Despite what we modelling geeks might like to think, people are both rationale and emotional.
In his book, psychologist Jonathan Haidt likens our emotional side to an elephant, and our rational side to its rider. Sitting on top of the elephant, the rider seems to be in charge. But anytime the rider and elephant disagree about which way to go, the elephant is going to win. As Chip and Dan Heath put it in their book:
“Most of us are only too familiar with situations in which our Elephant overpowers our Rider. You’ve experienced this if you’ve ever slept in, overeaten, dialed up your ex at midnight, procrastinated, tried to quit and failed, skipped the gym, said something you’ve regretted. Good thing no one is keeping score”
In The Heart of Change, John Kotter reports on a study he undertook with Deloitte Consulting on how change happens in large organisations. He noted that in most change situations, managers initially focused on strategy, structure, culture or systems, which leads them to miss the most important issue:
“. . . the core of the matter is always about changing the behaviour of people, and behaviour change happens in highly successful situations by speaking to people’s feelings. This is true even in organisations that are very focused on analysis and quantitative measurement, even among people who think of themselves as smart in an MBA sense.”
One area that some of our clients have found helpful in creating change among their modellers is the FAST programme of certification. FAST offers an online test for modellers which provides them with accreditation as a FAST certified modeller. Our clients tell us that this testing has a number of important benefits:
1. Modellers are more focused during training, knowing that they will be tested.
2. Modellers realise that the company is serious about this change process and if their colleagues are going to have this certification, they will need it also.
3. It provides a clear reward for good performance and an incentive to practice (which is critical to the acquisition of any new skill).
In short, testing taps into some emotions that are helpful to creating effective behaviour change, both negative (I don’t want to be the only one of my colleagues that fails this) and positive (having this certification will look good). This may still not be enough to make the change stick. We also need to look at the organisational context in which modelling is happening.
This is the third in a series of 5 posts on raising organisational standards of financial modelling.
Introduction – sometimes financial modelling courses are not enough
1. Provide crystal clear direction
2. Consider both hearts and minds
3. Consider the environment
4. Remember that change is exhausting