accounting and the like because I have focused on budgets, systems and governance. As a result, most controller roles are closed to me because I lack this basic for-profit experience. The same examples can be made for other administrative functions in human resources, procurement, etc.
Retiring as a Deputy Minister or City Manager may open up future opportunities. Think of the senior politicians, for example, who have gone back into law firms or think tanks. Alas often the value you can bring to an organization are the contacts and systems knowledge of the recently departed government. This knowledge is perishable in the extreme, particularly if there is a subsequent change in government or significant re-organization.
Mandatory cooling off periods may further diminish the relative value of recent experience if one needs to wait six to twenty-four months before cashing in. Nevertheless, if you got to be a senior civil servant, you probably have skills of value beyond a government context.
One method of ensuring the ability to work in the real world post public service is to not really ever leave it. A toe in may range from owning real estate property, working part-time (e.g. doing taxes if you are an accountant) or teaching courses. In this way you have non-government experience to point to. A further upside is having additional income of doing some or all of these things. A downside is working more than one job during your career.
If you are willing to stretch the definition of monetization, there is more to life than a second (third, fourth or fifth) career. You can also use your experience in a volunteer capacity helping our or other societies. For example Canadian Executive Services Overseas takes retired executives and places them globally and here at home (e.g helping first nation communities). Churches, non-profit boards and community leagues are other potential beneficiaries of a life time in the service of the public.
Not all of these will pay the bills if one’s pension is not fully maximized. However if money is not a primary driver (hey, you did take a government job after all), then you may be paid in post-retirement experiences!
Thank you snow storm for helping me clear my thoughts whilst walking… now back to work because I am not quite at the point of being able to start monetizing….
David Trahair writes on financial matters and provides a very welcome Canadian point of view on retirement and investment considerations. In his 2012 book: Cash Cows, Pigs and Jackpots; The Simplest Personal Finance Strategy Ever he provides both financial advice and some self-help to boot!
An idea that I have been kicking around for a few years is why organizations don’t maintain a list of audit questions they have been asked in an Auditor Question Log? Such a log contains the questions, responses and the organization’s supporting policies or documentation.
Continue readingThere are two inherent tensions when it comes to budgeting: compliance versus cooperation and people versus technology.
I have been able to call upon friends and colleagues twice to help me craft articles. In both cases IAEA Property, Plant and Equipment Framework and LATE the group provided me with excellent advice.
A huge note of thanks (and a libation or coffee on me next time I see you) to the following individuals who provided ‘friendly-peer-review’. As in the last go round, the result was a much better article. The article itself can be accessed through my “Antifragile Strategic Planning: director’s cut” or directly from the FMI website: January 2016.
Of course no good deed ever goes unpunished and to that end, the following are the folks who have helped me with the friendly-peer-review. Hopefully I can return the favor in the future. Also, if you are on the list and are logging this as professional development, feel free to refer to this post and notice below.
|
Person |
Organization |
| Anne-Marie A. | Alberta Bone and Joint Health Institute |
| Pam Q. | Athabasca University |
| Stacey D. | Government of Alberta |
| Shakeeb S. | Government of Alberta |
| Peter N. | Retired |
To whom it may concern, the above individuals were asked to perform a friendly-peer review of an article intended to be published in the Financial Management Institute of Canada journal, FMI*IGF Journal. The estimated time to perform this review was between 2 to 3 hours completed in early December, 2015. All of the above individuals demonstrated a firm grasp of the subject matter and helped to create-net-new original thought and critique through this peer-review which will be reflected in the final article.
The above activity meets the definition of Charter Professional Accountant – Alberta’s verifiable continuous professional development. Evidence for this include this web page attesting to the involvement as well as the emails and responses provided to myself. I welcome contact if further confirmation is required.
In Malcom Gladwell’s book, ‘David and Goliath’, he refers to the ‘principle of legitimacy’. These principles are the basis (or lack thereof) for why one group will allow themselves to be subject to another.
The principles stress that it is the behaviour of the leaders that determines whether or not the followers will follow. At least, the principles indicate whether the followers see the leaders as being legitimate [1].
Walter Gadsden, 17, was attacked by police dogs on May 3, 1963, during civil rights demonstrations in Birmingham, Ala. (Bill Hudson/Associated Press) , courtesy of http://www.boston.com [3]
The writing brilliance of Gladwell is that he introduces this concept first in a kindergarten and then applies it to broader contexts such as Northern Ireland or the segregation laws of American South pre-1960. In these examples, Gladwell extends the theme of his book in which an advantage may in fact be a disadvantage.
For example, the British Army in Northern Ireland had the men and material to temporarily impose control over the local population but not to sustain it because they failed to establish legitimacy amongst both the protestant and catholic populations.
Strong armed tactics doomed the British Army to decades of occupation and directly or indirectly resulted in the death of hundreds if not thousands of combatants and civilians. The principles of legitimacy are not without their consequences.
Gladwell does not have the space in his book to discuss is how much or how little of each are needed based on varying circumstances. There are circumstances where one of the three is reduced to nearly zero (try asking for a voice in the arrangement during the first week of army boot camp).
Alternatively, is there such a thing as too much of these principles? Do they break down when taken to the extreme? Have you ever been ‘surveyed’ to death by an employer asking about your degree of motivation or engagement with the company?
How about rules being applied too consistently such that the application actually erodes the legitimacy. A ten-year old child who is expelled from school because they made an imaginary gun out of their fingers is an example of a zero tolerance policy gone horribly wrong [2].
The take away from Gladwell’s book is that these three principles of legitimacy are just that – principles. They are not hard and fast rules and leadership is in their application rather than their memorization.
Here are some of my thoughts on considerations before over-applying one of the three principles of legitimacy:
For business leaders, is there anything new here? Yes and No. Societies with the greatest longevity have adhered to these principles. These principles are also the hallmark of good leadership and good governance.
If you want to build an enduring organization that will outlast you remember that those being led:
Leadership is still hard but authors such as Malcom Gladwell can help us to challenge our assumptions and become better, more legitimate, leaders.
Strategic planning can be more effective by focusing on three principles: first, prioritize the planning process over the final document; second, timely execution is crucial, as plans quickly become outdated; third, concise plans of four pages promote clarity and strategic thinking. These methods aim to enhance organizational responsiveness and focus.
Continue readingSome thoughts on how the FMI eJournal could be position in Canada as a premium vehicle for both public sector and accounting thought leadership.
Continue reading
Organizational Biology 