The Best-Run Businesses Run SAP

Most sports fans know that home teams have an advantage over visiting teams even though they have never seen any hard facts that prove it. While fans believe in the home field advantage, they hotly debate the reason for its existence. Over the years, I’ve heard a variety of explanations from not having to travel to playing in familiar settings to being in front of supportive fans. In addition to these psychological explanations, some people claim the formats of the games themselves are the cause: for example, in baseball the home team bats after the visitors giving them one last chance to win while in hockey the home team is allowed to make player substitutions after the visiting team which can create better match-ups.

In the book Scorecasting, the authors compile won/loss percentages for each of the major U.S. sports league and show that the home field advantage really does exist. (I’ve recreated the table from the book.) While the edge is minimal in baseball, it’s pronounced in major league soccer – nearly seven in ten games are won by the home team. However, the authors debunk the commonly held theories around travel and familiarity with the surroundings. Instead they claim that home teams get slightly preferential treatment from the officials, which gives them an edge in winning the game. Despite allegations of corruption in officials, the bias is likely unconscious and perhaps even involuntary. Every once in a while officials get caught up in the emotion of the crowd and make a call that pleases the home team. As this article points out, the increased home field advantage in soccer might be explained by the fact an official in soccer has more opportunity to influence a game’s outcome than in other sports.

If the home field advantage exists in sports, it’s natural to wonder whether it exists in business as well. Are M&A deal prices influenced by whether they are negotiated at the acquirer’s office or in a neutral location? Sales calls are typically held at the customer site but would vendors achieve a higher close rate on their own turf? Should job candidates avoid salary negotiations in their future boss’ office?

In this vein, researchers conducted a series of experiments to determine if people were more successful in negotiations that happened in their own offices than in unfamiliar locations. As might be expected, home team negotiators outperformed those in ‘away’ or ‘neutral’ locations.  This suggests you shouldn’t ask your boss for a raise in her office but rather in your own office or even in a neutral location like the cafeteria.

Unlike sports in which the home field advantage is attributed to the officials, the researchers believe psychological factors are at work here. If changing offices isn’t possible, the researchers suggest improving your confidence:

In our study, we gave some of the visitors a fake negotiation skills test and then provided them with false feedback. Irrespective of how they did on the bogus test, we told them that the results suggested that they are gifted negotiators. Sure enough, this confidence booster helped visiting parties overcome the home-field advantage that the office residents enjoyed.

You can be confident that in business, like sports, the advantage goes to the home team.

This blog was originally posted on Manage By Walking Around.

Performance management continuously invades my personal life, whether it’s on airplanes, during mentoring, or at Thanksgiving dinner. Here’s another example:

Not long after I moved into my previous house, a friendly neighbor came over to welcome me to the block. Amidst advice on local stores and restaurants, he pointed out that my front lawn wasn’t up to the neighborhood standards – in fact, it was mostly brown and barren. I needed green grass.

Wanting to keep up with the Jones’, I hired a landscaper who produced incredibly detailed designs, brought in a wide variety of equipment, and kept my front yard in shambles for three weeks. When he was done, I had lawn, hedges, flowers and a bill much higher than I had expected. But I had a yard to make the neighbors proud.

Read the full blog post here. 

While I’m a performance management enthusiast, I’ve often cautioned against using the traditional red/green/yellow traffic lights to represent performance. The simplest argument is that three states may not provide enough granularity to distinguish between levels of performance. When a driver approaches an intersection in a car, there are only two potential outcomes – proceed or stop – represented by green and red. While the extra yellow state provides the additional information that the light is about to turn red, it doesn’t add another potential outcome. On a yellow light, most drivers proceed through the intersection — albeit with a little more caution than if the light was green. (more…)