Posts tagged ‘Underlying assumptions’
If you could choose the time of day to go to a job interview what time would you pick? Before you answer, let me just warn you; the time you pick may impact your chance of getting the job.
My advice is that you pick a time early in the morning or right after the lunch break.
Let me elaborate…
Consider the following research study by Shai Danziger. He studied the results of 1,112 parole board hearings in Israeli prisons over a ten month period (see the study here). The results are illustrated in the figure below:
The vertical axis shows the percentage of cases where the judges granted parole. The horizontal axis shows the time which the cases were heard during the day. The dotted lines show when the judges went away for a morning snack and their lunch break.
The graph shows clearly that the odds that the prisoners will be successfully paroled start off fairly high at around 65% and quickly plummets to close to zero just before the first break. After the judges have returned from break, the odds abruptly climb back up to 65% before continuing on their downward slide.
In other words; the time in the day when the case is heard is very important to the outcome. Indeed, Danziger found that the three prisoners seen at the start of each “session” were more likely to be paroled than the three who were seen at the end. That’s true regardless of the length of their sentence, whether they had been incarcerated before and regardless of their gender, ethnicity or the severity of their crime.
Danziger explains the judges’ behavior in this way: All repetitive decision-making tasks drain our mental resources. After a while we start to suffer from “choice overload” and we then opt for the easiest choice. For example, shoppers who have already made several decisions are more likely to go for the default offer, whether they’re buying a suit or a car. And when it comes to parole hearings, the default choice is to deny the prisoner’s request.
There is no reason to suspect that recruitment experts are different from judges in this respect. We are all human beings and we are all subject to biases and imperfections AND it affects our decision making. We may believe that when we interview candidates for a job, we view them objectively and fair. In reality, we are influenced by irrelevant things like our moods and as this study suggests, our breakfasts.
So if you are going for a job interview, see if you can move it to 9am. It will enhance your chances.
Leading a company or managing a team in an organization is not like coaching a soccer or a basketball team. It’s not. There are some similarities – such as how to motivate, coach, prepare and celebrate successes – but even in those cases you should be careful. The metaphor of sports can limit you as well.
Don’t get me wrong. I am very inspired by the late John Wooden who I think was one of the best coaches in sports history. He won the NCAA championship ten times in 12 years – seven of which were in a row. His insights into how to motivate a team and how to get the best out of talent are inspirational. Also, when I see Al Pacino give his half time speech in “Any Given Sunday” I get goosebumps. And I have previously argued that these guys’ know a lot about spotting, assessing and motivating talent and that this insight is useful.
But, I am surprised how far many take the analogy. In US, football is the most frequently used sports metaphor to explain how business works, what leadership looks like, and how employees are expected to perform. And this I think is dangerous.
The great benefit of metaphors is that they simplify and that they can create a sense of understanding. Metaphors and analogies often distort our thinking by disproportionately focus. For example, if you use the sports metaphor you are likely to be narrowed in the following ways;
- All interactions in the marketplace are games to be won (some are, but most are not)
- The only objective is to win the game – at whatever cost (not at whatever cost)
- Customers are spectators (you should involve them – use co-creation etc.)
- You should fire employees who are not ‘in the zone’ (who is in the zone all the time at work?)
- The rules of the game are fair and fixed (no they are not)
- There is a referee who will be fair and impartial (nope)
Further, there are also so many differences between an organizational and sports context. The most obvious include the composition of team, context of work and intensity of context. But more importantly, what is a talent and high performer in a sports context is so very different from an organizational context.
So I think you should be careful before you rename your ‘managers’ to ‘coaches’ – as they have done at Eastman Chemical – give out gold, silver and bronze medals to best performing teams or assess your talents from a sports understand of what a talent is. It may work and be appropriate, but many times companies experience the hidden bindings of analogies.
HR must be careful not to fall into the trap of using sports as the primary analogy. It is tempting in talent management and performance management, but it carries risks. Business is like a game, but it is not exactly like a game. Be inspired by sports, but also be very careful not to make it the center of your understanding when designing processes in your organization.
ROI (Return On Investment) has become the tool which HR increasingly use to show that they are adding value to the company’s bottom line. And rightly so. HR has the potential to create a lot of value to a company – also Shareholder Value. And this value should be shown and highlighted.
ROI is a very simple tool. Too simple in many ways. The calculations is: (return-investment)/investment. The return is the monetary gain from a HR activity and the investment is the full all-inclusive cost of the activity.
Despite the obvious problems in actually measuring the financial benefits of say a leadership development program, the ROI calculation is something in itself to be careful about.
When I worked as a financial analyst, we didn’t use ROI that much. We used more ‘sophisticated’ metrics such as Enterprise Value metrics, ROIC (Return On Invested Capital), RoOFCF (Return on Operating Free Cash Flow), CRONCI (Cash Return On Net Capital Invested). What is common about all these ratios is that they recognise that ‘return’ and ‘investment’ is something quite complex.
When I still believe that ROI has a lot offer for HR executives it is because that when used right, it has a lot to offer.
The advantages with ROI are:
- Easy to understand
- Focuses on input and output of an HR activity
- Show the bottom-line effect
- Gives HR a language to talk to top management (and CFO in particular)
- Makes it possible to make better HR investment decisions
- Connects well with HR Balance Score Card
- Potentially show the important assumptions behind the activity
The weaknesses of ROI are:
- It is very sensitive to a few assumptions (in particular about productivity gains)
- Reduces complex things such as people and leadership skills to simple causal relationship and a single number
- Difficult to see the most important assumptions behind the calculation
So when you use ROI to show the financial value of your HR activities please remember that it is a very simple tool which should be used very careful. When I help HR executives to use ROI in their business I always emphasize the importance of process, structure, explicit assumptions and base line data.
Human Capital is the ‘hard’ side of Human Resources. It is about making strategic decisions, measuring the impact and basing decisions upon ‘objective’ and measureable data. One of the most important things for a Human Capital Manager is therefore to get quality data. Without that you cannot make good decisions.
Daryl Morey writes on HBR’s blog that ‘Success Comes From Better Data, Not Better Analysis’. He argues that the right data is more important that hiring good analysts, who can interpret this data. He writes “Raw numbers, not the people and programs that attempt to make sense of them. Many organizations have spent the last few years hiring top analysts based on the belief that they create differentiation….But…real advantage comes from unique data that no one else has”.
I only partly agree with Daryl. It is definitely true that most HR managers are basing their decisions on poor and questionable data and even more questionable reasons for using that data. Poorly formulated satisfaction surveys are often the only data upon which expensive programs are initiated. Most HR departments, which I speak with, will benefit greatly from having better data.
On the other hand I believe that some of the underlying assumptions on which many HR managers base their decisions are also poor. That many mistake correlations with causality and therefore don’t understand what drives what. The connection between Job Satisfaction and Productivity is a case in point. Better data will not help you with that. You will just have better data to make the same mistakes. The shift to Human Capital Management should also be about questioning some of the underlying assumptions in Human Resource Management.
Human Capital Management is about making better HR based upon strategic and measurable initiatives. This requires much more data of significant higher quality AND to challenge existing underlying assumptions behind how they should be interpreted.