Learned Helplessness and Managerial Uncertainty

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This post is the fifth (and last) post in a series of posts I am writing on lessons about managing people from the book Predictably Irrational, by Dan Ariely (for more post in the series, see 1, 2, 3, 4).

In the additions to the 2nd edition Ariely added a chapter called Thoughts about the Subprime Mortgage Crisis and Its Consequences. In it he writes this:

All creatures (including humans) respond negatively in situations where things don’t seem to make sense. When the world gives us unpredictable punishments without rhyme or reason, and when we don’t have any explanation for what is happening, we become prone to something psychologists call “learned helplessness.”

Let’s think about a business environment. In your office or in your team, how much uncertainty is present? And no, I am not talking about general uncertainty which is a part of every business. I am talking about managerial uncertainty. It is a kind of uncertainty that revolves around what behaviors are expected and what will be the rewards or punishments to them. It is uncertainty about how decisions that affect people are being made.

Just think about all the times that your manager waited until the last moment to give his team the news. The last time there were rumors in the office about what is going to happen. The last time you knew something is going on, but did not understand what is going on. The last time you got a decision dictated to you without understanding why.

I wrote here a number of times that I think a leader’s job is to take care of the future. To try and dissipate the natural fear that is part of the uncertainty the future holds. But managers have to deal with uncertainty as well.

In investment theory there is a term called systematic risk. This term defines the risks of the entire market. This is differentiated from the unsystematic risk which is specific for a company or industry. What is the difference between them? You can take care of the unsystematic risk with diversification, while you cannot care of the systematic risk.

A manager cannot take care of the systematic risk. The future. It is a leader’s job. It is the leadership uncertainty. A manager is in charge with the present. And he needs to take care of the risks associated with it. Take care of managerial uncertainty.

So, how do you take care of managerial uncertainty of the present? One word. Transparency.

As managers we need to make sure that our employees do not get to a state of learned helplessness. That they understand the connection between cause and effect in the workplace. That they understand how decisions are being made. That they understand the process of management. In the legal field there is term called Procedural Justice:

The notion that fair procedures are the best guarantee for fair outcomes is a popular one. Procedural justice is concerned with making and implementing decisions according to fair processes. People feel affirmed if the procedures that are adopted treat them with respect and dignity, making it easier to accept even outcomes they do not like.

When people understand the system and the system works “the way it is supposed to”, they don’t have to live in a state of uncertainty, even if the result itself is uncertain. They don’t have negative reactions and they don’t go into a state of learned helplessness. It is time we put some transparency to work in order to deal with the managerial uncertainty.

Elad

The unpredictability of rewards

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This post is the fourth post in a series of posts I am writing on lessons about managing people from the book Predictably Irrational, by Dan Ariely (for more post in the series, see 1, 2, 3).

In the additions to the 2nd edition Ariely added a chapter called Reflections and Anecdotes about Some of the Chapters. In it, he describes the idea of the schedules of reinforcement, which is a term coined by the behavioral psychologist B. F. Skinner. In simple terms, it means that when and how often we reinforce a behavior can have a dramatic impact on the strength and rate of the recurring appearance of that behavior. We would expect that a constant, fixed reward system will create a more recurring behavior. But what the experiments actually suggest is that variable reinforcements actually are more effective at creating a high steady rate of behavior.

And that got me thinking about how we reward and recognize employees. Do we do it once a year or once a quarter? Do we do it during a quarterly report or an annual meeting of the employees where the employee of the quarter is declared?

We know that predictable rewards are not as effective as unpredictable rewards, but still, most companies and managers stick to a schedule of predictable rewards. Why? Well, my guess is that it is just easier. As a manager, I don’t need to think and worry about my employees all the time. Does it really matter if I do in once every quarter for an hour or if I do it 30 times over the quarter for 2 minutes each time? But, the fact that it is easier does not mean that it is right (like most conventional wisdoms). We know nothing worth gaining is ever gained without effort.

