Nov 6, 2013: My first diving video is online!

I filmed 3 dives during my summer holiday in Gran Canaria, where I went diving with the team of Let's Go Diving in the south of the island.

Link to the Video on YouTube

My first diving video ... many more hopefully to follow!

Feb 10, 2013: Why it is compeletely rational to not clean your flat alone in a 2-person household

Cleaning the common apartment is an issue of dispute for many couples. Usually one of the partners has a lower threshold against dust and dirt and the imbalances and discussions start.
Let's look at the game at hand.
A clean state of the apartment gives utility. Utility is however negatively impacted by the effort that needs to be exerted to reach that state and by the disutility of doing the job alone. The effort to get the flat clean is in principle the same for all players, however there are effects of learning: having cleaned often might reduce the time each new cleaning takes. The game of cleaning is an endlessly repeated game, which for the sake of ease I treat as a series of one stage games (in a later blog I might dive deeper).
How can the players play the game?
I assume the game to be played by two players, A and B. A is assumed to be the woman in the household. Both players have two options: to clean or not to clean the apartment. This leads to a four square matrix with the payoffs of each player determined by his utility which is a function of the utility he gets from a clean flat, the disutility from cleaning alone and the effort necessary to clean.
What are the possible outcomes of the game?
In the scenario that both players have the same functions, the state that both clean as well as that nobody cleans are Nash Equilibria. Which it will be is determined by the exact functions that the two players have. They both won't clean until a certain threshold is reached, and once that happens, the rational consequence would be to help each other (half the effort for each).
In the scenario where the players have different utilities from a clean flat (or to be precise: disutilities from dirt) the one with the lower threshold, let's say stereotypical player A (the woman) earlier reaches her threshold. In that moment she considers the game and figures out if utility minus disutility from cleaning alone (as her partner does not yet see any reason to exert effort) minus the required effort to clean the flat alone, does lead to a higher utility than not cleaning and accepting an uncomfortably dirty flat. This game gets repeated from now continuously in certain intervals until the other partner's threshold is reached or if they are too far apart, player A at one point will decide to exert effort to clean alone. After every cleaning session the whole game starts annew. However, as the partners have now a history together, this history (and other threats) will influence each partner's utility function. After a series of cleaning alone, player A might get larger disutility from it (the effect to kick in might take a while because through learning the necessary exerted effort decreases). After sufficient repetitions, player A might decide to intentionally move up her threshold until the one of the partner is reached, hence to not clean, which leads them to play in scenario one. An in general higher threshold indicates a dirtier flat on which they would settle. Savvy women will try to decrease the cleanliness threshold of their partner so earlier get into the equilibrium in which they both clean.
Another option if the thresholds are too far apart and a settlement on the Nash Equilibrium of both not cleaning gives the highest utility is to substitute the time effort necessary to clean with money. If the opportunity costs of a player using an hour of his time to clean the flat are higher than to pay someone doing this professionally for their time to clean (with the time being shorter than the players' due to the learning curve) it is a rational decision to outsource.
Hence not cleaning the flat (yourself) but paying a professional cleaner is a rational decision when your opportunity costs for the time necessary to clean are higher than the cleaner's.

Feb 10, 2013: Dan Ariely's Truth About Dishonesty

In a row of experiments around a common mathematical test, Dan Ariely and his team tried to figure out the different situations that make us cheat and the extent of cheating. They arrive at the conclusion that we are prone to cheat when they have the chance to do so, but not by a whole lot - until a point where they still could think of themselves as honest.

In a nutshell, Dan concluded from his experiments:
Dishonesty is decreased by moral reminders (eg the 10 commandments), supervision, providing one's signature before filling a form (example of insurance claims# and giving a pledge.

A surprising finding was that the 2 factors I would personally have expected to have a great influence, namely the amount of money to be gained and the probability of being caught seemed to have no influence on the likelyhood to cheat.

What factors were identified to increase dishonesty?

  • One's ability to rationalize,

  • own conflicts of interest (dentist example)

  • creativity (surprising for me - but Dan Ariely found that creative people use their creativity also to come up with good stories to justify their behaviour for themselves),

  • the fact that one immoral act was committed #however small it was, it made it more likely that others follow#,

  • being depleted (tired after a long day of work),

  • others benefiting from our dishonesty (that is an interesting one. if we have the chance to help others when being dishonest we are more likely to go for it),

  • watching others behave dishonestly (this makes us redefine our moral standards)

  • a culture that gives examples of dishonesty.

Following Dan Ariely's way of reasoning, the outcome sounds logic and comprehensible. Where I struggle though is the kind of test he used for all his experiments. He used a set of 20 3 by 4 matrices and asked to find the pair of numbers, having two decimals, that add up to ten. I feel this test cannot be fully used as a predictor of cheating as the picture is blurred by the differing mathematical capabilities of the students which might also be impacted by the student's ability to perform under pressure, as students were given a one minute time limit.
The main conclusions of this book hinge on this test and variations of it what I find problematic. It does not say in the book how Dan corrected for all the influencing factors and hence its hard to judge for the reader if the results are really scientifically sound.

Additionally to the interpreation of his behavioural experiments, the author added a few easily comprehensible real life stories. I particularly liked the chapter about Golf. He describes the sport in marvellous words as "a demonstration of man versus himself, showing both skills and nobility" (p.56). He also cites Will Rogers stating that golf is a game that will make a cheater out of anyone. Shooting the ball a long distance into a little hole is a difficult and frustrating task and might make us be a bit more lenient to ourselves. From my own experience I could very well relate to that.
A result of Dan's research was that golfers find it easier to justify to themselves to move their not perfectly lying ball with the club, than with their bare hand. And they feel that other golfers are much more prone to cheat than themselves.. Dan concludes that "golfers, like everyone else, have the ability to be dishonest but at the same time think of themselves as honest."

