Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management |...

Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management | Jeffrey Pfeffer, Robert I. Sutton | Another thought provoking work from Pfeffer

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Hard Facts, Danger...

	Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management Jeffrey Pfeffer, Robert I. Sutton Harvard Business School Press, 2006 - 276 pages average customer review:based on 35 reviews view larger image
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highly recommended

The best organizations have the best talent. . . Financial incentives drive company performance. . . Firms must change or die.

Popular axioms like these drive business decisions every day. Yet too much common management ?wisdom? isn?t wise at all?but, instead, flawed knowledge based on ?best practices? that are actually poor, incomplete, or outright obsolete. Worse, legions of managers use this dubious knowledge to make decisions that are hazardous to organizational health.

This practical and candid book challenges leaders to commit to evidence-based management as a way of organizational life ? and shows how to finally turn this common sense into common practice.

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Better than the usual stuff

Some years ago a discipline was developed called evidence based medicine. It is based on using studies of outcomes to make medical decisions rather than on subjective feeling. An early example of evidence based medicine was the decision to see if blood letting was an effective way of treating various ailments. It was found that sick people who were treated with blood letting died at a higher rate than sick people who received no treatment at all. Blood letting had been one of the corner stones of medicine for centuries and in fact the leading British medical publication is still called the "lancet" the device used to drain blood.

The writers of this book suggest that like any ideas Management theories should be tested to see if they actually work. They are of the view that some ideas work, some don't and some are counter productive. To illustrate the notion of testing they first discuss a Casino in Nevada. The running and management of casinos has had what could be called basic unchallenged assumptions. They are:

* High rollers should be encouraged by the provision of free rooms alcohol and the like
* Large ostentatious buildings are important in attracting customers
* Advertising is effective

The writers talk about a Casino manager who rather than become a captive of the notion of accepted wisdom tried different things and then measured the financial gain. The managers name was Gary Loveman. What he found out was that the group who targeted the greatest revenue were retired people who would play machines for longer periods of time as a form of entertainment. The source of these customers were the local area. Direct mail was the best means of encouraging these people and as they lived in the area they were not interested in free rooms. What they responded to was the gift of $60 worth of playing chips. Other groups such as families with children were much less profitable as they had much less of their income to gamble and were poor targets for advertising.

On the cost side Loveman found that if money was spent on staff selection and training and some realistic notion of what the job was like was communicated to staff retention rates increased 50%.

Having outlined the idea of a methodology of approach the book looks at some of the conventional management approaches. One of the accepted truisms of modern management is incentive style pay systems. Do they in fact work? The answer is sometimes they work, sometimes they don't and other times they can be disastrous.

The best example of a successful incentive scheme is assembly production. The authors speak of a plant in which windscreens are installed in cars. In this case an incentive scheme achieved big productivity gains. The worst example is that of the New Orleans police. New Orleans had a big increase in crime and incentives were designed to reward police for reduction in crime figures. What happened was that instead of a decrease in crime the police simply faked the figures reporting offences as less serious matters. This initially led some of them to get reward payments but led to a clean out of the New Orleans police with large numbers of senior management being sacked. Clearly there are some differences which are important in working out when incentive schemes will work. With a production line it is easy to see if someone is cheating. One can look at the production for both quantity and quality. With a civilian authority dealing with a police department the flow and knowledge and the ability to understand what is going on is more limited.

It is clear however that incentive systems can send out rather bad signals and often can be counterproductive. Thus one of the goals of most organisations it to have their employees to work as a team. Another goal is to have the employees think that they are valued. Both of these goals are ones that run contrary to a system which may encourage competition and feelings of being seen as inferior to other employees. The point that the book makes is simply that such systems cannot be seen as by default good and their effects in a given system must be measured to see how they perform.

Another good example is the discussion of strategic plans. One of the writers attended a function run by a large law firm. The law firm had a secret strategic plan. The writer said the he was certain that he could guess the secret plan. He suggested that it was:

* Growing high margin areas
* Getting out of low margin areas
* Easing out historically low profit partners
* Bring in more profitable partners
* Move from a location based to practice based structure

The thing is that a large number of consultancy firms make a living out of working with law firms and offering such advice. The reality is that the advice is simply a set of truisms and that the key is not having those ideas but being able to move toward the goal. They key in any organisation is not the plan but the execution. As a result strategic plans have been going out of fashion and are seen as mainly effective at providing revenue streams for consulting firms.

The book suggests that there are no simple answers to any question and the best management tool is for managers to be open minded and to know their limitations and when they do not know the answers.

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Another thought provoking work from Pfeffer

I've been an avid Pfeffer fan since 'Resource Dependency', so am inclined to give him 5 stars for anything he writes.

The main themes in here are extremely thought provoking and are great for jogging one's brain to think thorough one's management assumptions. A few of his analogies are weak...I believe there are better cases as analogies for some of Pfeffer's points. He relies upon his corporate experience, but most of the half-truths have graphic examples in government bureaucracies. Using those types of examples would have made the book more alive.

I bought this when it first came out and just reread this weekend. It's the type of book I share with my staff to start the conversation about our approach to work. Very useful tool in that regard.

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Rigorous Research Put Into Practice

Pfeffer and Sutton cover a lot of important territory in this book. I learned lots of useful lessons about managing people, incentives, organizational change, leadership, and a host of other HR fundamentals. But the main lesson that I took away from the book is to be wary of excessive claims by people who claim to have great experience and expertise, and lots of success stories, but don't know or reject the findings from the best research. As Pfeffer and Sutton point out, one of the biggest problem with management methods and advice is that the people who sell them have a financial incentive to make claims that that their ideas are effective even when the best evidence clashes with their advice. And because of the well-documented human tendency to "see what you believe," people - including managers and doctors too - will go on using and recommending suspect practices throughout their careers while firmly believing that the evidence is on their side, even though it is not. This isn't a fast or light read, but it is an important wake-up call for management.

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Great scientific evaluation of many management beliefs

This is one of the best books on management, which takes a hard scientific look at deeply ingrained beliefs and provides scientific pointers, in many cases to the gold standard--controlled experiments.

As with any book, each of us loves evidence that supports our own beliefs, but this book provides strong evidence that made me re-evaluate some other deeply ingrained (and likely wrong) beliefs, and that's the real value of the book.

Unlike In Search of Excellence, which was highly motivating, but weak on causal data (most evidence was correlational), this one is full of great pointers to solid evidence and controlled experiments.

To keep the balance in this review, I'll mention one gripe. In multiple cases the authors have fallen into the trap of pointing to anecdotal evidence and single examples of "success" to support their claim, thus failing to pass the bar of scientific-based evaluations. These are few, and most evaluations are very solid, hence the 5 stars.

Read it, and re-evaluate some of our own misconceptions!

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reviews: page 1, 2, 3, 4, 5, 6, 7

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