Tag: Organizations

The Decision-Making Flaw in Powerful People

The paper below finds a link between having a sense of power and ignoring the advice of others.

The authors argue that power increases confidence, which can lead to an excessive belief in one’s own judgment.

In a sense, powerful people think they are right because of their place in the organization, not because of their knowledge.

This, of course, leads to flawed decisions.

From Strategy+Business:

Previous research has shown that the quality of decision making declines when people hew too much to their own beliefs and discount too readily the advice of others; outside information helps “average out” the distortions that can result when people give a great deal of weight to their own opinions and first impressions. This paper is among the first to examine whether power — defined as an individual’s “capacity to influence others, stemming in part from his or her control over resources, rewards, or punishments” — reduces or increases a person’s willingness to heed advice.

… In addition to confirming the previous experiments’ finding that more powerful people were less likely to take advice and were more likely to have high confidence in their answers, this final experiment showed that high-power participants were less accurate in their answers than low-power participants. By calculating the mean deviation between respondents’ initial estimates and the true answers, the researchers showed that low-power participants came significantly closer in their final estimates to the real tuition numbers because they “averaged” their initial guesses with the input from the advisors.

The researchers propose that their findings have troubling implications for organizations — and that power could negatively affect not just advice taking, but also an individual’s approach to seeking help or accepting performance feedback. But because power and confidence are so interrelated, there are ways to mitigate the problem. By “directly addressing the inflated confidence levels of powerful individuals,” the researchers write, “organizations may be able to help people with power take (and/or seek) advice when it is valuable to do so.”

For one thing, organizations could formally include advice gathering at the earliest stages of the decision-making process, before powerful individuals have a chance to form their own opinions. Encouraging leaders to refrain from commenting on decisions publicly could also keep them from feeling wedded to a particular point of view.

Bottom Line:
Powerful people are less likely to take advice from others, in large part because they have high confidence in their own judgment and don’t feel the need to incorporate outside views. By not factoring in others’ advice, however, people in power risk making flawed decisions.

Abstract:

Incorporating input from others can enhance decision quality, yet often people do not effectively utilize advice. We propose that greater power increases the propensity to discount advice, and that a key mechanism explaining this effect is elevated confidence in one’s judgment. We investigate the relationships across four studies: a field survey where working professionals rated their own power and confidence and were rated by coworkers on their level of advice taking; an advice taking task where power and confidence were self-reported; and two advice taking experiments where power was manipulated. Results consistently showed a negative relationship between power and advice taking, and evidence of mediation through confidence. The fourth study also revealed that higher power participants were less accurate in their final judgments. Power can thus exacerbate the tendency for people to overweight their own initial judgment, such that the most powerful decision makers can also be the least accurate.

Source: Kelly E. See, Elizabeth W. Morrison, Naomi B. Rothman, Jack B. Soll, The detrimental effects of power on confidence, advice taking, and accuracy, Organizational Behavior and Human Decision Processes

Promoting People In Organizations

In their 1978 paper Performance Sampling in Social Matches, researchers March and March discussed the implications of performance sampling for understanding careers in organizations. They came to some interesting conclusions with implications for those of us working in organizations.

Considerable evidence exists documenting that individuals confronted with problems requiring the estimation of proportions act as though sample size were substantially irrelevant to the reliability of their estimates. We do this in hiring all the time. Yet we know that sample size matters.

On how this cognitive bias affects hiring, March and March offer some good insights including the false record effect, the hero effect, the disappointment affect.

False Record Effect

A group of managers of identical (moderate) ability will show considerable variation in their performance records in the short run. Some will be found at one end of the distribution and will be viewed as outstanding; others will be at the other end and will be viewed as ineffective. The longer a manager stays in a job, the less the probable difference between the observed record of performance and actual ability. Time on the job increased the expected sample of observations, reduced expected sampling error, and thus reduced the chance that the manager (of moderate ability) will either be promoted or exit.

Hero Effect

Within a group of managers of varying abilities, the faster the rate of promotion, the less likely it is to be justified. Performance records are produced by a combination of underlying ability and sampling variation. Managers who have good records are more likely to have high ability than managers who have poor records, but the reliability of the differentiation is small when records are short.

Disappointment Effect

On the average, new managers will be a disappointment. The performance records by which managers are evaluated are subject to sampling error. Since a manager is promoted to a new job on the basis of a good previous record, the proportion of promoted managers whose past records are better than their abilities will be greater than the proportion whose past records are poorer. As a result, on the average, managers will do less well in their new jobs than they did in their old ones, and observers will come to believe that higher level jobs are more difficult than lower level ones, even if they are not.

