Article: Making HR valuable - Evidence-based mindset

Strategic HR

Making HR valuable - Evidence-based mindset

When it comes to improving critical thinking skills, the first step should be to become aware of these typical sources of error. The second step is to share and discuss it within the HR teams. Encourage your team members to challenge each other on knowledge claims. Moreover, hold each other accountable for always providing the evidence in support of your opinions.
Making HR valuable - Evidence-based mindset

HR leaders have done a good job improving both, their business and HR specific knowledge and skills; however, there is still room for improvement as far as critical thinking skills and evidence-based decision support are concerned

Most companies can copy strategy, technology, manufacturing processes, products, and services. However, HRM practices and culture tend to be much more difficult to imitate. It puts more pressure than ever on HR to do the right things the right way. In general, HR leaders have done a good job improving both, their business and HR specific knowledge and skills. Nonetheless, there is still room for improvement as far as critical thinking skills and evidence-based decision support are concerned. We gather information from a wide range of sources — other people, books, articles, Internet sites, media etc. We make choices and decisions on a daily basis that affect organizational performance and results. Common sense or intuition may serve us well in some situations. However, we can’t always trust our common sense because our raw perceptions can deceive us. So we need to be prepared to go beyond gut hunches when evaluating knowledge claims and making critical business decisions. HR can raise its own game by focusing on two interrelated areas: (1) developing critical thinking skills and (2) relying on an evidence-based decision making.    

Critical Thinking Skills 

Learning to think critically requires HR leaders to become aware of typical sources of error and learn to compensate for them. All kinds of myths seem to be much more fascinating than what is actually true. Myths easily fit into a broader view of human nature that many of us find plausible. Nonetheless, accepting erroneous claims is very likely to result in poor HR decisions. I am going to address some of the most common sources of error from an HR perspective.   

First, human beings tend to confuse a statement’s familiarity with its accuracy. The fact that we have heard a statement repeated over and over again doesn’t make it correct. For instance, we all have repeatedly heard a claim that the more we pay our employees, the better they will perform; and we have heard it so many times that we believe it is true. However, studies show that higher financial incentives do not always work. When it comes to cognitive tasks, higher financial incentives have even been shown to have a negative impact on overall performance. As people focus too much on getting rewards, their creativity suffers significantly. As a result, the overall quality of work declines.

Second, we have a desire for easy answers and quick fixes. We can easily fall prey to books or courses that offer foolproof promises of enhancing performance or changing behaviors rapidly and painlessly.

For example, a consultant that promises to turn your high-potentials into effective managers in three 60-minute leadership development sessions sounds too good to be true. As a matter of fact, it is too good to be true. Although most people have the potential to develop effective management skills, it takes a large investment of time and energy. From research, we know that it takes around 10,000 hours of education and practice to become a competent manager*.  

Third, we think that we can make most of our choices and decisions based on common sense.  The problem with common sense, however, is that it depends on the context, knowledge and experience of the person. As knowledge and experience is limited and contexts vary, our common sense can only go so far and is not an answer for most questions. For some reason, we inherently tend to evaluate studies and surveys on the basis of what our common sense suggests. So we prove knowledge claims that confirm our common sense and disregard those that contravene it. There are many valid studies out there that show the opposite of what common sense would advise. For instance, many of us would believe that cohesiveness will result in more creative ideas and that suspending criticism and focusing on consensus is the key to creative solutions. Studies, however, suggest that teams that debate and criticize others’ ideas in a constructive manner tend to generate more creative ideas. Moreover, disagreement can also be useful for elaborating on individual ideas and weaving them together into a comprehensive whole.                

Fourth, we also have the tendency to conclude that if two things co-occur statistically then they must be causally related to each other. Too often, case studies, benchmarking studies of best practices, or consultant surveys are presented as studies that reveal cause and effect. Just because the best-performing companies are using a practice doesn’t mean the practice is causing the performance. Let’s suppose a company introduces a no-layoff policy. A year later, the company’s profitability has improved and its stockholders’ returns have increased. It would be tempting to infer that the no-layoff policy led to better financial outcomes. However, it may not necessarily be the case. We also need to consider competing explanations. For instance, the company’s business performance could have improved because it lowered production costs or increased its profitable sales.

Fifth, another typical source of error can be explained by our selective perception and memory. We have a propensity to remember our hits and forget our misses. This can lead us to see a variety of associations that are actually not there. We use cognitive shortcuts to make judgments fast and in the process, leave out a lot of relevant information. For instance, an HR professional remembers that she has hired great employees using neither a structured interview nor any tests. That’s why she is tempted to act the same way again. Those hits are still fresh in her mind. The truth is that all of us get lucky sometimes. However, it should never lead us to dismiss the best practices in selection. Our chances of hiring the right person are much higher when we rely on an evidence-based approach. Evidence-based practices will eventually result in many more hits than misses. Non-evidence practices on the other hand will lead to more misses than hits.     