In another chapter Dan touches on conflicts of interest that may encourage people to be dishonest. He names dentists, but also academics. The fact that the dentist's income depends on the kind and number of treatments he does, creates a conflict of interest #patient's wellbeing vs dentist's own pocket#. Hence, inherently by being paid in that way, the dentist's and the patient's intestest are not aligned. In his example about conflicts of interests of academics he described that he himself was once tempted to disregard a datapoint of his study because it did not underpin his hypthesis. It's quite understandable that people become biased towards outcomes that stress their wanted result and more prone to disregard or discount those that counter them. In this context he named also the role of experts who were paid by companies for their expert opinions. But also here Dan experienced himself that he started to see the world through his client's eyes and not as objective as he should.
Dan also touched on people priding themselves with diplomas they have not really achieved. Several examples of this type of cheating have been revealed lately on the news. It seemingly starts with a small lie, and many others come to follow (the what he calls the "what-the-hell Effect").

Reading through the book makes morally challenging questions pop up. For instance: Who is the cheater: the one who copies a branded bag or the one who buys it? It is cheating to illegally download films and music - but is it becoming less of a crime because everybody does it?

Dan based his book very much on his own experience and the interpration of the data of his experiments. I personally would have found it a nice addition if he would have also touched on the more psychological and philosophical aspect of the topic of why people are dishonest.

The film "The Invention of Lying" (2009) approaches the topic from a different angle. Packed into a comedy, it tells the story of a world in which nobody can lie. Hence everyone is brutally honest. There is one man though, who can lie and uses this to his advantage. The story makes a religious turn where the protagonist presents some theses similar to the 10 Commandments. Despite being a comedy, this film gives food for furhter thought.

Dec 17, 2012: Review and Thoughts on Daniel Pinks book Drive

Daniel Pink sets the expectations high by giving his book the subtitle "the surprising TRUTH about what motivates us". In the first part of the book he sets the scene for the concept of motivation 3.0 stating that the ways to motivate people need to be different than in the last decades and have not been adopted to the latest insights of science. That was neither surprising nor new to me. However the further I read, the better the book became. In the second part he describes the 3 motivational pillars: autonomy, mastery and purpose. This part I found very valuable. Even if they would not have been backed up scientifically, to me those three pillars seem intuitively explanatory for motivation. Hence I could very much relate to the concept. In the third part of the book D. Pink gives ideas how to translate that concept into one' s own life, gives suggestions for further reading, poses questions for discussion and summarizes the book for different occasions. I found the last part really entertaining and felt also encouraged to come back to D. Pink with my input (have not done that yet though).

In the following I will dive deeper into some concepts/thoughts Daniel Pink presented:

"Now that" rewards superior to "if then" rewards: Pink names as the pitfalls of the carrots and sticks (if then) rewards that they extinguish intrinsic motivation, diminish performance crush creativity (narrow the mind), and crowd out good behavior (example blood donation for money). They encourage cheating, shortcuts and unethical behavior, become addictive and foster short-term thinking. The conclusion is drawn that their use should best be limited to rule-based routine tasks. "Now that" rewards on the contrary can be okay if they come unexpectedly for achievements. Also non tangible rewards like praise and giving positive as well as useful feedback should be considered.

I also found the part interesting where D. Pink contrasts performance and learning goals. School children being measured on performance goals (getting a good grade) compared to learning goals (becoming better at something) found it more difficult to apply the learned concepts to new challenges and exerted less effort to find new solutions. Conclusions from that finding should be drawn for our school systems.

Pink very often portrays examples of other well-known scientists in that field like Uri Gneezy, Aldo Rustichini and Edward Deci. He also cites Csikszentmihaly who proved in a study of that experiencing flow (deep sense of engagement) is absolutely necessary for humans and also found that people are more likely to reach that flow state at work than in leisure. Interesting.

The core of Pink's message is the new approach to motivation with the 3 elements:

(1) Autonomy - the desire to direct our own lives
(2) Mastery - the urge to get better at something that matters and
(3) Purpose - the yearning to do what we do in the service of something larger than ourselves.

In the third chapter of the book, D. Pink provides a conclusive toolkit of how to set the elements into practice. Very useful as sparks for thoughts and to make the topics more tangible!
The concept of the book is also nicely put into a 10minutes nutshell in the RSA video I have already blogged some time ago (Drive - The surprising truth about what motivates us).

Does Daniel Pink present a surprising truth? Neither a surprise nor probably a real truth (blunt to state as a social scientist to having discovered the truth, isn't it?) But quite an intuitive concept which might not be that easy to prove wrong and therefore seems valid to me.

Aug 5, 2012: Are the concepts of Performance-based pay and Carrots and Sticks outdated?

This blog if about the following movie: RSA Animate - Drive: The surprising truth about what motivates us. If you are an audiovisual type of person, you can also stop reading here and just watch the video. Of course, I would prefer if you now watched the video and afterwards returned to that blog.
First what I dislike about the video: the storyteller presents his opinion in a way that makes you feel as if it were a general and already researched truth. Already the fact that he calls the video "the surprising truth about xx" gives the feeling that he knows the one and only truth. Next to that it seems that he just picked the studies for his animation that support his point of view. So from a scientific standpoint that might not be fully sound. However, looking at several ideas presented, they seem very realistic (even if the full back up by science might yet be missing).

What I took away from it/what I liked:
A) it's pointed out that many companies use reward systems that are not fitting to the type of task at hand. If-then rewards are well known and often used, but seem to work just with simple, mechanical tasks. What also appears to be held for a good motivational system by organisations is to reward top performers, give something to the middle performers and to ignore the low performers. The author cites several not further specified studies which show that this does not work in reality. There the opposite outcome was reached, namely that people which were highly rewarded performed worse. Would be interesting of course to have some more background on that finding as that would revolutionise corporate incentive systems.

