EBMgt Course Module 3: Why Do We Need It?

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

2. Postgraduate Course
Reason 1: Mounting criticism
”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”
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.

3. Postgraduate Course
Trust me, I’m a manager.

4. Postgraduate Course
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. Postgraduate Course
 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wrong or out-of-date within 7 years of your graduation;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
Reason 3: false information

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

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

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

9. Postgraduate Course
 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)
Reason 5: The Zeitgeist

10. Postgraduate Course
But the MAIN reason is .....

11. Postgraduate Course
Bounded rationality

12. Postgraduate Course
Bounded rationality
System 1
 Fast
 Intuitive, associative
 heuristics & biases
System 2
 Slow (lazy)
 Deliberate, „reasoning‟
 Rational

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

14. Postgraduate Course
Systeem 1: necessary to survive

15. Postgraduate Course
 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
System 1: very prone to biases
 Confirmation bias
 Authority bias
 Small numbers fallacy
 In-group bias
 Recall bias
 Anchoring bias
 Inaccurate covariation detection
 Distortions due to plausibility

16. Postgraduate Course
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. Postgraduate Course
“The first principle is that you must not fool
yourself - and you are the easiest person to
fool”.
Richard Feynman

18. Postgraduate Course
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.”
Bounded rationality

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

20. Postgraduate Course
“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
EBP is about the signal and the noise

21. Postgraduate Course
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