…The present results reinforce the idea that indistinguishability among managers is a joint property of the individuals being evaluated and the process by which they are evaluated. Performance sampling models show how careers may be the consequences of erroneous interpretations of variations in performance produced by equivalent managers. But they also indicate that the same pattern of careers could be the consequence of unreliable evaluation of managers who do, in fact, differ, or of managers who do, in fact, learn over the course of their experience.

But hold on a second before you stop promoting new managers (who, by definition, have a limited sample size).

I’m not sure that sample size alone is the right way to think about this.

Consider two people: Manager A and Manager B who are up for promotion. Manager A has 10 years of experience and is an “all-star” (that is great performance with little variation in observations). Manager B, on the other hand, has only 5 years of experience but has shown a lot of variance in performance.

If you had to hire someone you’d likely pick A. But it’s important not to misinterpret the results of March and March and dig a little deeper.

What if we add one more variable to our two managers.

Manager A’s job has been “easy” whereas Manager B took a very “tough” assignment.

With this in mind, it seems reasonable to conclude that Manager B’s variance in performance could be explained by the difficulty of their task. This could also explain the lack of variance in Manager A’s performance.

Some jobs are tougher than others.

If you don’t factor in degree-of-difficulty you’re missing something big and sending a message to your workforce that discourages people from taking difficult assignments.

The importance of measuring performance over a meaningful sample size is the key to distinguishing between luck and skill. When in doubt go with the person that’s excelled with more variance in difficulty.

6 Must-Read Books To Help Navigate the Workplace

The challenges of climbing the corporate ladder are both fascinating and fluid.

Whether you’re looking to improve your ability to influence or avoid some common pitfalls these books are a great place to start:

1. Corporate Confidential: 50 Secrets Your Company Doesn’t Want You to Know—and What to Do About Them

“Your number one job is to keep your job,” Shapiro, a former human resources executive, writes in this informed and disillusioned take on the corporate life, so don’t ever “publicly complain, disagree or express a negative view,” take more than one week of vacation at a time, “volunteer,” or “tell anyone what you’re doing.” When asked to do anything, acceptable responses are “sure” and “of course,” always accompanied by a smile. Your dress style “should match as closely as possible the style of those at the top.” Don’t make friends at work-it’s “deadly” to want to be liked. The book reads like a guerilla survival manual for the employment jungle written by a hardened survivor.

2. Power: Why Some People Have It and Others Don’t

Pfeffer claims that intelligence, performance, and likeability alone are not the key to moving up in an organization; instead, he asserts, self promotion, building relationships, cultivating a reputation for control and authority, and perfecting a powerful demeanor are vital drivers of advancement and success.

3. Rework

Seth Godin sums it up best: “This book is short, fast, sharp and ready to make a difference. It takes no prisoners, spares no quarter, and gives you no place to hide, all at the same time….I can’t imagine what possible excuse you can dream up for not buying this book for every single person you work with, right now.”

4. Enchantment: The Art of Changing Hearts, Minds, and Actions

This book will help you improve your influence. After all, the best ideas sometimes need a little psychological help.

5. What Got You Here Won’t Get You There: How Successful People Become Even More Successful

Goldsmith, pinpoints 20 bad habits that stifle already successful careers as well as personal goals like succeeding in marriage or as a parent. Most are common behavioral problems, such as speaking when angry, which even the author is prone to do when dealing with a teenage daughter’s belly ring. Though Goldsmith deals with touchy-feely material more typical of a self-help book—such as learning to listen or letting go of the past—his approach to curing self-destructive behavior is much harder-edged. For instance, he does not suggest sensitivity training for those prone to voicing morale-deflating sarcasm. His advice is to stop doing it. To stimulate behavior change, he suggests imposing fines (e.g., $10 for each infraction), asserting that monetary penalties can yield results by lunchtime. While Goldsmith’s advice applies to everyone, the highly successful audience he targets may be the least likely to seek out his book without a direct order from someone higher up. As he points out, they are apt to attribute their success to their bad behavior. Still, that may allow the less successful to gain ground by improving their people skills first.

6. Managing With Power: Politics and Influence in Organizations

The big problem facing managers and their organizations today is one of implementation – how to get things done in a timely and effective way. Problems of implementation are really issues of how to influence behavior, change the course of events, overcome resistance, and get people to do things they would not otherwise do. In a word, power. “Managing with Power” provides an in-depth look at the role of power and influence in organizations. Pfeffer shows convincingly that its effective use is an essential component of strong leadership. With vivid examples, he makes a compelling case for the necessity of power in mobilizing the political support and resources to get things done in any organization. He provides an intriguing look at the personal attributes – such as flexibility, stamina, and a high tolerance for conflict – and the structural factors – such as control of resources, access to information, and formal authority – that can help managers advance organizational goals and achieve individual success.*