Business leaders, like sports stars, deal with assessing risk all the time. In business it may be about assessing the risk of investments in new products while in sports it may be about playing the game for safety or going for broke.

According to new research from the Wharton School of Business, the thought processes in each case of risk assessment are similar. In their study of attitudes to risk, the researchers looked at the performance of golf superstars who stand to win millions on inch-long putts and found that they are subject to the same fear and aversion to risk that can afflict managers. Taking the safe route, however, has its own costs.

The research examined putts during pro golf tournaments and determined that even the best golfers systematically miss the opportunity to score a “birdie” out of fear of having a “bogey”. For many, the agony of a bogey seems to outweigh the thrill of a birdie. The researchers calculate that this type of decision-making bias costs top golfers about $1.2 million in prize money a year. Apparently the golfers avoid the possibility of loss by playing conservatively when they have the opportunity to do better than par, but will try harder if they are at risk of coming in worse than par.

The study explores “loss aversion”, a bias in decision-making that is an important element in the growing field of behavioral economics, which explores how human psychology affects markets and business. This research provides evidence that people work especially hard in order to avoid losses.

Many people assume that experts and professionals don’t show risk biases and that managers have less risk biases than their employees. But is this true and can you measure risk bias?

The answer—yes—by using the “Opportunities-Obstacles Quotient” assessment—also called the QO2. Your answer to the QO2 online assessment measures your approach to risk. Your scores are mapped onto the Opportunities-Obstacles scale, indicating the balance you have between seeing opportunities and seeing obstacles. If you always focus on opportunities, it may prevent you from seeing potential obstacles; if you focus too much on seeing obstacles, it may cause you to miss opportunities.

The QO2 assessment is a great tool to use to help people develop self awareness regarding their attitudes to risk and can be used as a great tool for leadership and team development.

To take a look at a sample QO2 sample report click on the following link: http://www.tms-americas.com/pdfs/QO2_Profile.pdf

Several hundred large organizations around the world have applied an approach to organizing themselves called “Requisite Organization Theory”. This includes over 20 of Business Week’s “Most Admired U.S. Companies”. And yet you have probably never heard of it? This is not surprising as Requisite Organization Theory is not generally taught in US business schools and it is somewhat counter cultural in the current “flat is good” organizational design culture.

Requisite Organization Theory was developed over forty years ago by Eliott Jaques, and it has been refined and improved ever since. Jaques discovered through his extensive research that people organize themselves naturally into hierarchical layers to get work done. The key to this layering was problem-solving capability. Each higher layer must be able to solve the work problems the layer below cannot solve. Each higher layer also must be able to design work and goals that the next lower stratum can accomplish.

Jaques found he could measure this capability by the time-spans of the assigned tasks. He identified eight levels (he called them strata) with the following problem solving time horizons:

• Level 8 – 50 to 100 years
• Level 7 – 20 to 50 years
• Level 6 -10 years to 20 years
• Level 5 – years to 10 years
• Level 4 – 2 years to 5 years
• Level 3 – I year to 2 years
• Level 2 – 3 months to 12 months
• Level 1 – 1 day to 3 months

The role of CEO of a Fortune 100 company, for example, would be at Level 7 and only a handful of the largest organizations in the world would require Level 8. In his interviews with employees Jaques found they sought out a problem solver at the next higher level of complexity when they were stumped at work. It was the employees who defined the next higher stratum of problem solving. These levels were boundaries between the time-horizons of the employees and their “real” managers. Jaques did not set these boundaries—he discovered them from the way people behaved when they needed help.

Using Jaques approach to organizational design he claimed that we can design and build an organization structure using layers in which:

• People are clear about the capabilities they need to do the job at the assigned level and they know the decision making discretion they have in their jobs. This reduces interpersonal strife and conflict. For example, employees report to a “real manager” at the next level who can solve their problems and not a supervisor with limited power and knowledge.
• Work and goals are clear at each level thus increasing effectiveness, and
• Work problems are solved quickly thus increasing efficiency.

Requisite Organization Theory also covers issues such as compensation, promotions and succession planning through the levels. This approach to organizational design has been adopted much more widely in Europe, Australia, and Canada than in the USA. So perhaps the concept of organizational hierarchies is not dead but waiting in the wings for the popularity pendulum to swing away from flat organizations (the pendulum always swings back). Who knows, maybe in the future we will see a more widespread adoption of Jaques empirically based approach to organizational design here in the US.

Many managers will tell you that their decisions are based on incomplete or erroneous data. This usually leads to suboptimal results. Poor management decisions are often linked to the following six issues:

1. Using obsolete knowledge (relying on previous experience)
2. Decisions based on own strengths rather than accurate analysis
3. Hype and marketing
4. Dogma and belief
5. Blind Ideology
6. Uncritical emulation and casual benchmarking

A new concept has emerged as a reaction to poor decision-making called Evidence-Based Management (EBM). This management approach emphasizes the importance of the conscientious, explicit, and judicious use of current best evidence in decision-making.

EBM encourages managers to:

1. Demand evidence and to make sure specific quantitative information is available and used
2. Examine logic—ask for backup research and pay attention to gaps in exposition, logic and inference
3. Test the evidence by using prototypes, running trial programs, pilot studies, and small experiments
4. Have a healthy respect for what is not known and can’t be known

Let’s take hiring decisions as an example. Many managers count themselves as pretty good at selecting the best candidates; however, it is sobering to learn that regular interviews have a predictive accuracy of as low as 5%! So how can you increase your success rate with an evidence based approach? Here are some of the options.

