MBTI and Barnum Effect

MBTI is one of the most popular psychometric test used by HR professionals for recruitment, talent management etc. While HR professionals swear by MBTI, view of psychologists is different, most of them question reliability and validity of this test. But issue of reliability and validity has never bothered HR professionals, because most don’t even understand what it means.

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Many psychologists feel that description of 16 “types” is not unique. Description of 3-4 types can be applicable to you. The language of description reminds one of “Barnum Effect”.

The Barnum effect in psychology refers to the gullibility of people when reading descriptions of themselves. By personality, I mean the ways in which people are different and unique. However, it is possible to give everyone the same description and people nevertheless rate the description as very, very accurate.

Some examples…

• You have a great need for other people to like and admire you.
• You have a great deal of unused capacity, which you have not turned to your advantage.
• Disciplined and self-controlled outside, you tend to be worrisome and insecure inside.
• You prefer a certain amount of change and variety and become dissatisfied when hemmed in by restrictions and limitations.
• You pride yourself as an independent thinker and do not accept others statements without satisfactory proof.
• You have a tendency to be critical of yourself.
• At times you have serious doubts as to whether you have made the right decision or done the right thing.
• At times you are extroverted, sociable, while at other times you are introverted, wary, reserved.

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If you give these statements as description to a group of employees, all will agree that it accurately describes them, while MBTI will show that they belong to different types. So next time your HR manager administers MBTI and interprets results, take it with pinch of salt.

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The Talmud, Game theory and HR

Long, long ago a man owed three people 100,200 and 300 (let us call them Mr.100, Mr.200 and Mr.300), he died without paying his lenders; the lenders found that estate owned by man was insufficient to recover the amount. How do to divide the amount obtained after selling estate?

You too may have faced similar problems, ex. you promised to pay back money you owed to your friends based on performance bonus (assuming you work for company were performance link pay system is so transparent that you can actually calculate bonus in advance), and then your HR head tells you that you will get lesser amount as bonus, lesser than what you promised you friends. How do you handle the situation? For that matter any other situation where you have to pay more than what you have.

Coming back to our problem, Jewish religious text The Talmud offered solution to this problem.

Solution was…
1. If estate was worth 100, then it is given in equal proportion i.e. each gets 33.3.
2. If estate was worth 300, then it is given in proportion of 50,100 and 150
3. If estate was worth 200, then it is given in proportion of 50, 75 and 75.

While case 1 and 2 can be explained logically either equal distribution (each gets 1/3) or in proportion (each gets half of what needs to be recovered), but 3rd case was not making any sense.
Why should Mr. 100 get half of amount i.e. 50 while those Mr.200 and Mr.300 get 75 each? This remained mystery for long time, till noble prize winning mathematician Dr. Robert Aumann solved it using game theory-treating it as a cooperative/coalition game.

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Solution lay in concept of “equal division of contested sum”, which was accepted principle during that era.

Solution was arrived in following fashion.

1. Determine what amount is contested by 3 lenders, lender with least amount gets half the amount contested, other two also get equal amount. So in our case, estate is worth 200, so Mr.100 will get half of what he should get i.e. 50, Mr. 200 and Mr.300 also get 50 each.

2. With this Mr.100 is now out of picture, so remaining 50 is equally divided between Mr.200 and Mr.300, so they get 25 each, so total amount is 75 each. Hence division of 50, 75, 75.

Had it been 2 person game ex. between Mr. 100 and Mr.300, then Mr. 100 would have got 50 ( half of disputed amount) and Mr.300 would also get 50 ( equal division of contested sum) and entire undisputed amount i.e. 200, so he get 50 + 200= 250. Some may find this solution strange, but that was as per social custom, and social customs are made to ensure cooperation.

Now you know how to repay your friends with whatever money you have.

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HR department always has to match declining resources (esp. during recession) with rising aspirations of employees; maybe this game can offer solutions.

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Gut Feeling and HR

Mohan Routray, HR head of mid size IT firm, was irritated. Excel sheets frustrated him. He had to send analysis of various HR parameters to CFO. Every time he used to click send button, he used to have feeling that something must have gone wrong in analysis.

His assistant Gyani Mhais was not any better when it came to excel sheets. He always committed some errors, and it was Mohan’s job to recheck all formulas before sending sheet to CFO. HR analytics was new to both and they just hated it.

Mohan got call from CEO, who wanted to discuss latest findings of Employee Satisfaction Survey. Darius Mistry had impressive personality, 6 feet 3 inches tall, with baritone voice. Mohan started explaining the ratings on various parameters. Darius stopped him and asked him to forget the numbers and tell him what his gut feeling was. Mohan was fumbling for answers.