Sixth, many of us leap to the conclusion that because A precedes B, then A must cause B. But many events that occur before other events don’t cause them and are not related at all.  Let me give you a hypothetical example. We decide to do research into Fortune 500 senior managers to find out what accounts for their success. As a result of this research, we discover that many of them liked to solve crossword puzzles when growing up. It would be tempting to infer that solving crossword puzzles in childhood led those managers to develop excellent leadership skills as adults. However, the question of whether solving crossword puzzles is associated with leadership abilities needs a broader investigation. We would also need to figure out whether there are successful senior managers among those who didn’t solve crossword puzzles in the childhood. In addition, we would need to investigate whether there are those who solved lots of crossword puzzles in the childhood, but never made it to a Fortune 500 company senior management. It is very likely that solving crossword puzzles merely coincided with other factors. Graduating a top notch business school, having great coaches, being disciplined and committed to professional growth might have been some of the factors that contributed to their success in the corporate world.     

Seventh, if we run into performance issues we tend to jump on the training bandwagon. There are, however, a variety of causes for poor results. Lack of skills or knowledge is only one of them. Poor performance often has to do with one or several of the following areas: (1) structure/process, (2) information, (3) motives, (4) resources, and (5) wellness. Research suggests that more than 80 percent of the time performance problems aren’t caused by a lack of skills or knowledge. This means that training can easily become an irrelevant tool in many cases. Training is effective only if poor performance is caused by a lack of some specific skill or knowledge. So it is first necessary to analyze what causes poor performance and only then find an appropriate intervention. Throwing training at all or most performance issues is likely to result in wasted time and money.         

Putting it all into practice

When it comes to improving critical thinking skills, the first step should be to become aware of these typical sources of error. The second step is to share and discuss it within the HR teams. Encourage your team members to challenge each other on knowledge claims. Moreover, hold each other accountable for always providing the evidence in support of your opinions. 

The third step could be to ask line managers you work with to support their opinions with facts, examples and sources. Mere speculation just won’t do. They at least need to bring data to the table when arguing their points. Managers tend to mistakenly believe that they do make evidence-based decisions. The reality, however, is that those managers often make decisions rooted solely in their personal experience. 

Another trend seems to be that managers also take the work practices of other companies as evidence. Before we copy what other companies are doing, we shall evaluate whether these practices are effective and whether they are likely to work in a different context. The fact that some companies choose to call their management practices the best practices doesn’t make those practices universally applicable. 

We also need to pay attention to managers who like to defend their actions by stating that: “This is how we have always done things around here”. The problem is that it tells us nothing about the effectiveness of those long-standing practices. Doing something consistently over a long period of time doesn’t automatically make it effective. It needs to be evaluated to see what has worked and where improvements are needed.      

The fourth step in the process is to make funds available for training in data analysis, statistics, simulation or any other similar areas. Finally, it is crucial to recognize and reward those who take the lead in using data.                

Various surveys indicate large discrepancies between what HR practitioners think is effective and what the current research shows. This is quite thought-provoking, isn’t it? When we are suggesting certain HRM practices to be implemented, we always need to provide the scientific rationale behind it. So it is not sufficient just to say what needs to be done, but also explain why it makes sense to act in a certain way. It would be the right step towards creating a culture that reinforces critical thinking and evidence-based decision making. Our job as HR leaders is to communicate expectations and lead by example. 

When you are hearing a presentation at a conference or reading an article on the Internet, it would be worth paying attention to the following questions. These simple questions help us critically analyze and make sense of the information we are receiving:    

  • What is the expertise of the speaker/author in this area?                                                                           
  • What might be the possible motivation of the speaker/author?    
  • Are the claims supported by evidence? Is that evidence relevant?      
  • Are the claims internally consistent, free from contradictions and logical errors?                               
  • Is that information up to date? What are other authors writing about this topic?                              
  • Does the speaker/author acknowledge counter-claims or limitations of her own knowledge?    

                    
Evidence-based Decision Support

‘Evidence-based’ is not just some nice buzzword. An evidence-based approach teaches us to distinguish science from folklore, data from assertions, and evidence from beliefs or personal opinions. Moreover, research suggests that evidence-based practices lead to high performance. Before making an important decision, we need to ask ourselves: “What is the best available evidence?” It is critical to draw evidence from multiple sources to develop a better understanding of the issue at hand. I would recommend you to consider the following four main sources for gathering evidence: (1) scientific evidence (findings from scientific research), (2) organizational evidence (organizational data, facts and figures), (3) experiential experience (professional experience and judgment), and (4) stakeholder evidence (input from the employees who may be affected by the decision). 

