Moving up — Seven interpersonal skills for success as a portfolio manager
Portfolio, Program, and Project Management Author, Consultant, and Educator
Our focus has changed from ‘doing programs and projects the right way’ to ‘selecting the right programs and projects to pursue.’ As we move up the career ladder, the natural progression is to that of the portfolio manager. However, the portfolio manager requires different interpersonal knowledge, skills, and competencies than that of a program or project manager. To move into this role, change is viewed differently, the focus continually is on strategic alignment, the communication requirements are more varied, and the need for stakeholder engagement is more prevalent. Additionally, establishing a formal portfolio management process and determining a portfolio management model to use consistently is a major project in itself if an organization lacks such a process and model or has one but for whatever reason is not using it. The portfolio manager then must have the ability to demonstrate the benefits of portfolio management not solely to the executives but to everyone throughout the organization, recognizing both the strategic and tactical aspects of portfolio management. This paper, and its accompanying presentation, emphasizes the seven interpersonal skills one needs for success as a portfolio manager.
Success is contingent on making predictions and meeting commitments relative to products, services, or results and providing sustainable benefits for customers in the process. As we work toward success, it is essential to determine our priorities for the short- and long-term, the various deliverables our organization should pursue through its programs and projects plus their benefits, needed resources, and especially to determine how our programs, projects, and operational work supports strategic goals and business value.
Realizing this success is easier said than done. The Project Management Institute (PMI) reports in its 2014 Pulse of the Profession®, “very few organizations (9 percent) rate themselves as excellent on successfully executing initiatives to deliver strategic results. Consequently, only 56 percent of strategic issues meet their original goals and business intent” (PMI, 2014c, p. 2). Unfortunately, such data are not new, and these trends keep increasing, showing why portfolio management and a chief portfolio officer or comparable position possessing competencies to handle the responsibilities is essential to reverse these statistics.
The Importance of Portfolio Management
PMI's report further notes “fewer than one in five organizations reports high maturity of project, program or portfolio management” (PMI, 2014c, p. 14). In terms of portfolio management, processes are in place in 31% of organizations considered as a high performer, with only 6% of lower performers using portfolio management processes (p. 15). The rate of change and the high complexity of the work proposed or under way contribute to the problem. While having portfolio management processes in place is a start, it is not the answer as processes are performed by people, and people at all levels of the organization must be committed to portfolio management to enable business value and success.
Definitions and Relationships
Projects have been in existence forever, and many use the pyramids as an example to see the differences between portfolio, program, and project management. A portfolio “refers to projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives” (PMI, 2013a, p. 8); a program is “a group of related projects, subprograms, and program activities managed in a coordinated way to obtain benefits not available from managing them individually” (PMI, 2013, p. 8); and a project “is a temporary endeavor undertaken to create a unique product, service or result” (PMI, 2013a, p. 3). Using the pyramid example assume someone in ancient Egypt recognized their importance to the country and building pyramids was part of the country's portfolio. This person also realized if only one pyramid was built, it would lack the appeal, or sustainable benefits, of several pyramids; thus the need for a program with individual projects and other work involved. It was a complex undertaking, with numerous changes, but the strategic goal was achieved, and the benefits have been sustained for years thereafter.
Portfolio management sets the stage for program and project management by providing direction in terms of organizational goals and objectives to ensure that only those programs and projects that support the goals and objectives are considered and pursued. The same is the case for operational work. Many organizations lack the needed talent for all the work that is under way. It may be more cost effective to outsource functions now performed internally to concentrate on achieving overall business value. The operational work also requires scrutiny from a portfolio review board or comparable oversight group to determine the best way to proceed. There is no single solution that fits all organizations. Organizational leaders determine what should be done hopefully with the assistance of a portfolio unit, a chief portfolio officer, and following agreed-upon processes. Portfolio management therefore goes further than only programs and projects and involves everything which is done by organizations.
Best Practice Examples of Leading Organizations
While numerous organizations offer consulting and training services to assist organizations in developing portfolio processes, and other organizations offer software tools to use, few organizational leaders discuss its business value. The lack of information sharing may be due to organizations viewing portfolio management as a competitive advantage and also supports the PMI data. Some best practice examples follow.
The Mitre Corporation points out that it has an information technology portfolio management, responsible for investment analysis of hardware and software assets, and a capability portfolio management, responsible for managing end user applications. It has defined portfolio management processes with recommended tools and techniques to use. It explains portfolio management ‘is a greater good,’ or enterprise process, and is not supported “within a program acquisition culture rewarded for individual program success rather than enterprise success.” It states its systems engineers are to understand and focus on customer portfolio challenges and strategies. (Mitre, 2014)
The National Aeronautics and Space Administration (NASA) states it has portfolios involving the infrastructure, science and engineering, and project management. In 2011, it explained: “Portfolio Management is the systematic use of data, process, and tools to enable better decision making.” In 2006, NASA established a “cross-functional group to prioritize business systems requirements to ensure the Agency is using its limited resources to support its most critical needs.” (NASA, 2011)
At The Boeing Company, portfolio management is a major part of its enterprise project management office. Its portfolio management practice focuses on a common project classification system, using common tools for portfolio management throughout the company, and following a process for portfolio management. Among other things, its focus is using portfolio management to improve business results (Braafalt, 2013).
