Selecting the Best Hedge Fund Managers Using CPRI

Bullseye.jpg

For over a decade, I have been recruiting senior managers for some of the world’s most successful hedge funds. Hedge funds are notoriously secretive and selective. Even at funds with a reputation for candor, requests for feedback on why they rejected a particular candidate don't always elicit a clear response.

As a trained behavioral scientist, my mandate was to develop a shared understanding of both the explicit and implicit hiring criteria.

Here is what I found:

  • The most successful hedge fund managers have an exceptional ability to manage in an environment characterized by ambiguity and complexity.

  • Dealing effectively with ambiguity and complexity requires using specific cognitive strategies (ways of thinking).

  • An example of a cognitive strategy is applying a framework to help in analyzing a situation, making sense of the information, and determining an effective course of action.

  • There are many frameworks successful managers can use. 

  • In some way, these typically address elements I call “CPRI” (Context, Process, Results, Implications).

  • To evaluate senior management candidates, ask them to talk about a decision they have made (or hypothetically, may have to make). How do they analyze the context, develop and implement their process, and evaluate the results? How well do they tease out the implications of the results, and what would they do differently based on that information?

  • The highest performing managers will describe a thoughtful, systematic, and integrated approach

The best managers can articulate how they manage in complex, ambiguous environments. Some important aspects of how they think, feel, and act are learnable. How best to foster this learning is a promising area for collaboration.

Originally posted by Paul Edelman on LinkedIn on August 18, 2018.

Translating People Analytics Insights into Impact: Speaking to the Pro-Change Part of the Brain

Brain.jpg

People analytics practitioners strive to derive insights from HR data to inform managerial decision-making and drive improvements in employee engagement and performance. New scientific insights suggest that practitioners can have greater positive impact by cultivating the ability to speak to the "pro-change" part of managers' brains.

At the Conference Board’s recent HR Analytics Conference several participants described this frustrating pattern:

  1. The analytics practitioner meets with a line-management client to discuss a real business problem (e.g. reducing the cost of turnover)

  2. Together they formulate a question that can be answered by gathering and analyzing data (e.g. what are the controllable causes of turnover?)

  3. The analytics practitioner gathers data, analyzes it, extracts insights about the problem, and develops possible solutions

  4. The analytics practitioner meets with the line manager to share the insights

  5. The line manager questions the validity of the data or the insights

  6. The analytics practitioner attempts to defend the validity of the data or the insights

  7. The engagement ends with the analytics practitioner feeling frustrated with their ability to produce impact

This pattern recurs frequently enough that it is worth asking:

  1. What factors underly this pattern?

  2. Are there best practices for shifting the pattern and achieving more positive outcomes?

From my experience doing organizational consulting and executive coaching, as well as from my study of recent developments in brain science, I have developed a perspective I would like to share and refine through discussion with leading people analytics practitioners. There is scientific evidence that the brain is a complex, interdependent systems comprised of multiple subsystems. Different subsystems are activated at different times and under different circumstances. 

The so-called parasympathetic nervous system (PNS) controls the body at rest and is activated when we think positive thoughts. It is associated with positive emotions like hope. The neural pathways in this system are longer and function more slowly. When you ask a manager to envision positive changes in their organization, and to imagine the benefits that will accrue to him or herself personally from those changes, this part of the brain is most active. 

The sympathetic nervous systems (SNS) controls the body's responses to perceived threats and is responsible for the "fight or flight" response. It is associated with negative emotions like fear and anxiety. These pathways are shorter and function much faster. When you present a manager with information that is threatening in some way, this part of the brain is activated.

The language we use when we speak with our clients can activate either of these systems. For our purposes, as people analytics practitioners hoping to effect positive change in organizations, I suggest calling the PNS, the “pro-change” part of the brainWe can think of the SNS as the “no-change” part of the brain. Our challenge then is to find ways to speak to the pro-change system within the brain and avoid activating the no-change system. For example, compare the following questions:

  1. Would you like me to do a survey to find out what people see as the issues in your organization?

  2. Would it enhance your position in some way to know what people see as the issues in your organization?

Let’s assume that the manager already suspects that there are issues, and that some of these may be the result of things that he or she has either done or failed to do. Question one is likely to evoke a negative emotional response and activate the SNS, or no-change system within the brain. In earlier times, the human fight or flight reflex was easier to recognize. Our clients, however, have evolved too far to punch us in the nose, or get up and run. So we may not recognize the fight or flight response when they reply, “How do I know your survey methods are valid?” or “Why don’t you come back in a few weeks so we can discuss this further?”

Question two is designed to speak to the PNS or pro-change part of the brain. The survey still represents the same threat of exposure, however, we are purposely redirecting our client’s brain by challenging it to envision possible positive consequences that could flow from doing the survey. This is more likely to evoke a positive emotional (and behavioral) response.

So one best practice for people analytics practitioners is to pay careful attention to the language we use and to cultivate the skill of purposely speaking to the pro-change part of our client’s brains. 

I am interested in hearing feedback from people analytics practitioners. Please send your comments, suggestions, or questions to paul@edeltech.com, or call me on 508-947-5300. Also, do you have a best practice to share? I am interested in learning what has worked for you.

Originally posted by Paul Edelman on LinkedIn on November 8, 2017.