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For those long term readers of McLeod Governance, you will recall  we examined the concept of what we titled the Governance Distress Call – a tool for interested spectators to objectively measure the risk / control environments within differing organisations against a universal measure of distress or success.

Perhaps we were trying too hard to invent something that was before our very eyes and is the very thing that you are more than likely reading this missive on – email!

Recently we were sitting in a doctor’s waiting room and came across – as one does – a five year old magazine detailing how to identify corporate stress.

At the wonderfully named International Workshop on Complex Networks (note to the governance, risk and audit professions – we need better names for our conferences!) held in May 2009 in the Sicilian town of Catania (note to the governance, risk and audit professions – we need better locations for our conferences), two academics – Ben Collingsworth and Ronaldo Menezes of the Florida Institute of Technology – argued that email logs can provide advance warning of an organisation reaching crisis point.

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After Enron collapsed in December 2001, federal investigators obtained records of emails sent by around 150 senior staff during the company’s final 18 months. The logs, which record 517,000 emails sent to around 15,000 employees, provide a rare insight into how communication within an organisation changes during stressful times.

The academics identified key events in Enron’s demise, such as the August 2001 resignation of CEO Jeffrey Skilling. They then examined the number of emails sent, and the groups that exchanged the messages, in the period around these events. They did not look at the emails’ content.

It was expected that communication networks would change during moments of crisis.

Yet the researchers found that the biggest changes actually happened around a month before.

For example, the number of active email cliques, defined as groups in which every member has had direct email contact with every other member, jumped from 100 to almost 800 around a month before the December 2001 collapse. Messages were also increasingly exchanged within these groups and not shared with other employees.

Perhaps Collingsworth and Menezes have hit upon something that the standard models of communication within internal control environments miss.

As stress builds within a company, employees start directly talking to people they feel comfortable with, and stop sharing information more widely.

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The difficult part is confirming this DURING the (usually silent) build up of stress within the organisation as privacy concerns mean that email logs are hardly ever made public.

(Post based on “Email Patterns Can Predict Impending Doom” by Jim Giles, New Scientist, 22nd June 2009)

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