The American Automobile Association (AAA) established an enterprise portfolio management office (EPfMO) to focus on more effective use of its limited resources. As it did so it followed principles outlined in PMI's Portfolio Management Standards from 2007 to 2013, stating it recognized “scope creep could decrease the efficiency of resources usage.” At the time the EPfMO was set up, it was asked to analyze the organization's challenges and determine problems. A case study reported by the Project Management Institute in 2007 noted: “AAA of Northern California was able to meet strategic objectives and demonstrate performance. The organization was able to intelligently scale projects while still delivering real value. AAA reduced the scope by 50% while it obtained almost all of the original project goals. Within two years, AAA implemented over 150 projects and reached 80 percent of its investment goals” (PMI, 2007b).
Portfolio Manager Roles and Responsibilities
With change and complexity the norm and not the exception, the traditional ways of managing programs and projects, and even portfolios, are not appropriate. One no longer can be successful with a focus on time, cost, scope, and quality, and one must be exemplary in the work that is done. Since 2006, PMI has been conducting Pulse of the Profession® reports, which involve feedback and insight from more than 2,000 project practitioners across the globe. These reports discuss trends that have occurred both now and ones expected in the future. Its 2014 report emphasizes by the data collected the need for organizational leaders to take action to become high performers. To do so, organizational agility, as well as alignment of programs and projects to organizational strategy through portfolio management is required especially in the complex environment in which enhanced effectiveness and efficiency are imperatives (PMI, 2014c, p. 2).
Stakeholders and Processes
Every organization has some type of portfolio, but the issue is not whether a portfolio exists, but rather is whether portfolio management is taken seriously by everyone throughout the organization. Each person needs to see how his or her work contributes benefits to the organization's strategic initiatives. However, few organizations have focused on implementing portfolio management, or if they have done so, many leaders view it as a competitive advantage and are reluctant to share how to implement it effectively. Others may implement it but will not follow through or will focus efforts on tools and techniques, rather than processes and competencies required for success. Some organizations may lack a documented, defined strategy and plan as to how to put it in place.
Establishing/Maintaining the Portfolio Management Model
In establishing a portfolio management model, objectives are to: use programs, projects and operational activities to support organizational change; use programs and projects to support improvements in productivity and efficiency; focus on strategic thinking to ensure the work under way continues to support strategic goals and objectives; and develop a business case for each program and project.
Then, once the business case is approved, it guides programs and projects to ensure resulting benefits are delivered and sustained. The model is developed to rank the proposed programs and projects. Next a portfolio management group working hopefully in a EPfMO implements the highest-ranked programs, projects, and operational activities; monitors the selected components in light of organizational strategy; and makes decisions or recommendations as to whether or not to continue them, with the objective of a continual ‘stream of programs, projects, and operational work’ that support organizational goals in the pipeline at all times.
The portfolio management process should be viewed as a system to create a balanced portfolio that realistically reflects the goals, resources, assets, risks, and other constraints of the enterprise, such as market and regulatory concerns. Projects, programs, and operational activities are investments, and resources are limited. After all, the goal of portfolio management is to create and maintain a balanced portfolio, targeting a specific risk level and a specific mix of investments that will achieve an optimal return for the enterprise. One key, critical assumption is that the investors and stakeholders know what they are seeking. This is typically more, less, or the same level of performance or some other measurable objective for the portfolio within the context of the business (Rad & Levin, 2006).
For portfolio management value, it is necessary to build relationships with each key stakeholder to ensure his or her concerns are heard and addressed in a timely way, and by doing so, the result is one that leads to more successful outcomes for programs and projects in each organization. These communications with stakeholders often become more difficult in the global environment in which we work.
Change is constant, and a key role of people in a portfolio management position, in an EPfMO, or working anywhere in the organization is to review the environment and be alert to any changes. These changes, such as legislative or regulatory requirements or competitor products and services available in the marketplace, require early identification as they easily affect the organization's strategic goals and objectives and the existing portfolio. Internal changes such as in the leadership team, in the loss of key subject matter experts, in the overall risk tolerances of key stakeholders, the movement toward a customer-centric organization, downsizing, mergers, and acquisitions also must be identified for action to be taken quickly. The objective is to capitalize on these changes as much as possible to turn them into opportunities to pursue through work with the portfolio review board and to make effective decisions based on facts, not on one's own preferences.