Research shows that:

• References from past employers (if you can get them) can push up the predictive accuracy to about 23%
• Personality tests can push it up further to 39%, and
• Assessments using work simulations can drive up the predictive accuracy to as high as 65%

Of course, you will never remove all risk of making a bad hire—but 65% accuracy is a lot better than 5%. Encourage your managers to use a more evidence based approach when making decisions in everything from hiring to routine, day-to-day activities and you will avoid some of the poor management decisions that often plague organizations.

Managers and HR professionals concerned with developing leaders are inundated with leadership development theories, models, concepts and courses – Situational Leadership, Servant Leadership, and the Leadership Lessons of everyone from Attila the Hun to Jack Welch, to name but a few.

One of the better leadership models to emerge in the last few years is “Integral Leadership” based on the work of Ken Wilber.

Integral leadership emphasizes working with both the objective, exterior, subjective, and interior aspects of individuals and organizations. Most leadership development programs focus primarily on the objective, exterior factors involved in the situation, for example: behaviors, skills, strategies, structures, and processes. An integral approach combines a focus on the external, observable factors with an equal focus on interior factors such as thinking, feeling, and values – at both the individual and organizational levels.

Integral Leadership considers four dimensions: Interior, Exterior, Individual, and Organizational. These four dimensions give us one of the best known tools known to management training – a four quadrant model. Here is how it plays out with the Integral Leadership:

It seems pretty obvious to say it, but effective leadership development must take account of all four quadrants. Most traditional leadership models, however, tend to focus either internally (e.g. emotional intelligence) or externally (e.g. situational leadership) and fail to integrate the two perspectives.

By not taking an integral approach to leadership development you risk misalignment between the four quadrants. If the internal and external landscapes are not aligned at the individual level, for example, you risk developing leaders who have learned some of the skills and behaviors of leadership but may not have the maturity and self awareness that leaders need to be effective in the long term. Similarly, if you have leaders who are not aligned with the organizational culture, systems, or strategies, how effective can they be?

At Aspen OD we use the Integral Leadership model as one of our key analytical and design tools when helping organizations to develop their leadership programs. We have found that a well designed leadership development curriculum must take account of all four quadrants to be successful.

Don’t make the mistake of thinking that producing an effective e-learning module is a matter of juicing up a snappy PowerPoint presentation – you and your learners are likely to be disappointed with the results!

This article is designed to help e-learning designers and developers create, develop, and deploy effective on-line learning content and outlines some best practices to help get you the results you are looking for.

1. Make It Engaging

   It is critical that learning content (whether e-learning, classroom, or blended) be designed to engage the learners and facilitate their interaction with the material. If the learners’ interest is not maintained, they will tune out—wasting precious time off the job and leading to poor memory retention. The learner needs to be involved through hands-on, participatory and experiential activities such as simulations and case studies. Engaging the learner also means that the e-learning should be fun or entertaining so that learners want to pay attention.

2. Use Relevant Examples

   Adult learners are more motivated by practical, readily-applicable content than abstract theory and concepts. For content to be most valuable, it needs to relate to the learners’ world, including their industry, company and, most importantly, their job. Content should be relevant to the circumstances and aspirations of the students themselves. A way to make e-Learning more job-relevant is to design manager involvement and coaching into or after the course to provide on-the-job reinforcement. This improves e-learning effectiveness and retention.

3. Involve Experts

   Content is more credible and accurate if it involves thought leaders or subject matter experts (SMEs) in the design of the e-learning content. SMEs have deep knowledge, skills or experience related to a topic. SME’s involvement can include writing content themselves or sharing their information with designers. Such experts are expected to not only know the subject but be able to implement it and relate their experience or “first-or second-hand anecdotes” to show how the skills and knowledge being covered can be effectively utilized to achieve desired outcomes.

4. Use Reliable Information

   Use well-researched materials with reliable conclusions. Research based content is captivating, meaningful and accurate. To create it, eLearning developers should prioritize their efforts to ensure that learners can interact with research based materials and are able to relate it to their work.

5. Use blended methods if possible to accommodate different learning styles

   E-learning can be combined with classroom based or on-the-job training to reinforce the learning. Each of us has a preferred learning style–the style in which we can learn most efficiently. That style is often defined using these three dimensions:

   • Active or Reflective? Active learners attain understanding by doing or applying information. Reflective learners like to think things through before doing.
   • Sensing or Intuitive? Sensing learners like facts, are rule-oriented, and feel comfortable with repetition and routine. Intuitive learners are more interested in the relationships between facts, resent repetition, and like to innovate.
   • Visual or Verbal? Visual learners are more likely to retain what they see. Verbal learners remember words–spoken or written.

   Most adult learners fall somewhere in the middle on all three dimensions. The challenge is to create learning experiences that will work for a wide range of adult learners. A way to do this is to incorporate a variety of instructional strategies into the course design. For example, you may wish to present “how-to” information in written form for the verbal learners, as well as streaming video demonstrations for the visual learners.

6. Use creativity or innovation in design

   When evaluating the effectiveness of creativity and innovation in design of e-learning, a yes answer to all of the following questions is evidence of a high quality well designed instructional design e-learning program:

   • Does the program immediately capture attention when it is run?
   • Does the training program explain its relevance to learners? Does it answer the student’s question, “What’s in it for me?”
   • Are learning objectives presented near the beginning of each lesson?
   • Are learning objectives specific and observable?
   • Is the presentation of content made interesting with a variety of media or through an engaging treatment?
   • Does the program provide a variety of interactive exercises beyond simple multiple-choice questions?
   • Are learners given the opportunity for frequent practice?
   • Does the program include a post-test or other assessments?

7. Create easy-to-use support materials

   Consider the support materials that should be provided for reference and as a reminder to the learners once they have completed the on-line module. This may be provided as downloadable material from the on-line learning module itself or a reference to a web site to access downloadable material may be provided.