Evidence-Based Management Helping Managers to Make Better Decisions Denise M. Rousseau H.J. Heinz II University Professor of Organizational Behavior Carnegie Mellon University What It Means to be an Evidence-Based Manager

EBMgt is the practice of making organizational decisions based upon conscientious use of 1. Science-based principles & knowledge 2. Valid & relevant organizational and business facts 3. Critical thinking aided by decision supports 4. Ethical considerations (i.e., effects on stakeholders) What is Evidence-Based Management?

 Better Decisions by Using Practices that Work (and avoiding those that don’t!)  Defensible Decisions that Stand Up to Scrutiny (using best evidence and best process)  Developing Expertise throughout a Career (experience can be a poor teacher--bad habits!) 20 years of valid experience is different than 1 year of experience repeated 20 times! Why Should We Care about EBMgt?

What does EBMgt Look Like?

Evidence-based Piloting?

 Chesley Sullenberger, USAIR pilot, has been a visiting scholar at UC Berkeley’s Collaborative for Catastrophic Risk Management since 2007  Does research on how to make decisions to maintain safety despite technological complexity and crisis conditions 1. Use of Scientific Findings

 Has written and analyzed aviation accident reports for over 20 years 2. Reliance on Reliable and Valid Organizational Facts

 Used Decision Aids to Support Good Decision: As Sully considered what decision to make that day, he had his copilot review and follow all checklists on board relevant to crash landings  Formal Education to Prime His Skills: Sully is a graduate of the U.S. Air Force Academy and holds masters degrees from both Purdue University in Industrial Psychology and the University of Northern Colorado in Public Administration 3. Mindful Decision Making: Becoming Decision Aware

 The last person to leave the plane, Chesley Sullenberger twice walked the plane’s aisle to check all passengers were off  Sully’s last act onboard was to grab the passenger list. Used on-shore to verify rescue of all passengers and crew 4. Ethics and Responsibility to Stakeholders

In Sullenberger’s Own Words… “One way of looking at this might be that for 42 years, I've been making small, regular deposits in this bank of experience, education and training. And on January 15, the balance was sufficient so that I could make a very large withdrawal.”

How Is Sullenberger’s Example Relevant to Your Own Leadership Experience?

EBMgt is a means to improve decision quality. It’s a career, not a course.

 Evidence-based practice movements abound in medicine, education, and public policy  Management research from psychology, engineering, operations research (ETC.) 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) The Zeitgeist

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

1.Get Evidence into the Conversation 2.Use Relevant Scientific Evidence 3.Use Reliable and Valid Business Facts 4.Become “Decision Aware” and Use Appropriate Processes 5.Reflect on Decision’s Ethical and Stakeholder Implications Five Good EBMgt Habits

#1 Get evidence into the conversation Regularly ask “what’s the evidence…?” Regularly ask “what’s the evidence…?” Illustration- Discuss with your seatmates… What’s a practice in your organization that you suspect might not be NOT evidence-based? Five Good EBMgt Habits

Evidence is not the same as ‘proof’ or ‘hard facts’  Evidence is not the same as ‘proof’ or ‘hard facts’ ... can be - so strong that no one doubts its correctness, or - so weak that it is hardly convincing at all What is evidence?

 Evidence of effect (do!)  Evidence of no effect (don’t!)  No evidence of effect (research!) Don’t confuse

#2 Use Relevant Scientific Evidence  Focus on Action Principles Where Science is Clear  Rely on Science-based Sources  Example: Locke’s Handbook of Organizational Behavior (access electronic copy in blackboard)  Peer-reviewed research, especially meta-analyses Reduce dysfunctional variations in practice Build effective routines, procedures, checklists Five Good EBMgt Habits

Scientific Evidence Best Scientific Evidence is  based on large N (sample size of people/organizations)  well-controlled studies with comparison groups &/or longitudinal data  peer-reviewed Five Good EBMgt Habits

Peer Reviewed Journals

#3 Use Reliable and Valid Business Facts Best Business Facts are  large numbers sampled relative to population (not single or isolated cases, e.g. sales/# sales calls)  linked to context (season, location, #users, etc.)  provide key indicators for business decisions Five Good EBMgt Habits