It is easy to blame the poor economy and its lack of growth, downsizings, lack of customer collaboration, poor or non-existent processes and procedures, mergers and acquisitions, or the excessive turnover among C-suite executives, the level one rarely sees, for these problems. However, it is incumbent on professionals at all levels to be the catalyst for change, which is unavoidable, and recognize that ‘business as usual’ is no longer acceptable. As a result, an emphasis on effective portfolio management is required.
What is Unique about Portfolio Management Interpersonal Skills?
The portfolio manager requires different interpersonal knowledge, skills, and competencies than that of a program, project, or operations manager. Change is viewed differently, the focus continually is on strategic alignment and the long term, the communication requirements are varied, and the need for stakeholder engagement is more prevalent.
Often, a starting point is to ensure the organization has an up-to-date inventory of all the work under way, even in operational activities. Collecting these data is a difficult process, as many will not wish to share everything they are doing or feeling they may be working on the next breakthrough initiative for the organization, as an example. These individuals will use a ‘knowledge is power’ approach rather than a ‘knowledge sharing power approach’ to ensure their niche in the organization is secure. Unless a process is in place in which earned value and time reporting is the norm, it is difficult, if not impossible, to see whether resources are over- or under-allocated. Further, if organizational leaders decide it is time to pursue a new program, for example, unless competency profiles are prepared and up to date, it is difficult to know whom to assign with the needed competencies to do the work.
Portfolio Management is the Key to Organizational Success
Once the inventory is done, then a gap analysis can be prepared focusing and determining whether the existing strategy is one that should be continued or whether changes are needed to prepare for the future. Once this gap analysis is prepared, an evaluation of the portfolio management process follows to see if it exists, and if so, whether it is adding value or is only a layer of bureaucracy. This evaluation then leads to key competencies for the portfolio manager to best manage complexity, ensure strategic alignment and organizational agility, and embrace and exploit change. The portfolio manager sets the stage for program, project, and operational managers as he or she is focused on organizational strategy and ensuring what is under way is supportive and beneficial. Through portfolio management there is then an opportunity to focus on formulating and implementing strategy. As PMI (2014a) notes, “portfolio management balances conflicting demands based on organizational priorities and capacity to achieve the benefits identified for successful performance of the portfolio” (p. 62). By extension, its implementation and commitment leads to a competitive advantage.
The Portfolio Manager and the Tuchman Model of Team Dynamics
Tuchman (1965) developed the team development model of forming, storming, norming, and performing. As we apply it to portfolio management, we realize it still is useful as new programs, projects, and operational activities are selected to be in the portfolio, and others are either terminated or successfully completed as planned. In the forming stage, people on a portfolio review board may at first resist including certain components in the portfolio as they are from another department, or they may feel certain categories within the portfolio are not needed. Others may be concerned the portfolio process is not being followed throughout the organization since it represents a culture change. If people are not following the process, members of the board may wonder why they are on it and whether it is worth their time to participate. If others join the board, they may not understand how it works. Interpersonal skills then require the portfolio manager to resist the tendency to make any assumptions about the people, values, sources of motivation, and agendas of the review board members must articulate the vision for the portfolio and why it needs to be followed to show it is necessary in the organization. In the forming stage, the portfolio manager creates and crafts a vision for portfolio management, communicates the vision within the organization, actively listens to stakeholders at any level, asks open-ended questions as the vision is developed, and uses effective political skills to gain support from stakeholders to better ensure their commitment.
Then during the storming stage, noted by conflicts and disagreements, the portfolio manager is both assertive and is a facilitator to help the board members to create not just solutions to the individual conflicts among them as to the various initiatives to pursue but also to formulate processes the board members can use to resolve conflicts. It also is important to recognize that disagreements are likely especially if portfolio management is new to the organization, as board members may question the methods being used. Further, the selection process may be one that is marked by extensive discussion and controversy, especially if a key member of the board supports a project that then is not included in the portfolio; plus other people in the organization may be unaware of why portfolio management is being introduced and may feel threated about it. The portfolio manager works to establish among the board members a balance of cohesion and dissent.
During the norming stage, people are becoming more comfortable with the process, but challenges still remain. It is important to make sure that only those programs, projects, and operational activities that continue to support the strategic goals and objectives are the ones that are selected and performed. The portfolio manager then continually engages stakeholders in a proactive way and involves them in the process as much as possible to meet their expectations. He or she continues as the principal facilitator of the process. By this time, people in the organization recognize their roles and responsibilities; they have greater trust and support of the portfolio process; the emphasis is one in which “pet” programs and projects are not pursued, and the focus is on strategic goals and objectives.
In the performing stage, the portfolio manager is actively involved since the process is an ongoing one. If the board members are not operating at the desired level of efficiency, it may be due to interpersonal issues. Someone, for example, may be a new board member and requires education or an orientation session as to how and why portfolio management is being practiced in the organization. The portfolio manager must foster an atmosphere of proactive stakeholder engagement continually for success and must maintain momentum among the board members to show how portfolio management continues to lead to a competitive advantage. A key competency for the portfolio manager is a decision maker as the portfolio manager works to continually improve the process and maintains open communications as to the decisions made (Levin, 2010).
