A Cure for Poor Human Capital Decisions?

Companies could borrow a page from &doublequot;evidence-based medicine&doublequot; to stop engaging in practices that scientific research shows don...
John BoudreauJune 25, 2013

There is a large amount of scientifically supported research about workplace behavior, but few managers are aware of it. That’s a problem, because knowing the research could allow leaders to make better human-capital decisions. The same problem afflicts the medical profession, but there are hopeful signs of progress there. In fact, the example of “evidence-based medicine” may suggest a treatment program for poor management decisions generally.

Evidence-based medicine is “the conscientious, explicit and judicious use of current best evidence in making decisions about the care of individual patients.” It is surprisingly rare. A 2009 New York Times article noted scientific evidence often shows common medical practices don’t work: “More than a half million Americans per year undergo arthroscopic surgery to correct osteoarthritis of the knee, at a cost of $3 billion. Despite this, studies show the surgery to be no better than sham knee surgery, in which surgeons “pretend” to do surgery while the patient is under light anesthesia. It is also no better than much cheaper, and much less invasive, physical therapy.”

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Organizations like the Centre for Evidence-Based Medicine at University of Oxford now offer classes and tools to help physicians (1) ask focused questions; (2) find the evidence; (3) critically appraise evidence quality; (4) make a decision; (5) evaluate the results; and (6) design trials to conduct research. These six steps apply as well to decisions about human capital, but few organizations apply them consistently.

If physicians fail to use the best research – when patient health or mortality is at stake – is it any wonder that organization leaders do too? Jeffrey Pfeffer and Robert Sutton show that organizations adopt management practices because high-performing organizations use them, or because they seem “logical.”

How does such an evidence-based movement begin? In medicine, one catalyst was Archie Cochrane, a British physician and prisoner of war for four years during World War II, starting in 1941. Caring for 20,000 prisoners in the Dulag of Salonika, a German prison camp in Greece, Dr. Cochrane encountered “severe epidemics of typhoid, diphtheria, infections, jaundice, and sand-fly fever,” and had only “a ramshackle hospital, some aspirin, some antacid, and some skin antiseptic.” He expected “hundreds” of deaths, yet there were only four, and “three were due to gunshot wounds from the Germans.” He concluded, “It demonstrated very clearly the relative unimportance of therapy in comparison with the recuperative power of the human body.”

Dr. Cochrane spent his life questioning the assumption that therapy is always necessary, and other widely-held beliefs about medical care. His 1979 essay asserted that medical decisions should be based on the best evidence, and that required systematically organizing the evidence in ways that physicians could actually use.

Also in 1979, he established the first collaborative effort to build the Oxford Database of Perinatal Trials, which compiled clinical research on perinatal care. That effort has grown into the Cochrane Reviews, which engage a global network of experts to evaluate and summarize the best evidence – and present it in the form of answers to specific practical questions. Their recent Top 50 summaries included, “does zinc help with the common cold” (it does).

Some organizations rate hospitals on evidence-based practice. Could organizations be rated on evidence-based approaches to people and management decisions? In the future, will managers tap databases to answer practical questions such as, “What sort of job interview best predicts success?”

Companies like Google and Microsoft hire the smartest candidates they can find, and are legendary for using interview questions like “Why are manhole covers round?” and “How many golf balls can you fit into an airplane?” In a recent New York Times interview, Laszlo Bock, Google’s senior vice president of people operations, admitted that an analysis of Google’s own historical evidence showed such questions don’t predict anything, and “serve primarily to make the interviewer feel smart.” Google now encourages using “structured behavioral interviews,” that ask all candidates a consistent set of job-related questions, such as “tell me about a time when you solved a really difficult analytical problem.”

That this is news in 2013 is interesting, because decades of research already existed showing that structured interviews predict better. Yet thousands of managers conduct job interviews with no idea about research on how to select better candidates.

Can management, like medicine, become more evidence-based? There are hopeful signs.

Denise Rousseau, in a 2005 Academy of Management Presidential Address, called for an “evidence-based” movement in management, akin to medicine. She formed a collaborative that spawned a Center for Evidence-Based Management (CEBMa). (Full disclosure: I serve on the advisory council for CEBMa.) Like the Oxford Center in medicine, CEBMa aspires to make managers more evidence-based. Cochrane-like reviews of management research are in the offing.

Evidence-based management can be powerful, but the history of medicine suggests it can be a hard pill to swallow. It’s not easy to rigorously test cherished (even if wrong-headed) beliefs. Evidence-based human-capital management demands commitment from human-capital leaders. Yet the more pivotal commitment is from leaders throughout the organization, and even investors, who encourage, demand and personally use evidence-based approaches.

Leaders like you should support the nascent efforts to build communities and tools for evidence-based management. If job interviews can be improved with evidence-based thinking, imagine the payoff if more of your decisions were made that way. When making human-capital and other management decisions, consider the healthy habit of asking, “Is there evidence that this works?”

John Boudreau is a professor at the University of Southern California’s Marshall School of Business and research director at the school’s Center for Effective Organizations.