Making better decisions about how your company operates
Companies waste an awful lot of time and money managing people and work in the wrong way. For example, despite the fact that research has shown that many such activities have a negative impact on performance, demotivating even the best performers, an average 10,000 person business spends over £28M a year running performance appraisal and management activities (according to research by Gartner’s Corporate Leadership Council).
In the face of such waste and ineffectiveness, there remains a real reluctance to change, especially in larger organisations. So we see decisions about the way companies work being put off until they hit crisis point, until there’s a ‘burning platform’ which forces them into action.
We shouldn’t be surprised. Making decisions is a complicated business. In his book ‘Thinking, Fast and Slow’, Nobel Prize winner (for Economics) Daniel Kahnemann explains how human beings have evolved to make decisions based on emotion, not evidence. To survive our ancestors needed to be able to make swift decisions to get them out of mortal danger and they couldn’t wait around to examine the evidence. They felt the fear and took action. And we still see that behaviour happening every day in business.
Decision-makers that need to take action quickly may take some time to look at what other companies are doing (or say they’re doing!), but often they base decisions on their own untested assumptions, or buy a timely solution that they are told is just the thing they need.
What they often don’t base their decision-making on, even when they have the luxury of time, is evidence. They rarely give themselves the time to consider the evidence that shows there’s a problem and what that problem really is (e.g. have you really got a problem with high staff turnover, or is it at a level that’s typical of your sector?). All possible solutions aren’t considered, the experts aren’t heard and evidence is not sought to evaluate solutions’ effectiveness. Rarely is there a chance to test out potential solutions in the business to gather data to support or disprove the hypotheses.
The impact of this is that decisions that would make a business more competitive are put off for far too long, and when they’re made they are ill-considered, difficult to implement and very often don’t deliver the outcomes that are required.
Making better decisions
So how can leaders make better decisions about the way their business manages people? The first thing is that change doesn’t always need to be reactive and can be the result of a strategy to create a better future, rather than a response to a particular problem. Then identify why that solution or solving the problem is important to you, and to the business. This analysis can highlight any assumptions you’re making about what seems to be the right thing to do. If you’re looking to solve a problem, ensure you’re looking at the underlying cause, rather than a symptom, of the real problem.
Rob Briner, Professor of Organizational Psychology at Queen Mary University of London, promotes the use of evidence-based practice in organisations and advocates the following approach and questions to ask next:
· Questioning and critical: How do I know what’s going on here? Are my perceptions valid and reliable?
· Solution-generating: What are the possible responses to this problem? Which might work and why? Is it better to do nothing?
· Evidence-oriented: How good is the evidence for the apparent problem? What organisational data do I have? How good is the external evidence from research about the nature of this problem? What is the evidence for the proposed solutions?
· Integrating: How does the evidence from research fit with my previous experience of this kind of problem and what I know about this organisation?
Extract from ‘Is HRM evidence-based and does it matter?’ Rob Briner, 2007, IES (www.employment-studies.co.uk)
Then testing the proposed solution(s) in the real world of your business, rather than simply relying on case studies, will give you the evidence you need to support your decision or a change of approach.
A word of warning from Rob Briner: ‘moving to evidence based decision-making practice can highlight how dysfunctional decision-making often is in organisations’. Introducing new ways of making decisions about your business may have a bigger and more positive impact than you were initially anticipating!