Seven Key Interpersonal Skills for Portfolio Managers
Skills, as used in this paper, are defined as: “A set of skills, attributes, or characteristics of a person; the concept refers to a frequent pattern of what is said, done, expressed or performed by a person demonstrating one's values. It encompasses the modes or patterns of behavior that people exhibit in approaching their work and interacting with others” (PMI, 2007a, p. 75). Enhanced interpersonal skills facilitate success in one's work. This section focuses on seven interpersonal skills for the portfolio manager, because as Peters explains “these days it's the people skills that matter and will increasingly determine an organization's success” (p. 13).
Leadership is embedded in some way into everyone's jobs whether it is stated explicitly or implied, but it is especially important for the portfolio manager. He or she must set a vision for portfolio management, which ideally is embraced at any level. Crafting the vision is not easy as it must represent the future state and cannot be considered as a slogan or passing fad. Therefore, it demonstrates portfolio management is the business driver for organizational success as it ensures only those programs, projects, and operational activities that support organizational strategic goals will be pursued and continued with experienced people to do the work to attain and sustain the business benefits. It also leads then to creating a mission statement for portfolio management to show why it is important as without it resources may be misallocated and will not support organization strategy. Next, values to follow in making decisions are developed. Such values require transparency to avoid personal agendas driving decision making and to focus on not pursing one's ‘pet’ projects. Implied goals must be explicitly stated to show the added value portfolio management can bring. Congruence follows as the portfolio manager demonstrates the values in his or her actions to others throughout the organization.
As the leader the portfolio manager maintains momentum for it in the organization by ensuring proposed programs, projects, and operational activities have defined business cases to support them, monitoring work in progress to determine whether benefits are being realized as planned, and convening decision-making forums of the portfolio review board regularly and communicating the results. The portfolio manager then as the leader can answer the question as to why the program, project, or operational work is being pursued by describing the added value it will bring. He or she demonstrates sustainable leadership by involving others in the process and making difficult decisions in the face of adversity to satisfy business needs.
The portfolio manager is charged with developing and maintaining the processes to follow and tools to use. The goal is to create an administrative system that is useful but is not considered too cumbersome. Using the business case as an example, assume it is new to prepare them and get formal approval before proceeding to do the work. The portfolio manager can create a draft of its contents and then request feedback on it from a variety of stakeholders at different levels. A balance between excessive structure and a ‘laissez-faire’ approach is the desired goal so people can commit to the process. When a tool is to be used to facilitate the prioritization and balancing processes, as the leader the portfolio manager makes the final decision given the investment required, not only in acquiring the tool but also in training people in various positions throughout the organization in its use. A best practice to facilitate buy in is to pilot test several tools before a making a final decision. The structure the portfolio manager sets ideally is one that balances between being over-controlled or under-controlled and is one in which making continuous improvement to it by eliciting stakeholder feedback regularly is done (Levin, 2010).
An interpersonal skill in leadership is one in which the vision is established through active engagement with stakeholders and recognizing when changes are required. As the leader, the portfolio manager establishes the overall direction and structure for portfolio management and identifies and communicates critical success factors to stakeholders. For example, he or she develops a portfolio roadmap containing its intended direction, interdependencies, milestones, and benefits. Further, the portfolio manager will make decisions or recommendations to take calculated risks by focusing on some high risk/high reward components as part of the portfolio to broaden the customer base and use innovative approaches in the existing products or services provided even if others object. To do so, the portfolio manager forecasts the future-seeking business and competitive intelligence to propose new products or services, positioning the organization to increase its market share and reach more valued customers in the process. The portfolio manager, therefore, ‘owns’ the portfolio and as its leader is responsible for success as measured in the organization. He or she is actively involved with the portfolio review board and other key stakeholders and works to predict the overall level of portfolio success (Levin & Ward, 2011).
In 1985, Stuckenbruck and Marshall noted that 90% of a project manager's job is communication, and he or she spends about 50% of that time communicating with the project team. As one moves into portfolio management, the amount of time spent communicating increases, especially since portfolio management permeates the entire organization and involves external as well as internal stakeholders. Further, the portfolio manager is communicating with executives while making the business case for new components to be part of the portfolio and also must communicate to those working on programs, projects, or operational activities if their work is canceled and explain why this decision was made. Therefore, as portfolio management is implemented, the portfolio manager must have the ability to communicate effectively on all levels: upward to executives; lateral to peers and those at comparable levels; downward to those involved in programs, projects, and operational work; and externally to key stakeholders, especially in terms of when customer involvement is most beneficial. Throughout, as portfolio management becomes ingrained in the organization and is considered to be a standard way of working, the portfolio manager continually communicates its value and focuses on active communications as a way to make the processes and procedures more beneficial.