B) What the animation proposes as a better working reward system definitely deserves some attention: The author suggests to pay people enough to take the issue of money off the table. To then incentivise performance 3 factors should be present in the work environment: 1) Autonomy, 2) Mastery and 3 ) Purpose. Hence the author argues, that if people feel self directed, are challenged by their tasks and feel they make a valuable contribution with what they are doing, this is the recipe for motivated people. In my opinion this is a plausible concept.

Making this concept become reality will pose challenges. Managers need to identify how much money would be enough to "take the issue off the table" and to create these 3 elements into the environment of their subordinates. Leaving autonomy to subordinates and overcoming the inner drive to check their work, delegate responsibilities, frame tasks in a challenging but not overburdening way and pointing out the value of the task, will be on the agenda. Sounds already familiar anyway, right? But every industry is different, not every manager is there yet and definitely not every task that still needs to be done falls easily in those criteria. So, still a long way to go, but at least the direction seems clear.

I am curious what you think about that concept and if you have already any experience with it. Feel free to contact me!

Jul 15, 2012: Die Schule und ihre Lehrer: Klappe die dritte (Teil 1/2)

The blog about grades for teachers started off in German because I considered it to be an Austrian thing. However, digging deeper showed that that is not the case. Several aspects of the debate are relevant also abroad.
Very interesting was a video from RSA (RSA Animate - Changing Education Paradigms where the current schooling system is portrayed. The system is characterised as fitting the needs of the industrial revolution era, but not beyond. The system seems even to be organised like a manufacturing site of those days. The departments (being the various courses taught) are separated and the students run through the site on a conveyor belt sorted by age, like batches. The system is built on the assumption that age forms the best common denominator between students. A valid question to ask is if proficiency or mere interest in certain subjects would be a better denominator to form the "batches". That calls in my eyes for a certain basic education for all students in all subjects - to ensure a general knowledge and understanding but also to allow figuring out where one wants to invest/dig further. Very soon pupils should be allowed to choose their focus areas. However that might also put pressure on students to decide early on already on their career direction, which is not desirable either. So the general part of their focused education should still allow them to make a switch later on. That was a small excursus to the general challenges our current school system, which was designed in the last century, faces.
Back to the actual debate. Before going on, I would like to shortly summarize what I have written and argued so far in the last 2 blogs. I started off by stating that not just teachers should grade students, but also pupils should be given the opportunity to express their experience with their teachers. Teachers should be graded (not just by one numerical number but also some qualitative feedback) to allow for comparison between teachers as well as to enable them to learn and develop further by the feedback received. Being graded could induce competition among teachers (which could be healthy) and spark motivation as there is now a tool that really shows that they did or did not do a good job. As a result, schools could base their hiring decisions on these ratings or base part of a teacher's salary on their performance or better acknowledge them in front of the whole teachers corps. In my second blog, inspired by a passage in Malcom Gladwell's "What the dog saw" book, I argued that for young teachers who come straight from university and therefore cannot show any gradings (blog 1) or in any other way distinguish themselves from their peers, there should be lower entry barriers to become a teacher but a probationary period. In this timeframe the young teachers can prove themselves and afterwards based on ratings by students and their supervising teachers, a decision should be taken. Private companies like investment banks (well, not completely always private any more...), audit firms or consultancies, spend a fortune on finding talents, why should public schools not do the same?
Until now I have covered the issue of grading between students and teachers, which is at the moment only a one-way road. However, this grading still does not give an objective information on results. There could be huge variances between students within a class (covered by grades) but also between classes of students of the same "batch". To create transparency in that area, there are standard tests. It seems that they are already very popular in the US and are on their way to Europe. Also in Austria a step towards that direction is being taken by introducing the Zentralmatura. While these standard tests are supposed to show (and to ensure) a certain proficiency level, they don't come without challenges.
Firstly, the design of these tests is crucial. They should measure the right things, namely relevant and important skills acquired. That is very vague - on purpose. As these tests form the standard, teachers will try to reach it with their students. Therefore the standards really have to be good and important otherwise all head into the wrong direction. Additionally the exams should test skills rather than learnt-by-heart- knowledge which will be forgotten soon after the exam. So although it might be an easy question to ask, but the date of the start of the French revolution, is not a good exam question - rather ask for the driving factors. What I want to point out here, is that the design of these tests is really crucial and should be given the attention and importance it deserves.
Secondly, the tests are also one step towards centralisation. While till now teachers could - within ranges - determine where they want to focus on, given the strengths and weaknesses of their students, now this liberty is taken away from them. The rationing of language teachers might go to sacrifice an interesting issue they have just come across and which the students could benefit from personally to cover some more grammar. So, we have to be aware that in introducing tests, empowerment is taken away from teachers - to which degree? That links back to the design of the test issue.
Thirdly, the tests are where all attention evolves around, which might lead to pressure and incentivises unethical behaviour. This point of argumentation was particularly inspired by the film "Bad Teacher" with Cameron Diaz and Justin Timberlake. There the teacher whose class scored the best in a standardised test gets a monetary bonus. This incentive works as Cameron Diaz, in her role as a quite lazy teacher, in order to earn more money becomes motivated to score best with her students. So she pushes them hard towards results. When that did not show sufficient success, she obtained the test questions via quite unethical means. This example shows that by focusing all the attention on one test, people will come under pressure and not always play by the rules. However, although this example shows that there are pitfalls in the system, it does not disqualify because of them as I am confident that they can be overcome (eg being strict on who can see the test before it is taken).

