As Learning and Assessment Professionals What Could We Have Done to Prevent the Financial Crisis

March 28, 2009 at 3:37 pm 6 comments


As I prepare my various presentations for our Questionmark Users Conferences in Memphis, Tennessee in the context of an economic downturn but a thriving assessment market I can’t help thinking about how we as learning and assessment professionals could have done more to prevent the economic crisis.

A radical thought but take this journey with me.  The current crisis stems from:

  • Unethical behaviors in the mortgage sales process
    • Where were our regulators?  Did they know what they were meant to be doing? Were they assessed?
    • Were these mortgage brokers tested on ethics?
    • Was the chain of command trained on how to spot and prevent fraud and deceptive practices?
    • Do our certification methodologies need to move into the 21st century? We have so many tools to raise people’s levels of consciousness and thereby their accountability. But are we using them as effectively as we could?
  • Lack of Consumer Education
    • Businesses are out to make money. Credit helps us borrow against our future in order to have something now but borrowing excessively causes stress while making others wealthy. How many borrowers fail to understand this and why?
    • I wish I had learned fiscal responsibility earlier on in my life. Did I miss that class at school or college or did someone forget to put that into the curriculum?
    • Should/could there be elearning courses and assessments that could be part of the lending process to ensure that consumers are competent to take on their responsibilities?
  • Lack of understanding of new (unstable) financial instruments (e.g. Credit Default Swaps)
    • It seems to me that the financial instruments, or weapons of mass financial destruction, were poorly understood.  We don’t let children play with fireworks for very good reasons!  Many good people’s financial future has been wrecked by financial expert’s incompetence.
    • Just as we don’t let our pilots fly complex machines without educating them and testing them I don’t think that we should have amateurs pretending that they understand these complex instruments.
    • Is there any process to confirm that complex financial instruments are understood by the people who construct and trade them? Are they competent?
    • As assessment professionals we know that when someone says “Trust me I know” it often means that they don’t!
    • Should there have been more effective learning around these financial instruments?
    • Should they have tested to see if they had sufficient competence to play the high-risk financial games that they were playing?
  • C level executives exposing their organizations to unacceptable levels of risk
    • Some organizations were so focused on training and certifying new employees being on-boarded to handle their growing businesses that they forgot about educating and assessing middle managers and above.
    • I’m CEO of Questionmark.  I go on training courses. I do tests. I have to take our internal tests.
    • Should we not have batteries of test instruments to confirm that our C levels have the business understanding and ethics to run the organizations (banks, etc) that we as a society depend on?

Okay, so you now get what I’m talking about and you get where I am going!

So Learning and Assessment professionals stand up and be counted!  You have knowledge, skills, abilities and attitudes that can help us learn from recent experiences and help prepare us for a more ethical and stable future.  Your organization employs you for your expertise and so I ask that you use your knowledge and skills to help and benefit us all.

Anyone that knows me gets that I am passionate about assessments and I love learning. I especially love learning from our customers.  At this year’s User Conference I’d love to learn what we could have done to prevent the unethical/uneducated behaviors and questionable practices that led us on this journey of mass financial destruction not to agonize over what has happened but to help our profession be a part of the solution.

Lets make a difference and stand up for our profession!

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Entry filed under: Assessment, Learning, Professional Life, Soapbox. Tags: , , , , , , , , .

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6 Comments Add your own

  • 1. Cor Sluijter  |  March 30, 2009 at 6:59 am

    A good observation Eric, but your blog makes me think of the problem of maximal versus typical performance in assessments. So even if we had had instruments, that wouldn’t have ment that we would have been able to prevent anything. People are people

    Reply
    • 2. Eric Shepherd  |  March 30, 2009 at 12:36 pm

      Thank you Cor!
      And “Yes” people are people” but in our society we prevent road accidents by having driving licenses to maintain standards, a process of enforcement and the ability to withdraw licenses from irresponsible drivers. Yes people do still end up abusing the rules of the road but my sense is that we live in a safer world with the driving license system than without.
      I feel that giving up before we start devalues the value that learning and assessment professionals could bring to the table!

      Reply
  • 3. Ganesh K Raghupathy  |  March 30, 2009 at 4:57 pm

    Great take on how we could have helped mitigate if not avoid this crisis. Maybe there is a case for setting up a body that will identify the social risks involved in each economic growth activity and design a set of fundamental guidelines against which the stakeholders in the sector are assessed. These should tie back to the fundamentals of social health be it financial or otherwise.

    Reply
  • 4. Will Thalheimer  |  March 30, 2009 at 9:53 pm

    Eric,

    Great discussion.

    I love all your points.

    Let’s add the “Performance” side to this.

    1. Could we have provided assessments of the following kinds:
    1a. Assessments given to managers’ direct reports to provide managers with feedback on, for example, their encouragement to accept feedback from their direct reports (the idea: managers who are in a vacuum are more likely to be blind in decision-making).
    1b. Assessments given to managers’ direct reports directly assessing the manager’s financial risk taking.
    1c. Assessments given to everyone regarding financial risk taking.
    2. Let’s also remember that learning may not be enough. People can know what is right, but not think about it at the right time. We, as learning-and-performance professionals, could have designed systems to remind people of their financial risk-taking obligations. Perhaps we could have even provided some better assessment-like dashboards to help individuals and the organization keep track of how they are doing on critical financial risk-taking. Expanding this, we could have created better measures to help organizations be more transparent and to help folks like the SEC have better metrics on how companies are doing.
    3. People can also know AND remember, but fail to act properly because the incentive system (both formal/financial and informal/personal) might have been skewed. We could have done a better job on this account as well.

    Anyway, I’m sure there is more we could have done that is innovative.

    Our typical failures (as learning-and-performance professionals) probably caused problems as well.
    1. Our failure to adequately assess the effectiveness of our learning interventions probably led to a lack of understanding and a lack of an ability to remember on the part of learner–because generally we aren’t able to improve our courses because we aren’t getting good feedback.
    2. Our failure to provide real-world practice probably left many folks with learned information that was not accessible when faced with their typical situational cues.
    3. Our failure to ask the business side to contribute to the learning effort probably left many learners unmotivated, detached, and unlikely to actually make improvements on the job.

    Just some stuff to think about.

    Reply
  • […] As Learning and Assessment Professionals What Could We Have Done to Prevent the Financial Crisis Shepherd goes on to question whether adequate and proper training could have prevented the current situation.  Here is a sampling: […]

    Reply
  • 6. biljackson  |  April 1, 2009 at 1:53 pm

    A recent Wired article outlines, from their point of view, the specific equation that was supposed to account for fluctuating risk in the mortgage sector, thus freeing the markets to leverage that capital.

    That is, it was not a lack of training or ethics…it was an over-reliance on one person’s “solution.”

    Reply

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