Concrete communications skills, with recognition and appreciation of individual differences among the stakeholders involved, the tone and texture of the communication, and realizing one's own communication barriers are best practices. To expand on these concepts, using an ‘I’ message, for example, demonstrates the portfolio manager is taking responsibility but also wants to give the other person time to see whether he or she shares the same view or has another opinion. This approach involves the need to actively listen to demonstrate interest in what is being said. Hollingsworth (1987) defines active listening as paying close attention to what is being said, asking the other person to state carefully and clearly what he or she means, and asking the speaker to repeat himself or herself if unsure. By doing so, the portfolio manager can demonstrate that other views are important, especially as decisions are made, and issues are resolved. Open-ended questions are useful to enable a person to expand on his or her point of view and to again show interest in obtaining more information. By tracking the message, the portfolio manager makes sure the communication has not drifted into other areas than what was intended. This approach is especially important during meetings of the portfolio review board to make sure these meetings remain focused on the agenda, taking note of other issues made to address at a later time. It also is necessary as the portfolio manager works with so many different stakeholders to recognize people like to receive information in different formats. To keep stakeholder engagement high, note the preferred style and try to use it as much as possible. As well pay attention to one's own barriers and obstacles to communicate more effectively, as it is easy to have barriers such as denial, projection, displacement, and objectification from time to time (Levin, 2010).
Often the problem is lack of information as to why portfolio management and how individuals benefit. People wonder whether their work has value and whether people profit when it is completed: Will they then be assigned to another program or project once their work is complete? Is there a career development path? How are they perceived by managers at various levels? In a way, the ability to communicate using a variety of media and knowing which type of approach is preferred by stakeholder groups is a key ingredient for success. Further, consistent messages are required. For example, if a portfolio review board exists and makes decisions leading to approval of new programs and projects and terminating others to reallocate resources, the portfolio manager must communicate these changes immediately in a consistent and transparent manner to avoid unneeded rumors and subsequent resistance. If the decision leads to terminating a program to reallocate resources to a new program that will provide greater business benefits, for instance, the portfolio manager must communicate the decision, noting it is a strategic one and in no way reflects the work done by the program manager and his or her team.
Additionally, communication, as an interpersonal skill, requires active listening to the views of others regardless of their position in the organization to further the transparent process. Rather than explaining and convincing, the communications skill emphasizes conversations and participating. The portfolio manager projects an atmosphere of open communications throughout the organization that people at other levels can emulate.
The portfolio manager has limited time to spend with each stakeholder or stakeholder group in conveying why portfolio management will lead to a competitive advantage to the organization; therefore, one must assume trust from the beginning until proven otherwise and listen carefully to comments anyone makes to obtain buy in and support. In listening, one requires an open mind to possible suggestions to avoid future roadblocks and asks how, what, and when type questions to ensure the suggestions are heard correctly for feedback. By following such an approach, the portfolio manager demonstrates he or she sincerely respects the views of others, recognizing goals and stakeholder expectations change continually, rather than at set milestones, and highlighting the necessity of people working in concert instead of in silos. This approach is difficult in the face of exponential change and complexity to maintain a long-term, strategic focus, to be able to forecast external and internal trends, and to alter direction quickly in what appears to others to be in a seamless fashion.
By engaging stakeholders, a best practice is for the portfolio manager to resist making assumptions about key stakeholders and their agendas; the focus is to appreciate individual differences. The emphasis is on why portfolio management is essential and why a defined process is required.
The portfolio manager and his or her team focuses continually on identifying stakeholders at all levels and realizes that some stakeholders will lack interest at certain times, while others will want information on the items in the portfolio and their status as well as all the initiatives in the pipeline. The portfolio manager must be receptive if stakeholders are not actively engaged and work to find out why and recognize their concerns. To do so, the portfolio manager can encourage these stakeholders to offer ideas and suggestions, even if they are different from the new ways of working in portfolio management; this approach then enables the portfolio manager to follow up and seek solutions so these problems can be resolved as much as possible.
The goal is to build winning relationships and work effectively to negotiate any competing priorities among stakeholders such as proposed portfolio components to make balanced decisions. To do so, trust between the portfolio manager and stakeholders is required as the portfolio manager's goal is to leverage political dynamics to ensure work is aligned with the organization's strategic goals. One approach to follow is to set up a network with a variety of people at different levels to be up to date on internal and external developments and any key changes in personnel and other information that could affect the portfolio. By using this network effectively, the portfolio manager then can reach out to different stakeholders as required. It enables the portfolio manager to better recognize the various power bases in the organization and also use members of this network to work with key stakeholders as required. It further helps to anticipate in advance the reaction of key stakeholders as the portfolio is rebalanced and prioritized (Levin & Ward, 2011).