Jul 15, 2012: Die Schule und ihre Lehrer: Klappe die dritte (Teil 2/2)

In my opinion, there are 4 conceivable systems.
One, the system which is in place now (at least in Austria) where teachers grade their own students.
Two, a system where each major test determining a grade of a student is blindmarked by another teacher (either of the same school or of another one). That will put pressure on teachers to have fair tests and gradings.
Third, next to the students receiving grades, also the teachers are graded by their students. Only giving a numerical grade, would not be enough though. The students will also have to elaborate a bit in order to allow the teacher to benefit from it and improve.
Fourth, next to the grades for teachers, to ensure the quality of teaching (otherwise teachers could just be nice on their students neglecting the difficult stuff in order to get good grades) there should be standardised tests.
System 4 would balance the focus on results (measured by standardised test) with the focus on the way the content is taught (measured by the ratings of students to teachers and the feedback they give). The teacher's pay should then depend to equal terms on the outcome of these 2 measurements. An interesting add on could be to also look into in how far the success of a student in the standardised test is reflected in the grades he/she received from the teacher. There might be good reasons why the two of them are different, so I would not suggest to skip the one awarded by the teacher but really to always look at both. Regarding, the pay of teachers, another issue to think about is how much percentagewise of the teacher's salary is performance based (50% ranking based on average (not median) standardised test score of students; 50% based on the grade received from students). I would suggest that it should make up a substantial part of the salary to be taken as important enough, however basic security should be covered by some base salary, in order not to make teachers become risk takers. Maybe 10-25% is a realistic share? However to really determine the scores and payout of the performance base pay, that requires also some further thought. Should history/arts/geography teachers be paid differently from major subjects teachers? A teacher has more than one class - how is that taken into account? This and further questions have to be answered, and still the payment system has to remain easily understandable.
So, yes, there are also challenges in setting up the new system, but in my opinion they are definitely worth to be tackled for the sake of an education system ready for the future.

Jul 8, 2012: What do the recent LIBOR-Barclays and the GSK case have in common?

In many of my previous blogs, I relate people's actions to the incentives they have. I claim that two stories that recently came on the news can also be explained by wrong incentives.

1) the LIBOR manipulation: Barclays and presumably many other banks reported too high lending rates which were taken into account to calculate the LIBOR. Many other financial products are linked to that rate, so tricking it upwards led to higher earnings on the products linked to them. Higher sales lead to higher bonuses.
This would not have worked, if just one bank had reported wrong numbers. So the signs stand for collusion among the banks. I agree with the suggested approach in the article of the Economist ('Banksters', p14, July 7th) that those involved should be punished. If their motive was (as I can assume) greed this unethical behaviour is intolerable and they should be held accountable (pay back fines, face jail). But that is just a shortterm fix for that special occasion - maybe it spreads a bit by stating an example and scaring others off. Fixing the LIBOR issue would, also as suggested in the article work by altering the method - not reporting expected but actual borrowing costs and, what I find a really good suggestion, to also ask for the rate at which the bank would lend money to other banks (not just borrow), to allow for double checking. However that are just quick fixes that don't solve the underlying problem that people who run after an obviously huge carrot named bonus are prepared to play by all means.
In the second example currently in the news, the underlying drive seems to be the same.
2) the 3blnUSD fine on GSK for misbranding two antidepressants and retaining safety data for a diabetes drug: According to another article in the Economist (The Settlers, p58, July 7th) and lots of news broadcasts all over the place, sales managers of GSK are said to have given perks to doctors to increase prescriptions of drugs which were not fully approved by regulators. However, to state just GSK here would spread the blame too thinly. Also Abbott, Merck, Astra Zeneca, Pfizer and Eli Lilly have been fined in the last 2 years for promoting drugs which have not been approved by the FDA. Promoting not approved drugs and thereby potentially harming people to boost one's salary is unethical behavior explained by greed. How can that be stopped from happening again in the future? GSK claimed - according to the Economist article - that it changed internal incentives for sales people to discourage mis selling. Hence - again it seems that wrong incentives are to blame. However, also a second explanation might shed light on that habit of overpromoting pills.
In my master thesis "Effects of Drug Price Regulation on the Incentives to Invest in R&D in the Pharmaceutical Industry" I compared the drug pricing mechanisms in the US and the UK and investigated their effects on the research and development efforts of firms in the respective countries. I found that the drug price regulation in the UK which allows companies a certain profit on their research but keeps in general the drug price levels low, R&D was incentivised while in the US, with comparably high drug price levels, rather marketing and sales efforts seem to be fostered. In the thesis I concluded that adopting the proposed CEA (cost effectiveness analysis) for new drugs would perfectly incentivise research because it would reward fundamentally new drugs with higher prices, while just for marketing purposes slightly amended old ones would sell cheaply. In the US however, just incrementally amended drugs can still be sold for high prices, which consequently discourages huge research efforts and rather directs money towards marketing. I don't know (and I assume its also not easy to find out) if the cases of overpromoted pills refer to drugs that are really new on the market or just slightly amended ones (the latter further fostering my conclusion). Overpromoting slightly amended ones would lift a bit the burden on the sales managers as it would not be so much of a threat to the patients if the FDA had approved the old version of the drug, but not yet the new (just slightly amended one). That would definitely be a revealing issue to look into.

Hence, again incentives can contribute an explanation. However next to individual ones for executives also the existing (or rather non existing) drug pricing policy may have provided the wrong incentives.

Jun 30, 2012: Lehrerbewertung: Klappe die zweite

Malcolm Gladwell thematisiert in seinem Buch " What the Dog saw and other Adventures" die Auswahl und vor allem das Auswahlverfahren für Lehrer (2009, Black Bay Books, Seite 408ff.). Während zB privatwirtschafliche Unternehmen enorme Ressourcen in die Auswahl geeigneter Mitarbeiter stecken (er führt das Beispiel von North Star Resource Group an, ein Financial Advisory Unternehmen, das offenbar 1.000 Leute interviewt um 10 Mitarbeiter zu finden) argumentiert er, dass das Aufnahmeverfahren an Schulen adaptiert werden sollte. Er schlägt vor, dass der Lehrerberuf grundsätzlich jedem mit deinem Degree offen stehen sollte und nach einer gewissen Probezeit eine Evaluierung statt finden soll ob sich der Kandidat als Lehrer eignet oder nicht. Das könnte für Schulen heissen, dass sie sich mehrere Kandidaten ansehen müssen bevor sie den Geeigneten finden. Dieser soll aber dann auch dementsprechend der Leistung und nicht nach dem alten hierachischen Schema entlohnt werden um genügend Anreize zu schaffen.

