Yang: Separating Wheat From The Chaff

Los Alamos

Why do managers keep relying on “half-truths” or “nonsense” in their decision-making process? In Hard Facts, Dangerous Half-Truths & Total Nonsense, Pfeffer and Sutton give at least three reasons:

1. using data changes power dynamics;

2. people often don’t want to hear the truth; and

3. the marketplace for business ideas is messy and inefficient.

Facts and evidence are equalizers; anyone can gather them and present them to back up their assertions. If we allow anyone to apply facts, we can easily imagine the erosion of management power, and newly-legitimized criticism of the often ridiculously high pay associated with senior management levels. Issues of ego, hero stature, and power probably will all be re-written. Have you tried to change the power dynamics at work lately? And, have you tried to tell whole truths, especially unpleasant ones? 

Concerning the business literature, the marketplace for business advice and ideas is huge, and quite often fraught with contradictions. How do you separate good and sound ideas from others that look similar but are without merit? When truths are not pleasant, it is all the more enticing to just grab whatever seems attractive and sounds appealing; for example, who wouldn’t want to “search for excellence?” It’s “common sense,” (link) right?!

How, then, does one go about gathering and assessing evidence? The answer sounds an anticlimactic truth: “Use Sound Logic and Analysis.” Readers, take note: There just aren’t any straightforward 12-step programs to guide managers. Managers need to invest time and effort to get acquainted with as many logical and analytical issues as possible, so that when encountering yet another book or essay, managers will be in better position to judge the validity of claims. 

Related, managers should have some ideas of how social research is conducted, i.e. what the main questions in the study are, how the data are collected, where the samples come from, the approach of analysis, etc. For instance, are the data all about successful firms? Any failed ones for comparisons? Are they all based on respondents’ memory? Any “objective” data to back up assertions? This doesn’t imply that another workshop on statistics or research method is needed. However, setting this foundation will go a long way toward developing more rigorous criteria for choosing publications, and assessing ones’ own organizations, knowing what to ask and when to ask. 

So here are the guidelines Pfeffer & Sutton offer:

  • Treat old ideas like old ideas.
  • “Be suspicious of breakthrough ideas and studies – they almost never happen.
  • “Celebrate communities of smart people and collective brilliance, not lone geniuses or gurus.
  • “Emphasize the virtues and drawbacks (and uncertainties) of your research and proposed practices.
  • “Use success and failure stories to illustrate practices supported by other evidence, not necessarily as valid evidence.
  • “Take a neutral approach to ideologies and theories.  Base management practices on the best evidence, not what is in vogue.”

Most of these points are fairly self-explanatory. Yet, they do require thought and reflection before they can be internalized. Remember some of the lessons on
“emotional intelligence?” (link). It will take at least one year before changes in emotional state may be long lasting. Evidence-based management may sound dry, and yet, the consequences do evoke emotions. So, best to start with just one principle and familiarize with it and practice again and again. After all, doing supersedes planning and learning.

And proposing changes and allocating money/resources charge up our emotions in no time. 

Money issues can really mess up people and organizations. The biggest myth in our financial incentive system is this: People’s motivation to work, and to work hard, lies in the amount of money they get. If the money isn’t “right,” employees will undermine the organizational goals and management goals. Once organizations figure out the reward system, which is always intricate and complicated, employees’ behavior will be perfectly aligned with the organization. 

Do you think you only work for money?!

This assumption is also responsible for the perennial debate about teachers’ performance and whether teachers’ salaries should be tied to performance, as measured by the students’ test scores. First of all, do we really think that our own, and our next generation’s, education is all just about how we do in tests? This is not about politics, but about how to understand and employ logic and facts to engage in meaningful and intelligent discussions. And it’s a topic about which we all feel passionate, and we all have some experience.  How many teachers that you know of are actually motivated by their salary? Is teacher’s motivation the sole determinant of students’ performance? How about the teacher’s skill, parents’ involvement, parents’ education background and financial standing, the community in which the school resides, the school’s culture, the administration’s record, the resources, etc.?

Having reflected on these nuanced concerns, would you be surprised to know that the idea of merit-pay for teachers has been around since early 1900? Furthermore, the research in this area has been abundant, and the results have been pretty conclusive: Whatever benefit merit pay may achieve generally doesn’t last more than five years, and it consistently fails to improve students’ performance, i.e. test scores. By the way, what motivates students?

The two major points about financial incentives I learned from Hard Facts, Dangerous Half-Truths & Total Nonsense are:

  1. While financial incentives can increase people’s motivation, for a short while, the motivation will improve only effort (work harder, and only in the short term) but not ability (If you are not fundamentally good at something, additional money isn’t going to change that.). As Sherlock Holmes said to Watson: Once it’s explained, of course, it’s obvious!
  2. We think others are motivated by money, even if we are not.” A study of prospective law students found that 64 percent of respondents indicated that they wanted to pursue a law degree because of the intellectual work or interest in law, while only 12 percent thought their peers were likewise motivated. In fact, 62 percent thought the others pursued the degree because of financial rewards. 

Of course, in general, people would like to have more money, but they want it for a wide range of reasons, most of which are not directly linked to the motivation over which the organization wants control. And by and large, the intrinsic value of the work itself plays a significant role, a fact largely overlooked by management and compensation consultants.  These often untested assumptions help warp our notions of what work means to us, and what it means to others. Hence, financial incentives get overemphasized while the intrinsic importance of work gets underemphasized. 

In the next post, I will focus on “when (not) to change,” and “effects of managerial control.” Till then,

Staying Sane and Charging Ahead.

Direct Contact: taso100@gmail.com.