Darius looked at him with his steely eyes and said “Let me explain. Numerical analysis is not everything. At times you miss forest for trees.”

“Years ago I used to work with Venugopal Dhoot, owner of Videocon, he once asked a marketing agency to do survey on size of market for washing machines in India. The agency conducted survey and did detailed analysis, based on which they said that market was insignificant. Venugopal looked at report and asked the survey team to meet him at international airport at 11.45 P.M. No explanation was given.”

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“The team reach airport at given time, flight from gulf had recently landed, the passengers were coming out of airport with imported consumer goods (those were pre-liberalization days) esp. washing machines. Venugopal then asked them to keep visiting airport at that time for next 15 days. They noted that numbers of Indians bringing washing machines to India from gulf was significant , thus there was sufficient market for washing machines. Gut feeling makes difference.”

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“Mohan,numbers are not everything nor do employee surveys tell whole story, in case of humans, gut feeling, informal communications etc. are equally important. In fact your HR initiatives will come from informal channels of communication rather than ESS”.

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Tyranny of served market and Human Resource Department

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Madan Routray was tense. He was continuously calling his team member Gyani Mhais to see if presentation was ready. He had to show it to CEO and take his approval before presenting it to board of directors in remuneration committee meeting ( Remcom meeting). It was one of the rare occasions when Madan has chance to present HR initiatives to Board. HR head was almost never called in meetings of board of directors.Gyani Mhais had some ideas of how HR can improve, so had worked hard on this presentation.

Next day, in meeting, HR presentation was last on agenda. By the time HR’s turn came the members were already tired. Some excused themselves as they “had to take” some important call while Chairman was busy checking mails on ipad. Hardly anyone was interested in presentation. Finally Chairman said that it was nice presentation, but due to lack of funds, any new project will be taken only in next financial year, meanwhile HR should concentrate on improving existing processes and engagement level of employees.

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In many organisations HR suffers from what is called as the “tyranny of served market”. The stake holders i.e. the leadership team wants HR to continue doing what they are already doing; it discourages any radical changes/innovations. Many have fear that radical change might threaten their position or privileges that they have been enjoying ex. cost efficiency measures, outsourcing of processes, stringent performance management process etc. can make many managers redundant.

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Along with tyranny of served market, there is also tyranny of dead ideas. Some outdated HR practices are continued to protect status quo.

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Secondly, leadership team is victim of group think when it comes to defining role of HR. Since all have same views, there are no deviant views. Hence innovations in HR are unlikely to come from such leadership teams.

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All this makes it difficult for HR to introduce innovative HR practices. Maintaining existing practices can only bring about incremental changes, for radical change to occur, HR should break free from tyranny of served markets/dead ideas.

Law of 3, innovation and decline of job search firms

“Slower hiring, falling commissions, force over 7,000 job search firms to shut shop”
-Hindustan Times, November 26, 2013.

Above news in Hindustan Times should not surprise anyone who has in some way been associated with job search firms (yours truly worked with two such firms in early 90s).

Early 90s was golden era for placement agencies. Indian economy had opened up and India business houses started diversifying into every possible sector (concept of core competence was yet to make sense), this resulted it lot of business of agencies. Euphoria lasted till recession in 1998.

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Next wave was IT and Dotcom boom. Lot of placement agencies mushroomed during this phase. Some were façade for illegal activities of HR managers, where placement agency was front to recruit candidates for their own company and to collect commission.

Job search became lucrative business due to high commission (8.33% to 30% of annual cost to company), in addition to this some even charged retention fee. There was no problem of getting manpower to work for such agencies. Indian universities ensured unlimited supply of MBA graduates/Industrial Psychologists, who were available at a cheap rate. High commission and low manpower cost ensured good margins.

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But good times don’t last for ever. Innovative ideas and Jagdish Sheth’s global law of 3 changed everything.

Online job portals and social media (LinkedIn, Facebook etc.) provided cheaper and more reliable options to placement agencies, plus organisations started putting pressure on their in-house staff to hire on their own.

Globalisation resulted in global executive search firms getting into Indian market (BRIC is future!) and started eating into business of local agencies, besides they were better equipped to hire staff from global pool. Some agencies got into more reliable model of supplying temp manpower (which ensured recurring revenue as against one time placement fee).

It is predicted that in next 5 years- 5 billion people will be connected, so new models, which we can’t foresee now, will emerge.

Generalist recruitment firms without tie-up with global agencies or having additional source of revenue through supply of temp manpower are not likely to survive. As per Jagdish Sheth’s law of 3, there are always three major competitors in any free market within any one industry. Others will survive only if they get into niche segment.

Even if economy improves it is unlikely that any of these 7000 will reopen in fact more and more agencies will face closure if they continue to remain generalist recruitment firms.