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Evidence -based management: Why do we need it?

This article explores the need for evidence-based management by discussing mounting criticism, the need for accountability, the prevalence of false information, the time value of knowledge, and the limitations of human decision-making. It highlights the benefits of evidence-based practice and its ability to overcome biases and improve organizational performance.

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Evidence -based management: Why do we need it?

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  1. Evidence-based management: Why do we need it?

  2. Reason 1: Mounting criticism Managers have to endure a great deal of criticism from various directions. Misuse of the position of power to one's own benefit, failure and mismanagement are the charges most commonly heard. ”Staff in the private and public sectors are addressed on a daily basis in a language which does not express their own specific reality but the make-believe world of managers. This make-believe world is dominated by objectives couched and repeated in a theatrical rhetoric: top quality, excellence and continuous innovation”

  3. Trust me, I’m a manager.

  4. Reason 2: Accountability As a result of this increasing social pressure there is an external drive for transparency which fosters an upheaval for ‘objective opinion’ and even ‘objective evidence’.

  5. Reason 3: false information • Half of what you learn will be shown to be either dead wrong or out-of-date within 7 years of your graduation; the trouble is that nobody can tell you which half

  6. True or false? Incompetent people benefit more from feedback than highly competent people. Task conflict improves work group performance while relational conflict harms it. Encouraging employees to participate in decision making is more effective for improving organizational performance than setting performance goals.

  7. How evidence-based are managers? HR Professionals' beliefs about effective human resource practices: correspondence between research and practice, (Rynes et al, 2002, Sanders et al 2008) • 959 (US) + 626 (Dutch) HR professionals • 35 statements, based on an extensive body of evidence • true / false / uncertain • On average: 35% - 57% correct

  8. Reason 4: half time value of knowledge 5 years? 7 years? 10 years?

  9. Reason 5: The Zeitgeist • Evidence-based practice movements abound in medicine, education, and public policy • Management research from psychology, engineering, operations research yields 1000s of studies annually • Internet (scholar.google.com) gives ready access • Innovative companies now hiring “chief evidence officers” • Public demands accountability (quality decisions that are defensible)

  10. But the MAIN reason is .....

  11. Bounded rationality

  12. Bounded rationality • System 1 • Fast • Intuitive, associative • heuristics & biases • System 2 • Slow (lazy) • Deliberate, ‘reasoning’ • Rational

  13. Bounded rationality neo cortex (system 2) limbic system and brainstem (system 1)

  14. Systeem1: necessary to survive

  15. System 1: very prone to biases • Seeing order in randomness • Mental corner cutting • Misinterpretation of incomplete data • Halo effect • False consensus effect • Group think • Self serving bias • Sunk cost fallacy • Cognitive dissonance reduction • Confirmation bias • Authority bias • Small numbers fallacy • In-group bias • Recall bias • Anchoring bias • Inaccurate covariation detection • Distortions due to plausibility

  16. Errors and Biases of Human Judgment • Managers and consultants hold many erroneous beliefs, not because they are ignorant or stupid, but because they seem to be the most sensible conclusion consistent with their own professional experience! (system 1 will always engage!)

  17. Richard Feynman “The first principle is thatyou must not fool yourself - andyou are the easiest person to fool”.

  18. Bounded rationality I’ve been studying intuition for 45 years, and I’m no better than when I started. I make extreme predictions. I’m over-confident. I fall for every one of the biases.”

  19. Developing expert skill and intuition • A sufficiently regular, predictable environment • Opportunities to learn regularities through prolonged practice and feedback • The management domain is not highly favorable to expert skill and intuition!

  20. EBP is about the signal and the noise “It’s hard to tell the signal from the noise. The story the data tell us is often the one we’d like to hear, and we usually make sure it has a happy ending. It is when we deny our role in the process that the odds of failure rise.” Nate Silver

  21. EBMgt Overcomes Limits of Unaided Decisions • Bounded Rationality • The Small Numbers Problem of Individual Experience • Prone to See Patterns Even in Random Data • Critical Thinking • Decision Supports • Research • Large Ns > individual experience • Controls reduce bias The “Human” Problem Evidence-Based Practice

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