For effectiveness, the portfolio manager motivates a team of people to collaborate to focus on achieving organizational strategies and goals as a routine way of working rather than pursuing individual objectives. However, in portfolio management motivation is complicated by the large number of interested stakeholders, many of whom may be influential or interested, but not supportive. Unless a cohesive, collaborative approach can be fostered, the result is portfolio management will fail, and the high cost of failed projects and programs will continue to be the norm. There often are misunderstandings as to what is being done or why someone has not been part of the process from the beginning. Other typical issues are the usual resistance to change, a lack of visible executive support even if it does exist, or any number of factors, but motivating people to see the value of portfolio management is an interpersonal skill required for success.
Many consider motivation to be one of the more challenging aspects of the portfolio manager's job. It is due to many factors, but especially because each person is motivated differently, and in portfolio management with the large number of stakeholders, it is impossible to determine the desired motivation approaches. The network, discussed in the previous section, can help along with an ongoing awareness of the need to continually focus stakeholders on the portfolio components and ensure the portfolio is such that it meets overall business value. If it appears a key stakeholder is not involved, the best approach is to ask the person why and see what might be done to alleviate any concerns.
It is easy, for example, for a portfolio review board to make a decision to pursue a complex project, but difficult to decide to terminate this project if it becomes obvious it cannot be completed as promised especially if resources (human, financial, and assets) have continued to be invested in it. The portfolio manager, recognizing the above situation, then must make the decision or recommendation to terminate it, pointing out even though sunk costs are lost, it cannot recover and possibly should not have been pursued given the complexities involved. Making these difficult decisions is an interpersonal skill of the portfolio manager using fact-based information for support even if terminating a key program or project is a favorite of the head of the organization.
Meyer (2014) explains each component in the portfolio has some amount of uncertainty associated with it. In making decisions one does not know the amount of uncertainty and the probabilities of successful outcomes. Ambiguity is prevalent in portfolio management in selecting components and on the surface, he explains two components may look the same to decision makers, meaning the way the information is presented affects the ultimate decision. He points out that in projects, history has shown that once a component is selected to be in the portfolio, if it is not performing as expected, it rarely is canceled, even if there have been numerous changes, and the project no longer has value to the organization. Decision makers resist terminating projects, and often will even add more resources to them. They may feel there are too many sunk costs in the project, and it becomes an excuse to not terminate it even if the project will not result in a profit to the organization if it is completed. Others may feel they are personally responsible if a project cannot be delivered as planned or if delivered will not add any benefits and avoid making a decision at all. They remain optimistic even if data prove differently.
Wellman (2007) supports this view in an analysis of a case study in an organization, which had used matrix management since the 1970s. This organization had three conditions that influenced decision making: an open environment in which it was acceptable to disagree even with executives, a need to make decisions quickly, and an emphasis on rational decision making based on clear thinking rather than an expectation of always getting good answers. In his case study, one participant stated: “even if the decision wasn't total agreement with my way of thinking, I had good rationale… it wasn't a matter about saving face and egos … it was about let's talk about it in the open, make a decision and make some consensus if at all possible” (p. 69). Often in this organization there was time to wait for additional information, and the decision could be delayed. At other times, decisions had to be made quickly or with little time for interaction.
The portfolio manager then must be effective in making decisions, become involved in program and project review meetings to determine the effects of withdrawal costs, and then follow through such that a decision is made. It then becomes a key interpersonal skill for the portfolio manager to take action even if others do not wish to do so, and the portfolio manager must recognize when he or she has time to involve others and gather additional data, or when a decision must be made immediately.
Resolving Conflict and Managing Agreement
Consider as an example an organization which is pursuing a high-risk, high-reward project in its portfolio. It is entering into a new market, and it does so to diversify its product line and to show it can adapt to new ways of working. The high-risk, high-reward project has been endorsed by the portfolio review board, resources are allocated to it, and it is ranked in the top five of the most important undertakings in the organization. The people assigned to work on it are pleased to be selected. However, it seems as if the project is so different that it is difficult to obtain customer agreement to proceed at gate reviews. Ambiguity and emergent issues dominate, increasing what was complex from the start. There are continual conflicts between the project manager and other key stakeholders, especially at gate reviews and when information on progress is submitted to the portfolio review board. There, the board members use this project as a way to agree to disagree as to what to do.
In these situations, the portfolio manager can take a broader view with conflict-resolution skills and assess the situation. He or she may see the proposed technology is not working as planned, or the existing staff lacks needed expertise. By taking this objective look, the portfolio manager can perform some alternative analyses and determine some different approaches to consider collectively with the team and the portfolio review board. Such an approach does not necessarily provide the answer but elicits suggestions in a non-threatening manner to lead hopefully to a different approach and reduce existing uncertainty. If the problem turns out to be one in which the people require different skills, the portfolio manager can look to use external resources to supplement the team building on their intellectual property. These external resources then can serve in a mentoring way to enhance the expertise of the current team members perhaps through a job-shadowing relationship. As well, the portfolio manager can reach out to others for advice and consultation and use benchmarking studies to see how others may have handled somewhat similar problems.