Ich halte es für diskutabel ob der Lehrerberuf wirklich jedem mit welchem Degree auch immer freistehen sollte. Auch äußert sich Gladwell nicht darüber wie die Lehrerbewertung ausgestaltet sein soll. Zu dieser Problematik gibt es schliesslich sehr grosse Meinungsverschiedenheiten. Die Grundidee einer Probezeit, die eine gewisse Evaluierung erlaubten würde, halte ich allerdings für eine gute. Ich kann mir vorstellen, dass man in einem Interview Leherqualitäten bei weitem nicht so gut nachweisen kann wie in einer real life Situation über einen längeren Zeitraum im Klassenzimmer.

Nun stellt sich jedoch die Frage, wie der Bewerbungsprozess für einen Lehrer im Moment aussieht. Inwiefern kann ein Junglehrer überhaupt gleich nach der Uni bei einer Bewerbung/ einem Interview punkten und sich von seinen Mitbewerbern unterscheiden? Auf welcher Basis wird über seine Einstellung entschieden? Natürlich wird der Bewerbungsprozess auch stark von Angebot und Nachfrage beeinflusst: wenn viele offene Stellen vorhanden sind aber wenig Nachfrage besteht, dann können diese strikteren Auswahlkriterien nicht unbedingt angewandt werden. In Zeiten wenig freier Stellen oder bei sehr begehrten Schulen käme dieses System jedoch sehr wohl zum Tragen.

May 21, 2012: Forderung nach Noten für Lehrer

Wie unterscheiden sich gute von schlechten Lehrern? Dazu gibt es unzählige Meinungen. Objektiv belegte und sehr persönliche. Es scheint also sehr schwierig zu sein festzustellen ob ein Lehrer nun gut ist oder nicht. Basierend auf meiner eigenen Erfahrung (aber die liegt nun schon 10 Jahre zurück), möchte ich behaupten dass nicht wirklich Transparenz besteht. Diese Tatsache könnte zu moral hazard führen: dh ein Lehrer könnte an Motivation verlieren da egal ob er sich anstrengt oder nicht, ohnehin nicht objektiv festgestellt werden kann ob er gut oder schlecht performt. Dazu kommt, dass ein Lehrer kaum unmittelbare Aufstiegschancen hat, mit der Ausnahme nach vielen Dienstjahren einer der im Vergleich wenigen, Direktoren zu werden. Schlussfolgerung: Wozu sich anstrengen, wenns doch so auch geht. Dass das nicht zur bestmöglichen Leistungsbereitstellung des Lehrers führt liegt auf der Hand.
Ein Lösungsansatz um die Motivation der Lehrer zu steigern wäre eine Bewertung der Lehrer in regelmäßigen Abständen durch all ihre jeweiligen Schüler. Dieses Feedback würde zu einer besseren Transparenz der Leistung führen und Vergleiche mit anderen Kollegen zulassen sowie Entwicklungspotenziale aufzeigen. Im Zeitverlauf ließen sich dann auch Entwicklungen in die ein oder andere Richtung aufzeigen - wodurch es sich für den individuellen Lehrer lohnt, sich anzustrengen.
Skeptiker werden schnell das Argument parat haben, dass das Feedback der Schüler für einen Lehrer sehr stark zu relativieren sei. Es ist von der Entwicklung, Reife des Kindes aber natürlich auch den Noten die es vom jeweiligen Lehrer erhält und bestimmt vielen weiteren Faktoren beeinflusst. Ist das allerdings bereits Grund erst gar nicht danach zu fragen? Ich finde nicht. Das Feedback der Schüler sollte durchaus, unter Berücksichtigung der aufgezählten Faktoren, in die Bewertung der Lehrer einfließen. Zudem gibt es für jeden Lehrer eine Vielzahl an individuellen Bewertungen, wodurch sich im Durchschnitt ein recht wahrheitsnahes Bild ergeben sollte. Auch traut man möglicherweise den Schülern im Hinblick auf Bewertungen viel zu wenig zu. Ich denke dass sie sehr wohl beurteilen können, welche Qualitäten ein Lehrer hat. Sollten jedoch einige die nötige Reife noch nicht mitbringen, sind sie im Endeffekt nur eine Stimme unter den vielen Bewertungen die ein Lehrer enthält und sozusagen ein Ausreißer. Bewertung schön und gut, aber was sollte nun damit passieren? Zum einen sollte sie natürlich der betreffende Lehrer selbst sehen, aber auch die direkte Hierarchiestufe darüber, was wohl meist der Direktor ist. Welche Konsequenzen sollten nun aus diesen Bewertungen vom Dirketor gezogen werden? Ich denke, dass sie zu Informations- und Meinungsbildungszwecken verwendet werden sollten. Ich gehe davon aus, dass an den Schulen ohnehin ein System besteht, das "schlechte" (wie auch immer das nun definiert ist) Lehrer aufzeigt und den Direktor die nötigen Schlüsse ziehen lässt - alles andere wäre sehr enttäuschend. Das vorgeschlagene Bewertungssystem könnte dem Direktor als wichtige weitere Informationsgrundlage dienen und ihn für den einen oder anderen Lehrer sensibilisieren. Der Direktor könnte den entsprechenden Lehrer durch Schulungsmaßnahmen fördern oder die Konsequenzen ziehen.
Spinnt man den Gedanken nun weiter, könnten Lehrer nun versuchen das Feedback der Schüler zu beeinflussen um natürlich gut vor dem Vorgesetzten dazustehen. Sie könnten zu Mitteln des Selbstmarketing greifen um um die Schülerstimmen zu werben, was unweigerlich zu einem falschen Fokus im Unterricht führen würde. Doch die Richtung ist bereits die Richtige: Der Lehrer wird zunehmend als Dienstleister dem Schüler gegenüber gesehen - und seine Leistung wird zurecht vom Kunden bewertet. Es versteht sich von selbst dass so ein Fragebogen völlig anonym sein muss, um dem Schüler zu erlauben seine Meinung zu äußern, ohne dass er Konsequenzen befürchten muss.
Um jedoch "Selbstmarketing" des Lehrers von wirklicher Leistungsmotivation zu unterscheiden, muss großes Augenwerk auf eine durchdachte Fragestellung im Bewertungsschema gelegt werden.
Die Befragung sollte innerhalb der Schule von unabhängigen Dritten durchgeführt werden. Vielleicht sogar online mit einem österreichweit standardisierten Fragebogen. Offene Fragen würden sich besonders eignen, da sie dem Lehrer wirklich optimales Feedback und somit Gelegenheit zur Verbesserung geben. Staatliche Webseiten zur Lehrerbewertung haben sich (vor allem in Deutschland Bsp spickmich - es gibt nun auch schon die österreichische Version) als Initiativen gebildet. Diese halte ich jedoch nicht für das geeignete Medium. Meiner Meinung nach geht hier die Transparenz einen Schritt zu weit da nun Einzelmeinungen öffentlich preisgegeben werden. Es wird nicht die Gesamtheit aller Schüler eines Lehrers betrachtet weshalb wahrscheinlich die positiven Stimmen unterrepräsentiert sind da man üblicherweise etwas eher kommentiert wenn man unzufrieden ist, als wenn man zufrieden ist. Die Gesamtbewertung eines Lehrers aus der Summe aller Einzelbewertungen der Schüler mag auch Ausreißer enthalten, gibt jedoch ein aussagekräftigeres Bild.
Ich sehe kein überzeugendes Argument, weshalb Lehrerbewertung an Schulen nicht verpflichtend eingeführt werden sollte. Ganz im Gegenteil, sie könnte zur Steigerung der Motivation und Leistungsbereitschaft der Lehrer führen. Und auch wenn es viele Lehrer (noch) nicht wahrhaben wollen, sie bieten eine Dienstleistung an ihre Kunden an. Und diese müssen das Recht haben, wenn sie den Leistungsanbieter schon nicht so einfach wählen können (das ginge durch mühsames Schulewechseln) diesen zumindest evaluieren zu dürfen.

