Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 8, Issue 4;   January 23, 2008:

Managing Personal Risk Management

by

When we bias organizational decisions to manage our personal risks, we're sometimes acting ethically — and sometimes not. What can we do to limit 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.

Lt. Col. John Paul Vann

Lt. Col. John Paul Vann (second from right) briefs his colleagues in Vietnam. Col. Vann was an advocate of a strategy similar to what we now attribute to U.S. Gen. Petraeus in Iraq — enhanced dependence on small units, dispersed amongst the population, coupled with increasing reliance on forces drawn from that population. Col. Vann, who spent most of his years in Vietnam as a civilian, was known for his forthright assessments of the reality of the U.S. position, which he offered with relatively little regard for "personal risk management." As described by Neil Sheehan in his Pulitzer Prize winning history, A Bright Shining Lie: John Paul Vann and America in Vietnam (Order from Amazon.com), Col. Vann was asked at a 1967 meeting with Walt Rostow whether the United States would be over the worst of the war in six months. "Oh, hell no, Mr. Rostow," he said. "I'm a born optimist. I think we can hold out longer than that." Col. Vann was awarded the Presidential Medal of Freedom in 1972. Photo courtesy U.S. Library of Congress.

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 tactics
this 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. Go to top Top  Next issue: The True Costs of Cost-Cutting  Next Issue

52 Tips for Leaders of Project-Oriented OrganizationsAre 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

Would you like to see your comments posted here? rbrenXEiRBfuFHUtjHrqUner@ChacpYPvvSVhUNIOeXHKoCanyon.comSend me your comments by email, or by Web form.

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:

Mark Twain in 1907When You're Scared to Tell the Truth
In the project context, we need to know that whatever we're hearing from colleagues is the truth as they see it. Yet, sometimes we shade the truth, or omit important details. Here's a list of some of the advantages of telling the truth.
A wooden chestYour Wisdom Box
When we make a difficult decision, we sometimes know we've made the wrong choice, even before the consequences become obvious. At other times, we can be absolutely certain that we've done right, even in the face of inadequate information. When we have these feelings, we're in touch with our inner wisdom. It's a powerful resource.
A harrow in actionWhen Others Curry Favor
When peers curry favor with the boss, many of us feel contempt, an urge for revenge, anger, or worse. Trying to stop those who curry favor probably isn't an effective strategy. What is?
A Julius Caesar coinOn Organizational Coups d'Etat
If your boss is truly incompetent, or maybe even evil, organizing a coup d'etat might have crossed your mind. In most cases, it's wise to let it cross on through, all the way. Think of alternative ways out.
A happy dogMore Things I've Learned Along the Way: IV
When I gain an important insight, or when I learn a lesson, I write it down. Here's Part IV from my personal collection. Example: When it comes to disputes and confusion, one person is enough.

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

Forthcoming issues of Point Lookout

A beach at sunsetComing August 4: What Are the Chances: I
When estimating the probabilities of success of different strategies, we must often estimate the probability of multiple events occurring. People make a common mistake when forming such estimates. They assume that events are independent when they are not. Available here and by RSS on August 4.
Main Reading Room of the U.S. Library of CongressAnd on August 11: Many "Stupid" Questions Aren't
Occasionally someone asks a question that causes us to think, "Now that's a stupid question." Rarely is that assessment correct. Knowing what alternative assessments are possible can help us respond more effectively in the moment. Available here and by RSS on August 11.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenXEiRBfuFHUtjHrqUner@ChacpYPvvSVhUNIOeXHKoCanyon.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:

Reprinting this article

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 500-1000 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 The Power Affect: How We Express Personal Powerpeople 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.

Bullet Points: Mastery or Madness?

DecisBullet Point Madnession 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.

Follow Rick

Send email or subscribe to one of my newsletters Follow me at LinkedIn Follow me at Twitter, or share a tweet Subscribe to RSS feeds Subscribe to RSS feeds
The message of Point Lookout is unique. Help get the message out. Please donate to help keep Point Lookout available for free to everyone.
Technical Debt for Policymakers BlogMy blog, Technical Debt for Policymakers, offers resources, insights, and conversations of interest to policymakers who are concerned with managing technical debt within their organizations. Get the millstone of technical debt off the neck of your organization!
Go For It: Sometimes It's Easier If You RunBad boss, long commute, troubling ethical questions, hateful colleague? Learn what we can do when we love the work but not the job.
303 Tips for Virtual and Global TeamsLearn how to make your virtual global team sing.
101 Tips for Managing ChangeAre you managing a change effort that faces rampant cynicism, passive non-cooperation, or maybe even outright revolt?
101 Tips for Effective MeetingsLearn how to make meetings more productive — and more rare.
Exchange your "personal trade secrets" — the tips, tricks and techniques that make you an ace — with other aces, anonymously. Visit the Library of Personal Trade Secrets.
If your teams don't yet consistently achieve state-of-the-art teamwork, check out this catalog. Help is just a few clicks/taps away!
Ebooks, booklets and tip books on project management, conflict, writing email, effective meetings and more.