The portfolio manager looks for a better way even if the program or project is not in jeopardy. He or she focuses on open discussions with stakeholders even if these open discussions lead to conflicts. The objective is to then resolve them using different conflict-resolution methods based on a specific resolution and taking a positive approach in doing so. The open discussions may become future opportunities to improve the portfolio process or to lead the organization into new markets and work with new and significant customers. However, in resolving conflicts, the portfolio manager fosters these discussions without striving to lead to agreement among the stakeholders involved.
Many conflicts may involve the portfolio process as people may resist following it if they feel it is inequitable and unfair. They may believe the process will resist their freedom to try new ideas or work on breakthrough initiatives because their proposed project, for example, may not meet the selection criteria. The portfolio manager must listen, review the selection criteria, and see if changes are needed. He or she must demonstrate that the process does have value as people can see how their program and project links to organizational strategies. However, when changes do occur, the portfolio manager considers their impact and whether these changes can be beneficial to the organization rather than taking a negative view.
The portfolio manager also requires interpersonal skills in facilitation as he or she works to influence others and set to stage for success. Facilitation involves proactive communications, resolving conflicts, obtaining resources, and motivating others. To do so he or she uses clear, explicit statements to quickly get to the point, asks those open-ended questions, focuses on active listening, and asks for clarification as required. With this skill, the portfolio manager shows a willingness to behave in an assertive way and to do what is required while acting in an ethical and professional responsible manner. The goal is to provide a conducive setting for members of the portfolio review board or other key stakeholders and to trust the group to make effective decisions, resolve conflicts, and respond quickly to possible risks or issues. Making timely decisions, being persistent, and showing consistency in one's actions also is needed (Levin, 2010).
Effective use of social media is a necessity since it is rare not to work in a virtual or distributed environment, and one must be comfortable using forums such as video conferencing and webinars, for example. As stated by Shellenbarger, this interpersonal skill promotes trustworthiness and authenticity, the latter meaning one is behaving in a way whether in person, on video, or through webinars in which he or she presents an atmosphere that is natural and comfortable. It focuses on getting to the point quickly, recognizing attention spans are limited, making it more difficult to focus on distractions, and creating a feeling of connectivity through empathizing with the listeners (Shellenberger, 2014, p. D3). It focuses on emphasizing why something is occurring and its importance in a way that people have confidence in what is being said regardless of the media used. Building swift trust further is required as defined by Meyerson, Weick, and Kramer as trust that is “conferred presumably or ex ante” (1996, p. 177).
The portfolio manager can overcome resistance and human behavior complexity by focusing on using diversity to forge an approach people will support and avoid an ‘us versus them,’ or tribal mentality. The objective is to merge different expectations into a collective solution based on problem solving, not groupthink. While it is desired, it is arduous as differences may be overwhelming, and it may not be possible to find a common ground. The portfolio manager overcomes this challenge through focusing on the portfolio's vision, mission, and common values. One method, for example, is to convene focus groups with representatives from the different stakeholder groups at different levels to leverage integration across disciplines. To obtain buy in from key influential stakeholders, the portfolio manager can hold one-on-one sessions, use a Delphi approach so people can participate in an anonymous way to voice their opinions, and ask positive proponents for assistance. Since the portfolio manager is working with people at all levels, building on work of Patanakul and Milosevic (2009), the portfolio manager with an interpersonal skill in facilitation requires internal traits such as being well organized, disciplined, proactive, mature, and having self control to contribute to the ability to interface with diverse stakeholders at all levels.
Moving into a Portfolio Management Position
It also is hopeful, although not necessarily the norm, that portfolio management is driven from the senior leaders as they view it as the way to improve the success rate in the programs and projects undertaken in terms of sustainable benefits for customers. Often, however, it is a project professional or a group of project professionals, desiring some type of improvement in the success rate of programs and projects, who make a business case for portfolio management, and they are offered an opportunity to pilot test it in a business unit or department. It further may be that one is assigned to work with someone who heads the EPfMO to make the process one that is followed consistently at all levels. This section presents some guidelines to consider whether the portfolio management process is new or is being revitalized as leaders realize change is imperative (much of the section builds on the work of Rad & Levin, 2006).
Avoid an Overly Bureaucratic Process
The goal is to make portfolio management a natural part of one's job at any level, therefore the process that is followed should have some flexibility. It also is necessary to consider implementing portfolio management or enhancing the existing process as a project in its own right with full-time staff dedicated to it. Effective processes are required to perform portfolio management well, and often processes may not be in place or may be inadequate, meaning the portfolio then will be unbalanced and will fail to meet the organization's strategic goals or promote business value.
Both the portfolio manager and the portfolio review board should have charters. For the portfolio manager, this charter describes the goals and objectives for portfolio management in the organization, the level of authority given to the portfolio manager especially in terms of making decisions, roles and responsibilities, key assumptions and constraints, and resources available to the portfolio manager. The portfolio manager signs it to show concurrence and commitment, and the charter is signed by members of the portfolio review board.