A few posts ago I wrote about an important principle in feedback called – consistency. The same words could be used to describe the right approach for rewards and recognition:

Consistency – feedback should be given all the time. Not at a predetermined time once a quarter. But all along the year. This is where I disagree with Bratz. The question is not whether you had one meaningful conversation with your manager once a quarter. The question is how often during the quarter did you have meaningful conversations with your manager. Conversations that create value for you and are not done just to fill some kind of form or requirement from HR. If constructive feedback is given consistently, the answer will be all the time. And if it is done all the time, there is a high probability that we are dealing with a good boss.

How unpredictable are your rewards?

Elad

Who should choose the reward?

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This post is the second post in a series of posts I am writing on lessons about managing people from the book Predictably Irrational, by Dan Ariely (for more post in the series, see here and here).

In the additions to the 2^nd edition Ariely added a chapter called Reflections and Anecdotes about Some of the Chapters. In it, he revisits chapter 4 where he discussed the differences between social norms and market norms. Just to fill in the gap, one of the main ideas of the chapter is that money changes relationships. There is a difference between the social norms (doing a favor, giving a gift and so on) and market norms (paying with cash). Cash changes the relationships and actually can de-motivate people where it is supposed to motivate them.

This is one of the examples Ariely gives:

Imagine that you work for me, and that I want to give you a year-end bonus. I offer you a choice: $1,000 in cash or an all-expenses-paid weekend in the Bahamas, which would cost me $1,000. Which option would you choose? If you are like most people who have answered this question, you would take the cash. After all, you may have already been to the Bahamas and may not have enjoyed being there very much, or maybe you’d prefer to spend a weekend at a resort closer to home and use the remainder of the bonus money to buy a new iPod. In either case, you think that you can best decide for yourself how to spend the money.

Ariely claims, due to the effect of market and social norms, that giving the employee no choice, thus giving him the vacation, will make the employee happier:

I suspect that both your and my best interests would be better served if I simply didn’t offer you a choice and just sent you on the Bahamas vacation. Consider how much more relaxed and refreshed you would feel, and how well you would perform, after a relaxing weekend of sun and sand, compared with how you would feel and behave after you got the $1,000 bonus. Which would help you feel more committed to your job, more enjoyment in your work, more dedication to your boss? Which gift would make you more likely to stay long hours one night to meet an important deadline? On all of these, the vacation beats the cash hands down.

While I agree with the comparison between the cash reward and the none-cash reward (and there is a lot of empirical evidence in the book about that), I have a problem accepting the assertion that giving no choice at all is always better. As Ariely mentions himself, the employee might not want the Bahamas trip. Do we really want to give the employee a vacation he does not want? I am not sure that Ariely meant to say that we should not offer a choice between a number of none cash rewards, but the way this paragraph is phrased, definitely suggests that.

Now, while I know there is not only a problem with monetary rewards (cash), but also a problem with too many choices, I still think that an employee will be happiest if he receives a reward that he actually wants (and I know that sometimes people don’t know what they want). I will admit that my assertion is not backed up by empirical evidence and only by my own limited experience and by what I learned and read, but the mere fact that people are different must make us realize that different rewards will work differently on different people. So, while we need to realize the dangers of cash, we should also remember that the best way to motivate our employees is to understand them and what makes them tick and give them the ability to choose what is best for them.

Elad

Wait and re-evaluate

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This post is the second post in a series of posts I am writing about lessons about managing people from the book Predictably Irrational, by Dan Ariely (for the first post in the series, see here). This time I want discuss chapter 5.

Chapter 5 is called the influence of arousal – why hot is much hotter than we realize. In short, it describes the effect that feelings and extreme emotions have on our decision making processes. It is like each and every one of us contains a Dr. Jekyll and Mr. Hyde. A rational, calculating persona and an emotional, less sophisticated side. And it happens to us all the time even we are not aware of the effects. And when you are dealing and managing people, you are prone to a constant state of varying emotions.

For me, I think the most important lesson from reading this chapter is a two part lesson – wait and re-evaluate

Wait – Let’s say something happens. For example, a peer or an employee makes a mistake or sends you an e-mail that you feel is wrong (to use the nice term). You are angry and you want to instantly write back to him an angry e-mail. You write a wonderful e-mail explaining his entire family history and how it pertains to the current situation. And you hit send. And then, a few minutes after that, you calm down. And you think about it. Actually, he is right. He might not entirely accurate, but if you think about it from his perspective, you can understand why he said what he said. And after the apologies (assuming he forgives you) you talk to him and understand that the problem was in how you explained things to begin with.

