Evidence-based management

Dear colleagues,

Evidence-based practice has been widely taken up in medicine, so why not in other fields? How about management? That's what Stanford professr Jeffrey Pfeffer and Robert I Sutton have done in their book Hard Facts, Dangerous Half-Truths, and Total Nonsense.

Pfeffer and Sutton focus on companies in the US. They systematically examine a series of assumptions made by management, such as that work is fundamentally different from the rest of life, that the best organisations have the best people and that company performance is driven by financial incentives. They describe how these assumptions are reflected in actual organisations and then look for evidence pertinent to standard practices. In many cases, they find that management practice is at partial or complete variance from what the evidence suggests.

For example, managers often assume that the best way to improve performance is to employ highly talented individuals and to generously reward high performers. Pfeffer and Sutton say this is a half-truth, with the evidence supporting a different view: that good systems are often more important than good people. They recommend that managers "treat talent as something almost everyone can earn, not that just a few people own" (p. 100) and "encourage people to be noisy and nosy - it promotes wisdom" (p. 105).

However, many companies do the opposite. Pfeffer and Sutton report on a high-technology firm that used a forced-ranking system: "Managers were required to rank 20 percent of employees as A players, 70 percent as Bs, and 10 percent as Cs ... they gave the lion's share of rewards to As, modest rewards to Bs, and fired the Cs". This was despite executives at the firm, in an anonymous survey, saying this system "made it difficult to turn knowledge into action". Lots of companies use forced ranking, even though human resource professionals working at them say it results "in lower productivity, inequity and skepticism, negative effects on employee engagement, reduced collaboration, and damage to morale and mistrust in leadership" (p. 107). Pfeffer and Sutton say they "can't find a shred of evidence that it is better to have just a few alpha dogs at the top and to treat everyone else as inferior. Rather, the best performance comes in organizations where as many people as possible are treated as top dogs" (p. 108).

This book isn't about universities, but a lot of the points are relevant. For example, the chapter on incentive systems points out that they do attract talent, but often the wrong kind. If a company offers financial incentives, they may attract people who are just after the pay and who will leave when they receive a better offer. Pfeffer and Sutton describe the sorts of jobs in which financial incentives are an effective way to increase productivity, but academic jobs are definitely not among them: "when work settings require even modest interdependence and cooperation, as most do, dispersed rewards [i.e., bigger differentials] have consistently negative consequences on organizations. A study of college and university faculty showed that the greater the dispersion of pay within academic departments, the lower the job satisfaction, the less collaboration, and the lower the level of research productivity" (p. 128).

The authors describe an ingenious study in which supervisors rated a product - an advertisement - as better when they thought they had been involved in supervising the workers who produced it. Actually, none of the subjects in the study had had any influence on the product. Supervisors "who believed that their comments influenced the final advertisement rated that identical product about twice as highly as the other supervisors who believed that they had no influence, and gave similarly inflated ratings to their own ability as managers" (p. 198). No doubt this applies to evaluating the work of students, which is why it's appropriate to have strict rules excluding supervisors from examining theses.

Pfeffer and Sutton question the assumption that great leaders are in control of their organisations, giving advice such as "figure out when, and how, to get out of the way". They also say that "believing that you are powerful can wreck your organization":

"One of the paradoxes of being effective in a leadership role is that you must instill confidence in others to motivate effort and convince them that the future will be bright if they act in a cooperative, coordinated fashion to accomplish things. Yet even as you are instilling that confidence in others and projecting that you know what you are doing, it is imperative to avoid succumbing to your own hype, believing your own press, and as a consequence, suffering the downsides of believing in your own omnipotence." (p. 206).

Universities, being places where knowledge is created and tested, should be in the forefront of evidence-based management, but the reality is quite different. How often are teaching practices subjected to the test of evidence for their effectiveness? How often is research conducted, or examined, in relation to how to hire staff, set up workload models, establish pay scales, allocate research funds or run meetings? No doubt there's a great opportunity for any university that implemented evidence-based practices.

However, as Pfeffer and Sutton point out, people frequently don't want to know what's effective. They give the example of psychologist Gary Wells who demonstrated that showing suspects to witnesses one after another was far more reliable than the traditional lineup. "Yet although Wells has spent 20 years campaigning to convince police departments to use sequential lineups, only four out of over 19,000 legal jurisdictions have implemented this evidence-based practice" (p. 218).

To counter this sort of resistance, Pfeffer and Sutton give lots of advice about promoting evidence-based management. One of their points is that the task can't be left to senior leaders alone.

Brian Martin
8 November 2007

Jeffrey Pfeffer and Robert I Sutton, Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-based Management (Boston: Harvard Business School Press, 2006).

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