VW – Uber – Wells Fargo … What causes prominent leadership teams to make such devastatingly bad deci
Updated: Jan 3
What each of these companies has in common is a failure of their leadership culture. Specifically, each has a culture of close-mindedness, and in most cases, they don’t even know it. While it may be discouraging that it takes a spate of scandals to come to this realization, it’s probably a good lesson for companies to wrestle with in 2017.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth – persistent, persuasive, and unrealistic ... We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.”
~President John F. Kennedy
Over the last fifty years, psychologists and other researchers have developed a much better understanding of how and why the decisions of otherwise intelligent and reasonable people too often go awry. They’ve identified the underlying cause as cognitive bias: the inclination to present or hold a partial perspective, often accompanied by a refusal to consider alternative points of view.
Closed-mindedness is so hard to address because it’s:
Unconscious – difficult to bring to awareness
Pervasive – a common human tendency
Dispositional – ingrained in one’s personality
Often mistaken for confidence/charisma
Exacerbated by intelligence/knowledge
Difficult to assess
“Increasingly, we become so secure in our bubbles that we accept only information, whether true or not, that fits our opinions, instead of basing our opinions on the evidence that’s out there.”
~President Barack Obama
A combined Columbia and Duke University study found that an emphasis on results over people can encourage unethical behavior - a finding that should surprise no one. Their research provides systematic evidence that effective cultures are less likely to be associated with short-term thinking, unethical behavior, or earnings management to pad quarterly earnings.
Can HR Leaders influence this dynamic and help prevent these kinds of decisions from happening?
HR leaders have been talking more regularly in recent years about the importance of a healthy leadership culture. But what’s also clear is that creating an effective leadership culture requires thoughtful and persistent attention. HR Leaders can start by finding ways to have conversations with company leaders about the effect of cognitive bias.
SDHR has been following the research on this topic and we have discovered an assessment tool to measure a person’s tendency to let bias affect their decisions. Participating in this assessment exercise could be a great way to start the conversation with your leadership team. If you are interested in learning more about this free assessment tool, please contact me at: michael@HR.Cafe
There is an accompanying 360 tool to use as well to identify the gap between self perception and demonstrated bias.
“True open-mindedness is an entirely different mind-set ... It demands that you get over your ego-driven desire to have whatever answer you happen to have in your head be right.”
~Raymond Dalio, Founder of Bridgewater Associates (world’s largest hedge fund)
While a discussion of this topic might be challenging to facilitate, I can’t think of a better way to exercise your influence and potentially make a huge difference in the performance of your company’s leadership dynamic.