EBMgt Course Module 3: Why Do We Need It?

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EBMgt Course Module 3: Why Do We Need It?

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EBMgt Course Module 3: Why Do We Need It?

  1. 1. Postgraduate CourseEvidence-based management:Why do we need it?
  2. 2. Postgraduate CourseReason 1: Mounting criticism”Staff in the private and public sectors are addressed on adaily basis in a language which does not express their ownspecific reality but the make-believe world of managers.This make-believe world is dominated by objectivescouched and repeated in a theatrical rhetoric: topquality, excellence and continuous innovation”Managers have to endure a great deal of criticism fromvarious directions. Misuse of the position of power toones own benefit, failure and mismanagement are thecharges most commonly heard.
  3. 3. Postgraduate CourseTrust me, I’m a manager.
  4. 4. Postgraduate CourseReason 2: AccountabilityAs a result of this increasing socialpressure there is an external drive fortransparency which fosters an upheavalfor „objective opinion‟ and even„objective evidence‟.
  5. 5. Postgraduate Course Half of what you learn will be shown to be either deadwrong or out-of-date within 7 years of your graduation;the trouble is that nobody can tell you which halfReason 3: false information
  6. 6. Postgraduate Course1. Incompetent people benefit more from feedback thanhighly competent people.2. Task conflict improves work group performance whilerelational conflict harms it.3. Encouraging employees to participate in decisionmaking is more effective for improving organizationalperformance than setting performance goals.True or false?
  7. 7. Postgraduate CourseHow evidence-based are managers? 959 (US) + 626 (Dutch) HR professionals 35 statements, based on an extensive body of evidence true / false / uncertainOn average: 35% - 57% correctHR Professionals beliefs about effective human resource practices: correspondencebetween research and practice, (Rynes et al, 2002, Sanders et al 2008)
  8. 8. Postgraduate Course5 years? 7 years? 10 years?Reason 4: half time value of knowledge
  9. 9. Postgraduate Course Evidence-based practice movements abound inmedicine, 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 evidenceofficers” Public demands accountability (quality decisions that aredefensible)Reason 5: The Zeitgeist
  10. 10. Postgraduate CourseBut the MAIN reason is .....
  11. 11. Postgraduate CourseBounded rationality
  12. 12. Postgraduate CourseBounded rationalitySystem 1 Fast Intuitive, associative heuristics & biasesSystem 2 Slow (lazy) Deliberate, „reasoning‟ Rational
  13. 13. Postgraduate CourseBounded rationalitylimbic system andbrainstem(system 1)neo cortex(system 2)
  14. 14. Postgraduate CourseSysteem 1: necessary to survive
  15. 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 reductionSystem 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. 16. Postgraduate CourseErrors and Biases of Human JudgmentManagers and consultants hold many erroneousbeliefs, not because they are ignorant or stupid, butbecause they seem to be the most sensible conclusionconsistent with their own professional experience!(system 1 will always engage!)
  17. 17. Postgraduate Course“The first principle is that you must not foolyourself - and you are the easiest person tofool”.Richard Feynman
  18. 18. Postgraduate CourseI’ve been studying intuition for 45 years, and I’m no betterthan when I started. I make extreme predictions. I’m over-confident. I fall for every one of the biases.”Bounded rationality
  19. 19. Postgraduate CourseDeveloping expert skill and intuition1. A sufficiently regular, predictable environment2. Opportunities to learn regularities through prolonged practiceand feedbackThe management domain is not highly favorable toexpert skill and intuition!
  20. 20. Postgraduate Course“It’s hard to tell the signal from the noise. Thestory the data tell us is often the one we’d like tohear, and we usually make sure it has a happyending.It is when we deny our rolein the process that the oddsof failure rise.”Nate SilverEBP is about the signal and the noise
  21. 21. Postgraduate CourseEBMgt Overcomes Limits of Unaided Decisions Bounded Rationality The Small NumbersProblem of IndividualExperience Prone to See PatternsEven in Random Data Critical Thinking Decision Supports Research• Large Ns > individualexperience• Controls reduce biasThe “Human” Problem Evidence-Based Practice

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