Magazine

Forget Going With Your Gut


HARD FACTS, DANGEROUS HALF-TRUTHS & TOTAL NONSENSE

Profiting from Evidence-Based Management

By Jeffrey Pfeffer and Robert I. Sutton

Harvard Business School -- 276pp -- $27.50

(Readers'

Reviews below)

Editor's Review

The Good Makes a strong case that management should be based on careful research, not fads or pet ideologies.

The Bad It's sometimes preachy, and its recommendations often border on common sense.

The Bottom Line A densely researched, hype-free reminder of what matters: just the facts, ma'am.

For the average patient, the fact that "evidence-based medicine" is now one of the hottest forces in health care might seem pretty absurd. After all, isn't all medicine based on hard facts? Actually, no. To make decisions, many physicians rely on clinical experience, conventional wisdom passed down through training, and sometimes, outdated research. The evidence-based medicine movement, which has been gaining traction in hospitals and among insurers in recent years, calls for better integration of the most current, most carefully designed research into everyday medicine.

The practice of business management could use a similar movement, argue Jeffrey Pfeffer, a professor of organizational behavior at Stanford University's Graduate School of Business, and Robert I. Sutton, a professor of management and engineering at Stanford. In their densely researched book, Hard Facts, Dangerous Half-Truths & Total Nonsense: Profiting from Evidence-Based Management, the authors fret that managers' fondness for casual benchmarking ("GE does it? We should too!"), past practices, and pet ideologies may hold serious harm for their organizations.

The book is a rarity on the crowded management shelf. Unlike many such volumes, it offers no quick-fix, hype-heavy solutions from self-anointed gurus. At a time when intuition is on the ascent, thanks in part to Malcolm Gladwell and his best-selling Blink, Hard Facts is a useful reminder that the gut is often trumped by the facts. The book's deconstruction of some of the most widely applied management truisms and fads is thought-provoking but will leave some managers, especially those in metrics-driven cultures, unsatisfied.

The authors are at their best when dispelling the copycat tactics managers use for evaluating and rewarding talent. Take forced ranking, for instance. Popularized by General Electric Co. (GE) under Jack Welch, the process requires managers to divide employees into the top 20%, middle 70%, and bottom 10% of performers, often culling the lowest group. Practiced by as many as one-third of companies today, the authors say the approach has many flaws. A 2004 survey of more than 200 human-resource managers found that even though more than half of them used forced ranking, they felt it resulted in lower productivity, skepticism, reduced collaboration, and impaired morale. Breaking up teams by automatically firing the bottom 10% of workers can even be dangerous: Citing a National Transportation Safety Board study, the authors note that 73% of commercial airline pilots' serious mistakes happen on crews' first day together.

Pfeffer and Sutton also make a surprisingly persuasive case against paying widely divergent rewards to high and low performers, a popular practice in talent management today. Many studies show that tying pay to performance can drive good results when individuals are working solo. But the same can't be said for the collaborative, interconnected teams that now make up most companies. The authors cite a 2005 study that surveyed senior management groups at 67 publicly traded firms. Those with greater gaps between the best- and worst-paid executives also had weaker financial performance. Managers who implement wide pay differences in heavily team-based groups, argue Pfeffer and Sutton, forget that people get a lot of fulfillment from their social bonds at work, and creating such distinctions often diminishes trust.

At times, Hard Facts feels repetitive and borders on common sense. This is particularly so in an early chapter on the intersection of employees' work and personal lives. There is evidence about why managers shouldn't hire jerks, why they should encourage people to be themselves, and why there are benefits to including family in company affairs. Do we really need to be persuaded?

Moreover, managers whose businesses place a high value on metrics-based decision-making and on pilot-testing of new programs may find some suggestions painfully obvious: "It is also useful to get in the habit of running small experiments," for instance. All readers may at times feel like they're on the receiving end of a ponderous lecture: "Many companies and leaders show little interest in subjecting their business practices and decisions to the same scientific rigor they would use for technical or medical issues. It is a pity."

But can managers really subject their decisions to the same diligence as the medical field is seeking? Of course not. Double-blind, placebo-controlled studies aren't available in business, and fixing strategic dilemmas or personnel woes takes very different skills than treating a disease. In the end, Hard Facts is less about how to turn your company into a research-based powerhouse than how to create a mind-set open to new research and resistant to conventional wisdom.

By Jena McGregor


Silicon Valley State of Mind
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