Managing Personal Risk Management

Most of us believe that we make organizational decisions on the basis of organizational priorities alone. But it just ain't so — sometimes we take into account personal consequences, using organizational influence to limit negative consequences for our own careers, status, and compensation.

Often this behavior is quite ethical. It's encouraged — even embedded into compensation structures. Our stock option plans and profit-sharing plans exploit the pressure of personal consequences by aligning personal and organizational interests. At least, that's the theory.

But sometimes decision makers use their influence to achieve effects that confirm their own personal self worth in less benign ways — sometimes for personal economic gain, as in the case of stock options and profit sharing, and sometimes for other reasons. Those other motives include personal risk management.

Personal risk management is the practice of using organizational influence to protect one's career, personal status or personal compensation. This behavior can occur even when organizational consequences are clearly negative. Here are three typical illustrations.

Aggressive project schedules and budgets

Project sponsors who advocate very tight project schedules and budgets might be doing so for personal advantage, when gaining commitments to those goals might reflect well on them. The failure to meet those goals might reflect badly also, but if the sponsor intends to be long-gone by then, that risk is mitigated.

To limit this behavior, limit project goals and shorten project schedules. Short schedules enhance the likelihood that aggressive sponsors will suffer the consequences of aggressive goals.

Padded estimates

Project managers sometimes "pad" cost or schedule estimates to protect against the personal performance penalties associated with budget or schedule overruns. Much padding behavior is anticipatory — it provides protection from sponsors who are overly aggressive about budget and schedule, and against externally imposed requirements volatility. But some padding is just "insurance."

To limit Unrealistic project schedules
and pathologically tight
budgets are sometimes
little more than career
advancement tacticsthis behavior, monitor budget and schedule underruns. Investigate patterns to determine whether padding is being used for insurance.

Unrealistic promises to customers and investors

Account executives or enterprise executives who promise customers or investors aggressive performance might please the promise recipients, but the organizational cost can be unbearable. This behavior is most common at the ends of quota or fiscal periods, or near commission thresholds, or during time-limited "incentive" periods. It's all a consequence of using extrinsic rewards to enhance personal performance.

To limit this risk, avoid extrinsic rewards, or failing that, include in the calculation of personal incentives a negative effect for promises to customers or investors that are unsupported by prior organizational commitments, whether or not they're achievable or achieved.

Although most personal risk management strategies conflict with organizational goals, asking people to just stop doing it is usually futile, because they're caught in a system that demands it. To bring an end to personal risk management, we must change the systems that cause it.  Top    Next Issue

Are your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!

Your comments are welcome

About Point Lookout

Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.

Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.

Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.

Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.

Related articles

More articles on Ethics at Work:

Difficult Decisions

Some decisions are difficult because they trigger us emotionally. They involve conflicts of interest, yielding to undesirable realities, or possibly pain and suffering for the deciders or for others. How can we make these emotionally difficult decisions with greater clarity and better outcomes?

The Attributes of Political Opportunity: The Finer Points

Opportunities come along even in tough times. But in tough times like these, it's especially important to sniff out true opportunities and avoid high-risk adventures. Here are some of the finer points to assist you in your detective work.

On the Appearance of Impropriety

Avoiding the appearance of impropriety is a frequent basis of business decisions. What does this mean, what are the consequences of such avoiding, and when is it an appropriate choice?

Personnel-Sensitive Risks: II

Personnel-sensitive risks are risks that are difficult to discuss openly. Open discussion could infringe on someone's privacy, or lead to hurt feelings, or to toxic politics or toxic conflict. If we can't discuss them openly, how can we deal with them?

The Costanza Matrix

The Seinfeld character "George Costanza" is famous for having said, "It's not a lie if you believe it." What if you don't believe it and it's true? Some musings.

See also Ethics at Work and Managing Your Boss for more related articles.

Forthcoming issues of Point Lookout

Coming July 8: Multi-Expert Consensus

Some working groups consist of experts from many fields. When they must reach a decision by consensus, members have several options. Defining those options in advance can help the group reach a decision with all its relationships intact. Available here and by RSS on July 8.

And on July 15: Disjoint Concept Vocabularies

In disputes or in problem solving sessions, when we can't seem to come to agreement, we often attribute the difficulty to miscommunication, histories of disagreements, hidden agendas, or "personality clashes." Sometimes the cause is much simpler. Sometimes the concept vocabularies of the parties don't overlap. Available here and by RSS on July 15.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenfPisQwhtshXzxJVvner@ChacUYLEiQVcXCoqJzufoCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.

Get the ebook!

Past issues of Point Lookout are available in six ebooks:

• Get 2001-2 in Geese Don't Land on Twigs (PDF, )
• Get 2003-4 in Why Dogs Wag (PDF, )
• Get 2005-6 in Loopy Things We Do (PDF, )
• Get 2007-8 in Things We Believe That Maybe Aren't So True (PDF, )
• Get 2009-10 in The Questions Not Asked (PDF, )
• Get all of the first twelve years (2001-2012) in The Collected Issues of Point Lookout (PDF, )

Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500 words in your inbox in one hour. License any article from this Web site. More info

Public seminars

The Power Affect: How We Express Our Personal Power

Many people who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program.

• A recording of a program presented June 29, 2017, Monthly Webinar, sponsored by Technobility Webinar Series. PMI members can earn 1.0 Category 'A' PDU by viewing this program. View this program now.
   

Bullet Points: Mastery or Madness?

Decision-makers in modern organizations commonly demand briefings in the form of bullet points or a series of series of bullet points. But this form of presentation has limited value for complex decisions. We need something more. We actually need to think. Briefers who combine the bullet-point format with a variety of persuasion techniques can mislead decision-makers, guiding them into making poor decisions. Read more about this program.

• A recording of a program presented June 24, Monthly Webinar, sponsored by Technobility Webinar Series. PMI members can earn 1.0 Category 'A' PDU by viewing this program. View this program now.