May 17, 2012: Ideas to improve the table waiting experience in the Netherlands

I reckon that my blogs so far have been quite influenced by everyday situations around me that made me think. The same also goes for today’s blog. Having now been to a huge amount of restaurants and cafés in the Netherlands, my feeling that there is potential for improvement got confirmed almost every time. What is it in this country that waiting customers in a professional way does not work?! Is it the lack of training? Are there no educations for waiters? However while I can imagine that you could immensely improve your skills by training, basic waiting tables is not rocket science, rather common sense. So probably lack of training does not explain the situation. But I also don’t want to say that people lack common sense here – maybe it’s because they don’t know it better or it’s simply not expected from them. Hence it could be explained by habit. Generations of waiters have done their job that way and passed on their knowledge and people just feel that this is the way it should be done. And if nobody complains, why should they change. Well, why should they change? I feel that customer happiness and therefore the amount bought would increase – and that’s in the end why they are doing this.

Having argued that the cause of the mediocre table waiting experience lies in the culture there are several ways to overcome this. Having the waiters experience how that profession is done in other countries or giving them more training might be one way to improve the situation. What might work better is to pay them based on performance. A huge share of their salary should be based on the revenue the whole team of waitresses generates in a period of time (eg a week or a month). In this way the interests of the owner and the waiters are in line – both want to sell to customers as much as possible. In times of only few customers visiting the restaurant and therefore lower sales, also personnel costs would go down and pose a lower burden on the company – vice versa in good times – very much in line with the (business) environment. I don’t consider it necessary to define selling targets for the waiters. Just basing a huge part of their salary (half?) on the turnover of the restaurant should do the trick. A good thought should of course be given to issues arising from this concept:

1) the bonus should not be based on a single waiter’s contribution as this would lead to hostile behavior and just individual profit optimization and definitely no collaboration. So it rather should be based on what the whole team that is present on an evening/in a week or a month generates. This could also lead to discussions as the waiters working during the peak time will contribute more to the revenue – but the team could agree to just let the best among them work at those times to optimize the income for all, or to change working schedules frequently to give this chance to all.
2) Paying based on the total revenue of the restaurant (generated by all waiters together) makes every single one care more about their colleague’s skills and peer pressure will be exerted. If they see others performing badly they might offer a hand (again to also improve their own income) or in the worst case report him/her to the manger to take appropriate steps (further training, firing).
3) These kinds of incentives give the waiters a daily direct feedback on their performance. They in a way get this feedback via tips (which they of course should be able to keep for themselves) but now every evening they know how much they have increased their salary and know if they did a good or bad job by benchmarking with other working days.

If it is that easy, why does not every restaurant simply adapt that concept? Paying people a performance based salary makes them bear some risk: they don’t lose money, but in the worst case they don’t earn any either. Some – understandably – don’t want that. People have to pay rent, for their living and therefore demand security. This is why I suggest splitting the pay into a fixed and a variable part – maybe even half half. The fixed part gives security the variable one gives an upside depending on one’s effort but also the team. But of course they cannot influence the current economic situation or the weather (which might also impact the number of guests). Formerly the risk of less people entering the restaurant was solely borne by the owner. Now it has also been passed on to the employees. To cancel out for the economic situation or the weather to really narrow it down to factors the waiter can influence, the owner might think about adjusting the revenues based on benchmarks (eg restaurants being hit by the same weather and economic conditions and having the same business concept etc).

To conclude, paying waiters based on performance makes them to entrepreneurs as well. They start to think with the business. If they want to increase their income (what I assume they do) they need to sell as much as possible to the guests. They might now try to improve that skill – and that sets them already on the right path. Being fast at the customer’s table after his arrival, reading every wish from their lips and also being fast in collecting the money when the guest wants to pay are certainly steps that will make them succeed. Hence, a win situation for the owner, the waiter and the customer!