Have you been there? I have. The solution – if something in your everyday work makes you feel a particular emotion, just stop. Wait a few minutes. Wait a few hours. Re-examine the situation and then make the decision.

Re-evaluate – there are some decisions that we know are important. And still, we make them in different states of emotions. This rule is not practical in all situations, but if you have the opportunity, make the decision twice. I first came across the advice while reading Paul B. Carroll and Chunka Mui book Billion Dollar Lessons and manifesto Let’s Get Persian:

Herodotus, the Greek historian, reported that the ancient Persians always made important decisions twice—first when they were drunk, and then again when they were sober. Only if the Persians reached the same decision, drunk and sober, would they act on that decision. The approach apparently worked—the Persians dominated the much of the Middle East and Central Asia for three centuries.

They talk about it in terms of how to create dissent and overcome groupthink, but I think it is applicable to inter-personal communication as well.

Ariely mentions in his book that “Looking from one emotional state to another is difficult”. To use his analogy even further, Dr. Jekyll and Mr. Hyde don’t really communicate. The decision Mr. Hyde makes under the enhanced state of emotions seems completely rational to him. But when Dr. Jekyll re-evaluates the same decision, he will understand how irrational it is. We need to create this communication between the sides and allow them to discuss the rationality. Sometimes, the decision would not change. Sometimes it will. But at least you will have some kind of assurance that it was made (hopefully) more rationally and that it will be fairer to your peers or employees.

Elad

Is money equals motivation a conventional wisdom we have to break?

The last few days I have been reading the book Predictably Irrational, by Dan Ariely. It describes many experiments done over the years that illustrate how people behave in irrational ways when we – and when I say we I mean traditional economics – expect them to act like rational people. While I don’t agree with some of the conclusions Ariely makes in his book, I find the questions fascinating. Thus, I am going to dedicate my next few posts to relevant lessons for managing people the book.

Chapter 4 of the book is called: “the cost of social norms – why we are happy to do things, but not when we are paid to do them”. In it, Ariely describes a number of experiments that show how when people are paid to do things, they do them with less enthusiasm and effectiveness. It reminded me of the above fascinating TED talk by Dan Pink that talks about similar experiments that led to similar (but a little different) conclusions. Both Ariely and Pink conclude that we need to rethink the effectiveness of money as a motivator for work.

So, is money being the best motivator another conventional wisdom that needs breaking.  Well, I will let my past as lawyer get the better of me and say – yes and no.

Yes, because we need to realize that the world is changing. That some things that we thought were true are not true anymore. There is a growing tendency of people to seek out work that not only gives them money, but also gives them joy, a sense of impact and work life balance. People look to use their strengths more and attempt to reach a state of flow. And we need to understand that money creates problems, because it is easy to compare (link in Hebrew). I would direct you to Ariely’s first chapter in the book about relativity.

But the answer is also no. in some situations, monetary rewards work. And when we think about these experiments we need to remember a few things. First, the experiments described in Ariley’s book and in Pink’s lecture are experiments, done in a lab, on students and not in a real work environment. Real life is different and we need to be careful in applying the lessons learned in the lab without thinking about the differences between students in the lab and real life work environment. Second, these experiments are social science experiments. They don’t have one result. They check for averages. And averages are sometimes dangerous. The experiments show trends. They show tendencies. But they don’t show how all people behave in all situations. And we know that monetary rewards do work in certain circumstances. As Paul Hebert from I2I explains, although there are some accurate things in Dan Pinks’s lecture, we must be careful when taking it as saying all monetary rewards are bad. Below is his presentation on how to look at incentive reward strategies within the context of how business operates:

From all the theories of motivation I encountered to date, the one I like the most is Vroom’s expectancy theory.  The reason I like it so much is that it talks about personalization. About understanding each employee specific motivation and about customizing the right rewards, invectives, and recognition, in order to motivate him. And I think this is the most important lesson from the science and experiments. We should be careful from applying one approach. We should doubt and check if what we are doing actually works. And the most important thing of all, we should not assume what motivates people, we should find out.

Elad