Inaccurate updates on how projects are faring are the reason many don't turn out as expected, new research suggests.
The misreporting of project statuses, at all levels of the company, is often to blame for corporate projects failing or ballooning in cost, according to the study published in MIT's Sloan Management Review.
The findings are based on insights drawn from 14 investigations that were conducted over the past 15 years, each concerned with individual project status reports — and misreports — and the responses those reports evoked.
Here are the five key reasons researchers uncovered for why projects flop:
- Employees don't accurately report when projects are failing: Many employees put a positive spin on the project's status when they report to senior management, due primarily to their being on the weaker side of a power relationship. Also, when the organizational climate is not receptive to bad news, truthful reporting can be inhibited. "An executive should 'trust, but verify,'" said Ronald Thompson, professor of management at the Wake Forest University School of Business and one of the study's authors. "Instead of taking an employee's status report at face value, an executive should solicit the opinions of others who are close to the project, obtaining views from different levels within the organization."
- People misreport for many reasons – and those reasons matter: While executives tend to attribute misreporting to poor ethical behavior on the employee's part, individual traits, work climate and cultural norms all play a role. For example, some workers may just be optimistic about a fledging project, while others may be risk takers. Still other employees may have cultural backgrounds that traditionally reward individualism above collectivism. Charles Iacovou, a Wake Forest University professor of management and one of the study's investigators, said executives should spend more time considering the composition of their project teams, especially project manager positions. "Of particular note are personality traits, employees' perceptions of their work climate, and employees' cultural backgrounds," Iacovou said. "Be especially wary of optimists and risk takers."
- Audit teams help to proliferate misreporting: In one study of state government managers who reported to an IT oversight board, the researchers discovered several cases in which the use of an audit team led to growing distrust and deception among the employees being evaluated. Workers reporting project status information reacted to some auditors' queries by trying to thwart the auditors. The auditors, in turn, concluded that the project participants were either incompetent or deceptive, and they increased their scrutiny, which led to more defensiveness and an even greater degree of misreporting.
- Putting a senior executive in charge of a project may increase misreporting: Conventional wisdom says to appoint a senior executive to oversee all major projects, thus providing visibility and organizational support to marshal resources. But research suggests that the stronger the perceived power of the project leader, the less inclined subordinates are to report accurately. The study's authors believe that the career aspirations of project managers and senior executives often skew results toward the positive. Thompson said this is why companies may benefit from having a project management office to help. "The PMO can provide a trained leader that helps mentor other project mangers," Thompson said. "It provides a resource for project managers to turn to if problems arise instead of running that information up to a supervisor."
- Executives often ignore bad news: A number of the examined studies found situations where employees went to share concerns about a project with powerful decision-makers, who had the ability to change the course of the project, or even stop it, however, their opinions were not taken into consideration. Iacovou said overconfidence is an occupational hazard in the executive suite and can lead to instances where executives continue to escalate their commitment to a project, despite negative news. "In many of the corporate disasters of the past 20 years, overconfidence or overcommitment almost always played a role," Iacovou said. "Executives should not only listen to a variety of stakeholders, but they should take the warnings they receive seriously, or they risk creating a climate of silence in which employees grow even more reluctant to report bad news."
The study was co-authored by Georgia State University's Mark Keil and Miami University's Jeff Smith.