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happens, having diversity training programs was unrelated to
“the share of white women, black women, and black men in
management”. The authors concluded that diversity training
did not affect minority hiring.
But just a moment. Having diversity training vs. not having it is a
self-selected variable. Corporations that hire diversity trainers
may be less interested in hiring women and minorities than
corporations who find more effective ways to increase hiring.
In fact, they may simply be using such programs as protective
cover for their real hiring policies. Corporations that don’t
have diversity training may be effective in hiring minorities by
techniques such as setting up diversity taskforces or making
success in minority advancement a part of the evaluation of
senior managers.
In another corporate scenario, imagine your company’s
department stores are doing better in Southeast Asia than in
South Asia or the Middle East. Before you try to get all your
managers to imitate practices of managers in Southeast Asia,
consider what else might distinguish the region from other
parts of the world: perhaps general economic conditions or
strength of online sales.
6. Control Testing
The self-selection issue is particularly important where
health is concerned. Men who take vitamin E are less likely
to have prostate cancer. So if you’re a man getting along in
years, you might be tempted to start taking vitamin E. The
problem here is that men who take vitamins are also likely to
be doing everything else they think is good for their health.
For example, they probably already exercise regularly; watch
their cholesterol, blood pressure and weight; drink alcohol in
moderation and don’t smoke. It could be any of those factors
or a combination that is causing the lower cancer rate.
People in public health call this the “healthy user bias”. The only
way we’re going to find out whether vitamin E is a good idea is to
turn to what’s called the “gold standard” in scientific research.
That’s the randomized control experiment. Recruit a large
number of men to test vitamin E effects. Flip a coin to see who
gets a placebo and who gets the real thing. Wait a few years,
checking morbidity and mortality rates periodically. That’s
been done, as it happens, and the men who took vitamin E
were found to be more likely to get prostate cancer than those
who didn’t.
Most of the health findings, and many of the scientific findings
you read, fail to inform us whether the study that produced
them was based on a randomized control experiment or mere
observational data.
Outside of the health realm, the corporate world is also
increasingly beginning to rely on randomized control
experiments. At Google there is a derisory expression
describing what most people in business do when they have to
make a decision: they get the HiPPO – the Highest Paid Person’s
Opinion. Google does an experiment instead, by assessing, for
example, which gets more clicks, the webpage with the red
border or the page with the blue border. Experimentation of this
kind is called A/B testing—a randomized test with two variants.
Researchers in a city adjacent to Juarez, Mexico, conducted A/B
tests on a number of tactics for increasing sales of fruits and
vegetables. According to the research, signs telling customers
that the average shopper in the store purchases X number
of certain items can boost sales for the produce in question.
Meanwhile, putting a divider in the shopping cart with a sign
saying, “Please place fruits and vegetables in the front of the
cart” can actually double sales of such produce. The signs also
turn out to have a massive effect on the purchases of the group
with the most to gain by an increase, namely low income people
from both sides of the border, many of whom are ordinarily
likely to purchase processed rather than fresh foods.
From randomized control experiments to weighing up
opportunity costs, by harnessing tools for reasoning and
applying them to the business world, leaders can vastly improve
their people-decision skills and fill the human capital gap that
plagues many companies across the emerging market world.
This means not only hiring the right people in the first place,
but making the right managerial decisions that will keep both
workforce and company performance on track.
Richard Nisbett. Distinguished Professor of Social Psychology and Co-Director of the Culture and
Cognition program at the University of Michigan at Ann Arbor. With multiple seminal works to his
name, he is one of the most respected authorities in his field. His most recent book is Mindware: Tools
for Smart Thinking.
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