The portfolio review board's charter describes why the board exists, its roles and responsibilities, how decisions will be made if consensus cannot be met, the frequency of its meetings, and how decisions are communicated after each meeting to demonstrate to the rest of the organization that it is a decision-making forum. It should be signed off by each board member to indicate commitment and concurrence and ideally by the head of the organization. When new members join the board, they should review the charter and sign it. It also may be appropriate to include the portfolio manager on the board as a non-voting member with facilitation and communications responsibilities. From time to time, both charters require review to see if they meet their intended purpose or whether changes are needed.
Preparing a Scope Statement
While the hope is that portfolio management is established at the highest level of the organization with a chief portfolio officer reporting to the chief executive officer or comparable executive, each organization is different. It may be established in a department or a division. As well, the goals for portfolio management are different, ranging from a fully implemented portfolio process that is followed throughout the organization to a data gathering unit in which reports are prepared according to the software tool used. Regardless, preparing a scope statement builds on the charter and shows how portfolio management is to be practiced by documenting constraints and assumptions and describing what is in scope versus out of scope. It also shows overall success criteria for portfolio management.
Preparing a Work Breakdown Structure
Similar to a work breakdown structure (WBS) on programs and projects, a WBS is equally useful for portfolio management. It serves as a framework for portfolio management planning and monitoring and controlling. Its first level elements can be organized according to categories that represent the type of work in the portfolio. Another approach is to set it up by the organization's strategic goals. A third approach is to set it up according to the Defining Process Group, Aligning Process Group, and Monitoring and Controlling Process Group (PMI, 2013c). Not to be overlooked in any of these formats is a project management function describing work involved in implementing and maintaining the portfolio.
Preparing a Schedule
From the WBS, a schedule of portfolio management activities can be prepared leading to a broader portfolio roadmap. Assuming portfolio management is new to the organization or its functions are being enhanced so it serves the entire organization, a best practice is to set it up to focus on some quick wins or early success stories to build momentum. An example is having proposed components prepare business cases that are officially reviewed and approved to be part of the portfolio, and if not approved to have the portfolio manager talk with the sponsor to describe why it was deferred or rejected. As the process matures, the prioritization model is prepared and agreed upon so everyone can see the priority of his or her work in the organization. Communications after each portfolio review board meeting are documented and distributed for transparency in the process. In time, a portfolio mindset is ingrained, ‘pet’ or personal projects are not pursued, and programs or projects that no longer are aligned with the changing strategic objective or that are lagging and once completed will not add business value are terminated as decisions are made. This schedule then is part of a portfolio roadmap showing interdependencies, major milestones, and benefits (PMI, 2013c).
Developing and Following a Portfolio Management Plan
The next step is to develop a portfolio management plan, typically the responsibility of the portfolio manager and signed off by members of the portfolio review board. This plan formally describes objectives for portfolio management, major milestones, and completion dates of the process to follow and the models to use. It includes subsidiary plans as needed with a communications management plan a best practice. The plan has a budget for portfolio management and metrics to be used along with roles and responsibilities. Once the plan is prepared the portfolio manager circulates it in draft to stakeholders such as members of the portfolio review board, program and project sponsors, operations managers, and program and project managers. By soliciting feedback and incorporating what is useful, a transparent process is established from the beginning. If the final plan does not incorporate a key stakeholder's comments, the portfolio manager should talk with this stakeholder to explain why. Once the plan is officially approved, it again is distributed, recognizing it will change as the portfolio process is implemented and enhanced.
Since portfolio management is a decision-making process, it requires data in a format that is easy to understand to track component progress in delivering benefits and in preparing forecasts to determine whether the portfolio is adding value. These success metrics consist of ones that are quantitative or tangible or qualitative and at times intangible. The tangible and quantitative metrics include items such as increase in net profits, return on investment, new benefits, new customers, new markets, net present value, internal rate of return, resource availability with desired competencies, and cost reduction, to list a few. Qualitative and at times intangible metrics include increase in customer satisfaction, increase in employee productivity, increase in overall staff morale, enhanced strategic alignment, and recognition of legal and regulatory compliance, again to list a few. Hopefully, a portfolio management information system is in place so the data are easy to collect from a single system and can be presented in the report formats desired by the board members. Such an approach can facilitate decisions made based on facts that are in turn communicated to others.
Summary and Parting Thoughts
Portfolio management is ongoing throughout the organization, and continuous improvements are expected. A portfolio manager with expertise in these seven interpersonal skills, as well as having an understanding of the needed performance competencies, can lead to greater success in its acceptance and implementation. It is a key culture change for people at all levels in the organization.
Are You Ready or Are You Going to Continue to Fish?
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© 2014, Ginger Levin
Originally published as a part of the 2014 PMI Global Congress Proceedings – Phoenix, Arizona, USA