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 (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 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
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Related articles
More articles on Ethics at Work:
Currying Favor
- The behavior of the office kiss-up drives many people bats. It's more than annoying, though —
it does real harm to the organization. What is the behavior?
Looking the Other Way
- Sometimes when we notice wrongdoing, and we aren't directly involved, we don't report it, and we don't
intervene. We look the other way. Typically, we do this to avoid the risks of making a report. But looking
the other way is also risky. What are the risks of looking the other way?
Approval Ploys
- If you approve or evaluate proposals or requests made by others, you've probably noticed patterns approval
seekers use to enhance their success rates. Here are some tactics approval seekers use.
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.
More Things I've Learned Along the Way: V
- When I gain an important insight, or when I learn a lesson, I make a note. Example: If you're interested
in changing how a social construct operates, knowing how it came to be the way it is can be much less
useful than knowing what keeps it the way it is.
See also Ethics at Work and Managing Your Boss for more related articles.
Forthcoming issues of Point Lookout
Coming March 29: Time Slot Recycling: The Risks
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And on April 5: The Fallacy of Division
- Errors of reasoning are pervasive in everyday thought in most organizations. One of the more common errors is called the Fallacy of Division, in which we assume that attributes of a class apply to all members of that class. It leads to ridiculous results. Available here and by RSS on April 5.
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