In Part 1 of “Are People Really Your Greatest Asset?” we took a look at building “people portfolios,” using the financial investing principles of Allocate, Diversify & Rebalance (ADR). We began with allocating behavioral characteristics to achieve a whole greater than the sum of its parts in workgroups. Now, we’ll dig even deeper, looking at how to Diversify & Rebalance to be sure you’re not investing too much in any one person or personality type.
The well-known axiom “Don’t put all your eggs in one basket” warns against investing completely in any one thing. If you drop your one basket of eggs, they’ll likely all break. But if you have eggs in several baskets and you drop one, you still have some undamaged eggs. If the eggs are your people, breaking one might be losing a person and breaking a basket might be people with a certain set of characteristics not fitting what’s needed for a particular situation. Diversity isn’t just race, gender, and age. Personality models have shown us many pros and cons of various approaches, temperaments, and behaviors, and you’re more likely to weather changes in the marketplace, technology, or some other arena by constructing a people portfolio that combines a variety of strengths as opposed to relying on the same strengths for everything.
Not so long ago, one of our teams ran into some challenges. All of the business and design people were co-located and had experience working together. Collaboration was high and impactful, visual and verbal communication was swift and spontaneous decision making and management by walking around were effective. However, the development work this team depended was moved to teams halfway around the world. In fact, there were two different development teams in two different locations, with two different cultures. Suddenly, the team needed to shift its approach to communication, diplomacy, and management from local and co-located to remote and distributed. Some team members were able to adapt better than others and the project’s successes and failures showed it. Those who were dependent upon verbal communication, who wanted to maintain their existing ways of managing projects, tasks, and time, and/or who couldn’t find different ways of working were more frustrated and less effective than those who had experience working in different ways or were able to adapt.
Financial investment guidelines recommend that no more than 5% or 10% of your total portfolio should be in any one holding. So, even if you can satisfy a great many of your risk-mitigating asset allocation requirements through one company, it’s too risky to rely on any one company too much. If we apply the same kind of thinking to your people portfolios, be sure you’re not over-relying on one person or even one strength in too many people. The size of your overall workgroup and individual teams will greatly inform how diversified you can be. For example, a three-person team will have more than 10% of its total portfolio invested in each team member. If you look at your full workgroup and it has 10 or more people, you can more easily hit the 10% guideline.
Think about what kinds of characteristics and behaviors are important to implementing your model (to support your strategies toward your goals) and look ahead to the foreseeable future. If everyone on a team is an extroverted taskmaster who “shoots from the hip” when making decisions (or if everyone is an introverted idea shaper who carefully deliberates every decision), your team chemistry probably needs some attention. If no one on your team exhibits taskmaster or deliberation tendencies, your team needs attention as well.
If you want to run fast, run alone. If you want to run far, run together. —African Proverb
If you want to run well, diversify!
And maybe just walk when carrying baskets of eggs.
Many investors, whether investing monetarily or in people, forget about assessing and adjusting after a model is in place. A one-and-done or set-it-and-forget-it mindset forms. Regular rebalancing is key to the success of any asset allocation and diversification model.
During rehearsal, and even during performance, the conductor of an orchestra is responsible for — among many other musical aspects — the balance of sound across the orchestra. If the trumpets are too loud for the audience to hear the clarinets, the conductor is in the best position to make adjustments. As you’re the conductor of your “orchestra,” it’s up to you to ensure the “trumpets” aren’t too loud for the “clarinets” or perhaps that the “flutes” aren’t too quiet for the “violins.”
You might need to talk to that extroverted taskmaster, who steam-rolls others when making decisions, about leaving room for others to contribute and taking some time to allow for healthy debate. You might also want to talk to other team members about speaking up or being sure not to deliberate too much over every decision. Or perhaps you need a logical thinker to identify when the disrupters have taken over, and vice-versa. And, as happens during music, what is effective changes during a performance and from one performance to another, based on audience, environment, and other factors. Bottom line, build a diverse team and you’ll build greater strength for a greater variety of situations.
You might have some team composition changes to consider as well. In finance, overall market changes can cause your portfolio to drift from its model. Or the specific investments you choose might not perform as expected or as other, similar investments do…so, too, with people. More often than not, I’ve found that with considerate timing and approach, rotating team members can improve the chemistry on each participating team, as well as the experience of the team members who make the change. If that can’t be done or doesn’t work out, looking outside of your workgroup to another department might provide a rebalancing opportunity as well.
Excessive conflict and natural attrition create rebalancing opportunities
While making changes within a team or a workgroup doesn’t necessarily mean losing an employee from your department or organization, it might. If it does, or if there are other opportunities for a new hire, be sure to reconsider and rebalance within your model. Every change and every hire is an opportunity for even better balance. Identify gaps and needs as you go, so you’ll be ready when the time comes. In my experience, changing up team chemistry resolves multiple issues for multiple issues most of the time. It’s the rare and unfortunate case that turns out to be just moving a problem around.
Even without external forces conspiring to change your model, assess your people portfolio on a regular basis. In the same way a life change such as an inheritance can trigger a need to re-evaluate finances, there are several factors that might impact your people portfolio: markets can change, innovation can disrupt, and political forces can change the rules that govern your work. Your model may need adjustment or even a rework. Be sure to assess this a few times each year and, of course, anytime you lead or manage a new group.
Assuming you’re interested in a sustainable model, what you learn from a portfolio assessment won’t necessarily turn into immediate action every time. Doing so could have associated overhead costs tantamount to churning your own portfolio, driving up costs, and to no one’s benefit. Having an up-to-date assessment of your people portfolio means you’re always prepared to take action when needed or when an opportunity presents itself.
Applying ADR to your workforce portfolio is a concept for you to explore rather than a precise recipe to follow. Forming a model based on your goals and literally implementing that model won’t guarantee a positive outcome or even the same outcome each time. A lot of your model depends on your situation (e.g., the size, age, and maturity of your organization). And there are likely a healthy number of people in your organization who are looking only at hard facts around pay rates, output that can be measured, and so on. You may need to leverage some successful examples from your own organization to put your model into practice, which is good form anyway. Also, be sure to follow applicable hiring and interview laws, which vary greatly among national and more local governments.
There’s one other benefit I’ve observed when applying ADR to workgroups and that is the “miracle” of compound interest. In finance, this is where interest is earned on the initial investment as well as on accumulated interest. Doubling your money every 9 years at an 8% interest rate is an example of this miracle. With people portfolios, compound interest also pays well, where those you’ve hired inspire, guide, and teach others…as you have and continue to do. 🙂
The “miracle” of compound interest can apply to people portfolios as well
How about it?
So, yes, people really can be your greatest asset. In addition to simply saying so, you can put your money where your mouth is by developing an asset allocation model for your people portfolios. The people working in your organization will notice positive changes and, without even knowing it, your customers will benefit as well. What’s more, you may see operational improvements even greater than ours, where we realized a revenue-to-labor ratio better than 5:1 and year-over-year labor cost reductions of 4% — for 8 consecutive years — when combining ADR with other people-first practices. Whether you’re a leader, manager, or contributor, think about how ADR could impact your workplace. You can also apply ADR to time and effort management, workspace planning, and just about anywhere else you see competing resources.