May 15, 2012: Kunde droht mit Kauf – Episode Albert Heijn

I wanted to buy a pack of cashew nuts for 2.75 EUR at Albert Heijn to go. Seems easier than it was. When trying to scan the article, the shop assistant recognized that the article was not recognized by the system. Different scenarios how the story could continue: 1) the cashier could trick the system and manually insert the price and sell me the nuts, 2) she could find a way to get the nuts into the system or 3) and obviously preferred by this cashier: not selling me the article at all. I did not get the pleasure of eating nuts (maybe better for my diet anyway) and Albert Heijn did not earn money. Did the cashier, being paid by what I purchase, care? Surprisingly not at all (maybe understandable because of the low price of the nuts – but things add up und wie heissts so schoen: wer den Groschen nicht ehrt ist den Schilling nicht wert).
However, isn’t selling to a customer the main business model of a supermarket? How it earns the money? Seemingly the system prevented it from earning money. And in a way the reasoning that has taken place is understandable: if the article is not correctly in the system, which price do you charge (well, that is an easy one as this was written on the badge on the shelf)? Then follows the larger challenge: how to book the inventory. So in the end you would be left with the 2.75 EUR money but it would appear that the stock was stolen. But at least the supermarket would have the money, you would think, and therefore go ahead and see you whatever you find on the shelf. However, I see that stockkeeping would then be difficult when it comes to FMCG (and theft might be a real big issue). An easy way to prevent that from happening in the roots is to not allow the cashiers to change anything in the system. So what they are actually allowed to do is to scan and to collect money. The latter preferably via bank card because then it’s ensured that there is no miscounting or money stealing. So every manual impact in the system by the cashiers is disallowed in order to ensure a running system. The British chains like Tesco, M&S and Boots even took it a step further and don’t need cashiers at all with their self checkouts. Scanning and paying customers can do themselves – and if they want to steal they might achieve that in an ordinary supermarket as well. Hence, the Albert Heijn concept seems to be somewhere in the middle between the old style supermarket where a cashier registers only manually the price in the calculation machine and a trustful self-checkout system. – However in this case, this model did not fulfill the customer’s need to buy what is on the shelves. Furthermore it also does not fulfill the supplier’s intention of selling its product to the end customer. In this case it was Albert Heijn’s own brand – the harm really stays with Albert Heijn not earning money… and me not eating nuts now.

Jan 7, 2012: Is Zara paying its employees in an optimal way?

Rummage tables where things are hard to find; a quarter to closing time, you are already getting kicked out of the shop; dusty, dark fitting rooms without proper space to drop clothes; and an irritated glance once you dare to ask the staff where to find a certain piece of clothing or whether it is still available in your size –best solution: don’t talk to the staff at all. That’s the impression I have as a customer when I buy clothes at Zara, Mango, Esprit and H&M. However for instance shopping at Jones (Austria) is a completely different experience (yes, also a bit more expensive than Esprit/Zara/Mango, but really just a bit). At Jones I can come in shortly before they close and they still serve me nicely and don’t kick me out. They actively think about what would suit me, what would suit the particular piece of clothing I am currently trying on etc. To entertain my accompanying boyfriend, there are comfortable seats everywhere with view to a TV set and the staff offers us coffee. No need to mention that in such an environment combined with affordable clothes, you are easily talked into spending more than you planned to, which translates into higher sales for the store. What is causing that huge difference in shopping experience?

The explanation that comes most obvious to my mind is that Zara and Co pay their staff not based on their performance. Staff there is not seen as sales people but more as shop assistants who take care that the clothes in the store are nicely presented. People working for Jones appear more entrepreneurial. While I don’t know how ownership is handled for Zara, Mango and H&M, I know for sure that Esprit is a franchise concept – as is Jones. So the franchise owner has every incentive to behave entrepreneurial. While for Jones it appears that the employees of the franchise owner are also paid based on how much they sell, the same seems not to be true for the other chains. At least that is the impression I get as a customer. So if the customer shopping experience and the amount he/she spends as well as the employee’s salary increase with performance based pay in place, why are these big chains then not adapting this model? Reasons I could think of are:

a) The system would be hard to administer: you always have to know who sold what to the customer and keep track. In everyday life this can lead to a lot of quarrels. You also have to keep track of the returned clothes and book the on the name of the person who sold them initially. Another challenge for the system.

b) The issue on what to base performance based pay upon would have to be sufficiently well solved: do you pay based on what a person sells compared to the last period, to his peers, to other Zara stores? It might be a good option to pay a person directly related to what his/her team within a store is selling. The more they sell the higher everyone’s a salary. That would ensure that they help each other and act as a team. Furthermore this could boost up peer pressure.

c) A significant part of the salary would have to be variable in order to motivate staff with the caveat that this increases the risk an employee has to take. The risk is to a larger part shifted from the owner to the employees giving them the chance to increase their salary but also making them go home with less if times are bad.

To conclude, it seems that I find it hard to justify why Zara and Co don’t pay their people based on performance. But if you happen to have more insights, I would be happy if you let me know!

Dec 2, 2011: Wanted: a provider offering a credible threat to enter the glassfibre internet market in Rotterdam

We have been threatening UPC, the only provider of proper glassfibre internet in Rotterdam for 7 weeks with becoming their customer. After 7 weeks of being pestered on the phone and in the shop by us, they gave in and managed to have our internet working. Two days later we already received an invoice for the 7 weeks of internet services they claim to have provided to us. A shopvisit and a superexpensive phonecall to the servicecenter later, we are convinced that we ought to pay the bill, and trust in their promise that we will be refunded the following months. What is wrong here?

