Just the Facts: Evidence-Based Management

I recently read an enlightening book by Jeffrey Pfeffer and Robert I. Sutton, titled, Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management.

The premise of the book is that many organizations follow the guru du jour, or manage according to the book of "someone said so." As the book points out, if we only looked at the evidence, we'd see that may of these so-called truths are anything but.

Here are some examples of the lessons the book has to offer, always supported by evidence:

1) Forced ranking of employees doesn’t work, especially where people’s performance depends on interdependence with others. Furthermore, a survey of over 200 HR professionals by the Novations Group found that forced ranking (employed by more than half of the companies) resulted in lower productivity, injustice, skepticism, less employee engagement, reduced collaboration, lower morale, and mistrust in leadership.

The authors add that, if an organization trains people right and places them in an effective system, there’s no reason why 10 or 20 percent would automatically become incompetent every year.

2) Beware of your biases as a manager. Studies of NBA drafts showed that players picked earlier and paid more were less likely to be traded and had longer careers, regardless of their actual performance.

3) In the war for talent, don't forget that bad systems cause far more damage than bad people. Try redesigning systems and jobs before judging individuals. And don’t give people objectives unless the system and staffing can support it.

4) Watch out for dangerous incentives. One organization's salespeople shipped too far ahead of schedule just to win a prize. Some salespeople would hold customer returns in the trunk of their car so they still get their commission for that period. Others opened bad credit accounts because any order counted as a good order. In another company, incentives to complete truck routes early led to increased accidents and overloading of trucks to avoid multiple trips.

5) Strategy isn’t all it’s cracked up to be. Operational execution often has a greater impact on performance. The CEO of Wells Fargo once said, “I could leave our strategic plan on a plane and it wouldn’t make any difference. No one could execute it.” In U.S. football, virtually every play is designed to go for a touchdown. Unfortunately, reality gets in the way, as do mistakes in execution.

The authors point out that time spent pursuing strategic options could be better spent solving operational problems or focusing on customer needs. Organizations such as eBay and Intel use a “learn as you go” approach, putting something in the market and tweaking accordingly. Doing the right things is important, but not at the expense of doing them effectively.

6) Many changes, including mergers and acquisitions, ERP implementations, Six Sigma programs, Business Process Reengineering, cost cutting initiatives, and others, carry risks that outweigh the benefits and can be easily misapplied. People tend to underestimate the costs and overestimate the gains.

However, if it is determined that the change is still needed, the authors suggest we:

a) Ensure dissatisfaction with the status quo (i.e. the burning platform)
b) Communicate the same message repeatedly about the need for the change
c) Express extreme confidence in the change, but listen to concerns and adjust accordingly
d) Expect setbacks, errors, and miscommunication; Learn from it and revise processes. Never point fingers.

7) Based on proven evidence, in order to gain respect and trust, leaders should:

a) Act "as-if" - Be sure to act and talk like a leader
b) Have some sense of modesty. Understand the difference between knowledge (knowing things) and wisdom (knowing what you know and knowing what you don’t know).
c) Know when to get out of the way.
d) Above all, be an architect of systems, teams, and cultures.

These are but a few of the valuable nuggets in the book. The book offers additional tips as well, plus loads of supporting stories, examples, and research. Perhaps most valuable is the chart on the various types of changes and risks associated with them. I highly recommend this book to all leaders.