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Observations on Employee Ownership

Research Shows More Power Means Worse Decisions

Corey Rosen

October 3, 2011

(Corey Rosen)One of the reasons the financial sector imploded a few years ago was that the powerful people making decisions were utterly convinced how smart they were. Like Supermen able to leap tall buildings in a single bound, these corporate powerhouses were able to leap over objections from the less worthy that the decisions they were making were excessively risky and grounded on implausible assumptions.

A classic problem of the powerful is that precisely because of their power, they tend to believe they are always or almost always right. Fearing for their jobs, their underlings are reluctant to argue with them. Only truly great leaders, such as Abraham Lincoln or, in my view, Jack Stack of SRC Holdings, figure out that a much better approach is to assume they might be wrong and listen humbly to what other people think.

In a study to be published in November titled "The Detrimental Effects of Power on Confidence, Advice Taking, and Accuracy" conducted by Elizabeth Morrison, Kelly See, Naomi Rothman of Lehigh University, and Jack Soll of Duke University, the researchers write that "incorporating input from others can enhance decision quality, yet often people do not effectively utilize advice." They hypothesized that "greater power increases the propensity to discount advice, and that a key mechanism explaining this effect is elevated confidence in one's judgment."

They looked at four studies, one in which working professionals rated their own power and confidence and were rated by coworkers on their level of advice taking, one where participants rated their own power and then were given an advice-taking task, and two experiments where power was manipulated to see how it affected advice taking. They found that "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." The researchers also found that employees rate the bosses who take advice much more highly than those who are more decisive.

No doubt many people will read this and think, "So what? Everyone knows that." Like many "obvious" research findings (research used to show the Sun must go around the earth, and ulcers are caused by worrying, for instance), it is not so obvious in fact. A competing narrative—and one heard over and over in both politics and business—is that people want decisive leaders, people who can see further and make courageous (often meaning contrary to what other people tell them) decisions. Another competing narrative is the heroic leader: the powerful visionary who is primarily responsible for the success or failure of the organization. Other research has shown that people with this kind of self-confidence are much more likely to move up in the corporate and political world. It takes a very special personality, indeed, to be both successful and humble.

Being aware of that can help people be better leaders. Seek out other opinions regularly. Have a bias toward accepting other ideas even when you think they might not be right. Get feedback from surveys on what kind of leader you really are, especially on the issue of taking advice. It isn't easy, but it can be learned.

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