UPC is the one and only glassfibre internet provider in Rotterdam area. Obviously in the Netherlands the huge providers UPC and Ziggo decided on a geographical split of the area. So, at least in this area UPC is a monopoly unless you want to change to the significantly slower but equally expensive ADSL. So at least UPC offers competitive prices for a better service. That is a good selling point. However, I can understand customers foregoing this selling point in favor of ADSL internet due to the crappy customer service processes of UPC. Shopassistants can just make system entries. Everything requires long and expensive phone calls to a service center. Once a technician made is way to the customer to fix an issue, the customer is required to call customer service in order to report the problem fix. So, there is an evident and urgent need for some process revamping – at least from a customer’s perspective. Why should UPC bother? – they have a monopoly position! So the customers should actually not wish for new internal UPC processes, but a competitor!

So, why does no competitor enter and grasp all these desperate clients of UPC? I can think of hurdles relating to the fibre net in Rotterdam, which might have been built by UPC. The new competitor would have to rent it, which would put him at competitive disadvantage as UPC won’t rent it out cheaply. Another possibility to enter would be to build a second network, doing double the work. Consequently it would have been best if the city of Rotterdam would have invested into the fibre net in the first place and then just have rented it out. This proves once again the benefits of the split between provider and operator (as so often discussed in the case of railnet and the trains). If Rotterdam missed this opportunity of building it itself, it might be a good idea to buy the glassfibre net from UPC now and rent it out. However, why would the city of Rotterdam be willing to do so? Just to protect UPC customers? To prevent UPCs monopoly? And UPC of course would not be willing to sell as this would open the market to a competitor. Seems the only way for a competitor to enter is by building up his own network. And of course UPC will respond with some kind of lock in strategy for its customers. So, this seems like a vicious cycle – not at all in favor of the customer. However, the mere, but credible, threat of a new provider entering the market would already immensely help us customers! I hope that a cunning company takes up this opportunity! But what is in it for them if they just remain as a threat? They could ask to be paid to play: UPC might pay them so they don’t enter (might not be fully legal, however), Rotterdam might pay them to break up the monopoly and be able to offer a second source. The customers, however, are the ones who should really be willing to pay: once a competitor enters they will have lower prices for the internet and better services. They should be willing to pay for this improvement. If the costs are lower than their benefits, they are better off. So, potential new entrant: ask UPCs clients and clients in spe to pay you for maintaining the threat of entering the market!!

Dec 2, 2011: My week with the Nuns

no, I was not in a monastery! "The nuns" ist he inofficial name for the prestigious language institue Regina Coeli in Vught near Den Bosch. However, once you are there, you really feel a bit like a nun. But instead of praying the whole day, you put up with Dutch grammar and the audio lab.
Although the week with the nuns was really intense - every day language lessons from 8.30 am to 9pm- it allowed me to make a huge leap in my understanding of the Dutch language - and was also great fun due to the people I met there! I can therefore recommend it to everyone who wants to learn, or improve a language. And no, I don't get paid a commission for recommending them, I am really that convinced, that their teaching method is great!!

Was een heel leuke week!
Fijne dag en tot ziens!

Nov 19, 2011: thoughts on BOGOF offers

My intention was to buy one toothpaste: The red Elmex. Nothing more, nothing less. What did I end up with? Instead of spending 3 EUR on the Elmex, I left the shop with 7 EUR less in my wallet, but 4 toothpastes. Still one Elmex, but also three further ones: another Elmex and 2 expensive Sensodynes.
What has happened? There was this attractive 2+2 offer. Initially I thought about it, but could resist and went to the cashier with 1 Elmex in my hands. But when she smiled at me and reminded me of this hilarious offer, I could not help it but go back and choose three more toothpastes from the bucket. With the feeling of having struck a real good deal by paying just 7 instead of 14 EUR for 4 toothpastes I left with half-year supply of toothpaste in my bag. That I originally was only prepared to spend 3 EUR did not touch me any more.
The economic viewpoint: In this offer some sort of BOGOF (buy one get one free) incentive is combined with a mix and match choice of products (all toothpastes could be chosen from, even the very expensive ones). This kind of offer turns complementary products into supplements. If one usually buys just one toothpaste there is mutual exclusivity between them. Only one of them strikes the deal. But the mix and match offer allows choosing among various brands, so all of them enter the draw. As the BOGOF is not just 1+1, but even 2+2 this leaves the customer to pick even 4 pastes, allowing for a huge amount of combinations. My personal choice was to pick my favourite toothpaste and then fill the rest with the most expensive ones which I perceive as high quality and might not buy usually. Other customers might choose with the same strategy. Consequently I can imagine that the demand for the supermarket’s own cheap brand might be small, as this leads to the smallest win from the offer. After all the customer is a utility maximiser, isn’t he? However, while this unbeatable offer leads to higher sales now at the cost of sales tomorrow, it results in stocking by the customers what certainly delays their next buy. So definitely not good sales outlook for the toothpastes who did not get picked frequently in the draw. But it gets even worse: as customers buy goods they had good experience with, in their next purchase they might be inclined to pick one of the toothpastes they chose for the 2+2 offer and were happy about. Furthermore, as already laid out, the rational customer has most probably picked the most expensive toothpastes during the offer. So, which one might he buy the next time? Seems like the 2+2 BOGOF does the trick to make customers switch to more expensive products. And after all – aren’t our teeth worth it?!
So, what is the logical conclusion from a company’s perspective? If you are the seller of the high priced toothpaste, better get active and start the BOGOF offer, if possible without the mix and match option. However, in case you have competitors which might come up with the same idea, let them take part in the game and add a mix and match option. To insure that your product is picked, increase its price to make the bargain for the customer appear high. As he does not actually pay the price but just considers a high price as “saving” because of the offer, the price increase does not hurt your sales. And in case you could even sustain the high prices afterwards, that was a nice way of bringing an otherwise very difficult to introduce price increase to the market.
If you are offering the budget brand, be alarmed, as this offer aims at your target group. Maybe staying out of it and having a counter offer might be wise to attract your target group’s attention back.