Illustration--Discuss with your seatmates…  What indicators does your organization most commonly use to make important decisions?  Are these the “best business facts” you need to make these decisions?  What indicators would be more useful, if you could get them?? Five Good EBMgt Habits

 # Medication errors in Unit 1 were 200% greater in 2011 than Unit 2’s. Is patient safety worse in Unit 1? Depends on number of unsafe incidents divided by # patients or # procedures—needs a control.  Mike has w/10 subordinates & 20% turnover while Kim has 55 employees & 10% turnover. Is retention better in one? Hard to determine. Small N’s have greater bias and are more variable.  McDonald’s stores average 300+% turnover/year. Does Mickey D. have a problem? Depends on industry comparison and business strategy.  Company A managers focus decisions on monthly cost, downtime and revenues. Company B managers focus on service quality, employee retention and profitability by customer category. So what? B’s more diverse performance criteria can promote attention to longer-term and growth-oriented outcomes. A’s narrower economic focus can promote shorter-term thinking. Help Learner How to Interpret Business Facts

#4 Become “Decision Aware”  Identify different kinds of decisions learners face? What kinds of different approaches are used to them? Why?  How can you determine whether you made a “good decision” when you cannot know the outcome? (The answer to this question is what is known as “decision quality”) Five Good EBMgt Habits

“Decision Awareness” Promotes Decision Quality  To manage decisions, know what decisions must be made.  Map out decisions that affect key outcomes. Who is responsible? (Are they prepared?) Who is responsible? (Are they prepared?) What information is required? (Will it be available when needed?) What information is required? (Will it be available when needed?) Five Good EBMgt Habits

Awareness Calls Attention to Decision Process. Proper Processes Improve Decision Quality  What is the process for making the decision?  Different processes work better… -for routine decisions (create validated checklists and action plans) -for decisions with known unknowns (systematic sequence of considerations) -for decisions with unknown unknowns (pilot-tests and trial/ experiment)  Decisions have an “aftermath” and a “pre-math” that a good manager actively manages. Is the decision well- managed? Help make it so.

Using Evidence Well Requires Your Own Critical Judgment

#5 Reflect on Decision’s Ethical Implications  Who are stakeholders for this decision?  Possible effects?  How might the decision be altered to optimize positive stakeholder effects and reduce negative? Five Good EBMgt Habits

Scientific Principles for Effective Teaching  Set learning goals (2-5)  Pre-test: where does learner stand on learning goal before course  Build opportunities for practicing those learnings throughout course (curriculum)  Post-test: Measure progress on each learning goal and provide feedback  Feedback & Redesign: Use feedback to make course more effective over time Five Good EBMgt Habits

Evidence based management: closing the gap between research and practice Turning Evidence into Practice & Practice into Evidence

J. Ehrlinger, K. Johnson, M. Banner, D. Dunning, J. Kruger. (2008) Why the unskilled are unaware: Further explorations of (absent) self-insight among the incompetent. Organizational Behavior and Human Decision Processes, 105,(1) pg. 98 E.A. Locke (ed.), Handbook of Principles of Organizational Behavior, 2 nd edition, Malden, MA: Blackwell. D. M. Rousseau (2012) Oxford Handbook of Evidence-Based Management, New York. D.M. Rousseau, D.M. & E. Barends (2011) Becoming an evidence-based manager. Human Resource Management Journal, 21, D.M. Rousseau, J. Manning & D. Denyer (2008) Evidence in Management and Organizational Science: Assembling the field’s full weight of scientific knowledge through reflective reviews. Annals of the Academy of Management, 2, R.C. Schank, D. Llyras & E. Soloway (2010) The future of decision making. New York: Palmgrave Macmillan. J.F. Yates. (2003). Decision management. San Francisco: Jossey-Bass. J.F. Yates & M.D. Tschirhart (2006). Decision making expertise. In K. A. Ericsson, N. Charness, P. J. Feltovich, & R. R. Hoffman. (Eds.). Cambridge handbook of expertise and expert performance (pp ). New York: Cambridge University Press. J.F. Yates, E.S. Veinott & A.L. Patalano (2003). Hard decisions, bad decisions: On decision quality and decision aiding. In S. L. Schneider & J. C. Shanteau (Eds.), Emerging perspectives on judgment and decision research (pp ). New York: Cambridge University Press. Got Evidence? References