New study examines similar traits of CEOs and NHL general managers

Jun 11, 2012

Are drafting decisions of general managers in the NHL different among teams that are more stable and those exhibiting greater volatility? Peter Tingling of Simon Fraser University’s Beedie School of Business says an initial study finds that turmoil in a hockey club makes no real difference, likely because GMs, like most CEOs, are mainly focused on the short term.

“It’s interesting because there are two competing sets of theories that could explain their behaviors,” says Tingling, who set out to test whether managers at organizations with a history of firing their top executives make different kinds of decisions than those with more continuity and less turmoil.

“On the one hand it could be argued that GMs will make “safe” decisions until they establish a track record and feel secure. On the other, it could be argued that they might think that since they are going to be fired anyway, they should swing for the fence.”

Tingling and co-researcher Kamal Masri, also of SFU’s Beedie School, tested both ideas by grouping teams into different levels of historic volatility and compared them with a somewhat comparable set of decisions – how well they did at the draft. They also measured their level of risk by comparing how far they deviated from the rankings made by the NHL scouting service.

“We mainly looked at the GM turnover but we did also try to measure sentiment by counting blogs and searches that called for changes in the GM,” adds Tingling.

The researchers talked with numerous senior hockey executives, who were fairly consistent in their belief that a lack of difference in decision-making amid more or less turmoil is because of most GM’s short-term focus. “Given that the average GM lasts just a little more than five years it would seem that their feet are held pretty close to the fire.”

Tingling says the NHL is fertile ground for studying the role of turmoil in management decision-making. “It’s not just an abstract question. CEO turnover at large companies is at 14 per cent and more and more CEOs are being shown the door. Yahoo and HP of course have both had a series of CEOs but other companies such as Samsung, Wal-Mart, Sony and Rim have also made changes.”

Tingling will present a paper on the study, New Job, Old Job: Does job security help or hinder decision making? at the Administrative Sciences Association of Canada (ASAC) annual conference in St. John’s Newfoundland on June 11.

He will later be Pittsburgh-bound – to attend the NHL’s 2013 draft, which begins June 22 – where he will continue to ask hockey insiders about their decision making.

“It’s not just that sport is big business in its own right, more importantly it is a great place to study what is often hidden – decision making as it happens in a context where we can compare,” he says.

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