Wikipedia defines the signal-to-noise ratio (did I mention that Ron was a NASA communications systems engineer with an ABD in electrical engineering?) as the ratio of signal power to the noise power corrupting the signal. A ratio higher than 1:1 indicates more signal than noise, a very good thing. SNR compares the level of a desired signal to the level of background noise. The higher the ratio, the less obtrusive the background noise.
In HRM, the analogy is to signal power is the individual/group contribution to achieving the organization’s business outcomes. The analogy to noise is the aggregation of costs, risks, disruptions, annoyances, management bandwidth, etc. needed to support that individual or group in achieving that contribution. We can express the ratio as business outcomes contribution divided by organizational noise created, where organizational noise is understood to reduce the organization’s ability to achieve those business outcomes. The higher the ratio, the more desirable the individual or group from a performance management perspective.
During my nine years at American Management Systems, the period I’ve always thought of as AMS’ golden years, my great mentor Larry Seidel introduced me to the SNR for organizational performance, or perhaps he invented it for managing me. I was a very different hire than the “fresh out of school” (and here we’re talking Harvard MBAs and MIT computer scientists) majority of AMS’ hires during the mid-70’s. With ten years behind me of increasingly responsible experience in every aspect of software design/development/implementation, I had actual opinions that weren’t yet AMSed, and I expressed those opinions with my usual reticence. So when Larry, younger than me by nearly ten years, but oh so much smarter, was assigned to manage me, we were both in for it. Yes, I had a ton to contribute, but no I wouldn’t sit down and shut up while contributing it. Fortunately, my contributions outpaced my noise level.
In a project-based organization like AMS, and so much of today’s work is project-based, the project mix at any time is unpredictable along with the mix of team capabilities needed to deliver the required business outcomes. One’s value to the organization rises considerably the more broadly-based are your capabilities and the more readily you deploy them — as long as your noise level is manageable. It was an organization chock full of star players, with strong personalities to match their amazing capabilities. But I noticed that, as I began managing projects and then leading a portfolio of projects, I quickly developed my own SNR for many of the folks who worked on my projects, as I’m sure others did for me.
We’ve all known stars whose outsize personalities, disruptive behaviors, and general noise level eventually overwhelmed their contributions to the point that the organization would be well rid of them. But we really need the capabilities of those stars when they’re in positions that drive business results. And therein lies the need for SNR analysis.
The bottom line. How much noise can the organization stand in order to unleash the capabilities of star players? What HRM techniques can be used to dampen their noise without dampening their contribution? How can we anticipate, during the hiring or later lifecycle processes, what a person’s SNR will be? What approaches can we use with our younger stars to minimize the growth of their noise levels as they grow into their full capabilities to contribute? For all of these questions and many more, which go to the very heart of improving organizational performance and the achievement of business outcomes, the contribution to noise ratio may be the best summary indicator of each individual’s value to the organization. What’s your SNR?