Risk Management for Management Risk

Basic Project Management (PM) disciplines involve detailed planning, execution and control of a project until objectives have been satisfied. In the course of doing business though, unknown unknowns and potential known risks can affect project outcomes. Early identification of these risks helps reduce mitigation costs downstream.

The responsibility shouldered by the manager for the successful execution of the project is often times both exhilarating and sometimes daunting. The manager has to depend on his/her team to identify, assess and prioritize risks to determine mitigating actions to take, if any. In a perfect world, all team members understand the mission and are proactively working to execute the project demands and identify potential risks.

Usually, good project management involves embedding some schedule margin into the plan to tackle unforeseen events without jeopardizing the end commitment date given to a customer AND also allocating a percentage of the total budget, called Management Reserve (MR), to handle these situations. This is a standard Project Management 101 principle. Practicing these tenets in the planning stages should yield optimum, effective and efficient processes.

Process executions however, involve people. How motivated and cohesive is the team? Is management using capital assets efficiently? Is the PM tapping into ALL available human capital to reap the most efficiency? Are team members motivated to perform their very best or are they literally “punching the clock” to ensure a paycheck?

Many surveys indicate that the majority of the workforce (>50%) would change jobs if they could. WOW! Other surveys indicate that billions of dollars are squandered in the workplace by lack of productivity with such tactics as Parkinson’s Law (work expands to fill the time available for its completion), lack of engagement or a litany of other reasons.

If the economy were better the biggest management risk would in fact be management itself. The standard view of management risk being process, environmental or technology related no longer has the same level of importance; it is management itself that is the risk.

This management risk is the source of ineffective, destructive and underperforming management. Do the leaders of today have the culture, emotional intelligence, tact, knowledge, humility and self-confidence to lead the projects and organizations of tomorrow? Who is addressing this management risk? I have witnessed many who would never want a job, or promotion, because of superiors that were insecure, disrespectful, egotistical and rude. These “higher ups” personal insecurities were masked by overbearing “down your throat”, “throw you under the bus” type of approach that was enabled by their ability to command authority and assert their “positional” power. This is an extreme example that involves negative aspects of an “active” management risk. On the other extreme, passive management risk is just as damaging where a lack of involvement, uncaring attitudes, uncommitted behaviors and lackadaisical leadership styles undermine the organizations’ full potential. In reality, there are gradients to these examples that will directly relate to the total management risk equation.

Is management squelching initiative, innovation, performance and loyalty? Yes, it is happening. Employees are withholding ideas and energy!

Training and sincere “walk-the-talk” leadership that models the perceived “talk-the-talk” rhetoric begins to tap into the psyche of human capital’s full potential, the intellect and desire.

In better economic times you want your organization poised and ready to reap the rewards. Managers who have a reluctant team today may find themselves dealing with high turnover rates in the future. Managers who have positional power but have not earned “referent power (power of an individual over a team based on a high level of respect, admiration, identification and desire to follow)” may be shortchanging efficiency gains today and could just be your greatest management risk tomorrow.

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