The first source of evidence is scientific research published in academic books and journals. It doesn’t mean that we should only read academic literature. It is essential to read HR-related articles in academic journals, trade magazines as well as in newspapers. However, it is necessary to keep in mind that the reliability and validity of information presented varies from one source to another. Peer-reviewed journals bring scientific rigor to understanding issues in the field of HRM. For instance, research in selection has consistently shown that integrity tests are highly predictive of dysfunctional work behaviors such as theft. However, we don’t know how reliable recommendation letters are. When it comes to compensation, research tells us that more hierarchical pay structures are related to greater performance when the

However, we don’t know how reliable recommendation letters are. When it comes to compensation, research tells us that more hierarchical pay structures are related to greater performance when the work flow depends more on the individual contributors. However, there is practically no research on the optimal size of the promotional increase or its effects on behavior, satisfaction, or performance.  

A second source of evidence is organizational data which can come in many different forms. It can be data taken from financial reports or customers through various feedback surveys, or data derived from employee opinion surveys or engagement surveys. Organizational data can be “hard” numbers such as employee turnover rates, errors or productivity levels. It can also be data that includes so-called soft components such as attitudes towards management or perceptions of the organizational culture. Both hard and soft data matter and should factor into decisions. It is critical to collect organizational data consistently for being able to identify important trends and spot problems early. I would also recommend using the same tools for a longer period of time in order to get comparable data and more consistency for evaluation purposes. If you keep trying out new tools every year, it makes it harder to get an adequate picture of what is going on in an organization. Also, you want to ensure that the data you have in your corporate systems would be correct and up to date. Wrong data can do more damage than no data at all.                    

A third source of evidence is experiential experience. It refers to making decisions based on professional experience. It is crucial to not confuse professional experience with intuition or personal opinion. Everybody can act on an intuition or personal opinion. Professional experience, however, reflects the specialized knowledge gained by repeated experience and practice of specialized activities. It is essential to emphasize here that professional experience in and of itself doesn’t create much value. What makes experience valuable is your ability to analyze it, learn from it and adjust accordingly. It is also necessary to consider the specific context when evaluating your experiences. For instance, we as HR leaders can ask the managers we are coaching the following questions. What do you think went well/wrong in a particular situation? Why do you think so? Are there any alternative explanations? Have you received feedback from others? What do they say? What would you do the same way/differently in a similar situation next time? What are the key learning points that you are going to take with you from this experience? Such kinds of conversations stimulate deeper reflection and learning.                         

Stakeholder evidence is the fourth source of evidence. All HR decisions affect employees to some extent. The bigger the impact of the decision, the more critical it is to involve employees. Even if you can’t let them make the decision, at least find out what they think and feel about the question at hand. Unfortunately, what we often see in companies is the management making decisions solely based on what they think is best for the employees. Sometimes they guess it right, at other times they don’t. The point is that decision making should have nothing to do with guessing. It should be based on the input received from stakeholders. For instance, when (re)designing office environment, it would be tempting to just follow recent trends in office design or let managers decide what could be best.  If you want your employees to be truly happy and engaged, you need to design their workspace based on what they prefer. 

HR decisions directly affect both individual and organizational performance. The quality of those decisions determines business outcomes. HR leaders need to look for ways to create more value.   One of the fundamental things to do to add more value is by embracing an evidence-based mindset. It requires HR leaders to develop their critical thinking skills and encourage evidence-based decision making in organizations.         

References

1   Burkus, D. (2014). The Myths of Creativity: The Truth about How Innovative Companies and People Generate Great Ideas.  San Francisco: Jossey-Bass   

2   Lilienfeld, S.-O., Lynn, S.-J., Ruscio, J., & Beyerstein, B.-L. (2010). 50 Great Myths of Popular Psychology.  Chichester: Wiley-Blackwell

3 Milkovich, G., Newman, J., & Gerhart, B. (2011). Compensation, 7th Edition. New York: The McGraw-Hill Companies, Inc.     

4 Pink, D. (2009). Drive: The Surprising Truth About What Motivates Us. New York: The Penguin Group.

5 Willmore, J. (2004). Performance Basics. Alexandria: The American Society for Training & Development.   

* https://hbr.org/2007/07/the-making-of-an-expert

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Topics: Strategic HR

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