The Hindu Business Line : A call for evidence-based management

Do you make the right decisions, or do you simply copy "what seems to work for other companies"? This is the question that two Stanford professors Jeffrey Pfeffer and Robert I. Sutton pose in `Hard Facts, Dangerous Half-Truths & Total Nonsense,' from Harvard Business School Press (www.HBSPress.org) .

The book is a call for `evidence-based management' in the place of simply following inputs from `a seminar, book, or consultant'. The latter course is a case of `doing without knowing' - of adopting half-truths "that are partly right at times, but are flawed and misleading enough to get organisations into serious trouble." Part two of the book has six chapters devoted to `dangerous half-truths about managing people and organisations'. The first `half-truth' is that work is fundamentally different from the rest of life. "Lip service about work-life balance aside, companies routinely treat employees' nonwork lives as less important than work," rue the authors. "Accommodating the rest of life may actually be more efficient," instead.

The second question that the authors pose is, "Do the best organisations have the best people?" An obsession with individual talent can be hazardous to organisational health, they caution. Because human judgments involved in assessing talents can be clouded by "largely inescapable psychological biases." Also, intelligence measured usually by IQ (intelligence quotient), though a common predictor of job performance, "seldom correlates more than 0.4 per cent with performance."

Wisdom, not intelligence, may be the most crucial talent. More important than "people who think quickly and well when they work alone on problems with known correct answers," are "people who know the limits of their knowledge, who ask for help when they need it, and are tenacious about teaching and helping colleagues."

A valuable insight in the book is that great systems are often more important than great people. The third question is: "Do financial incentives drive company performance?" Incentives can work as motivators only when performance outcomes are under the control of people who receive the incentives, point out the authors. In the absence of such control, incentives can lead to frustration.

Urgent read.

http://BookPeek.blogspot.com

D.Murali