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| How Boosting Self-esteem Can Backfire In Decision-making |
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| Living - Workplace | |||
| TS-Si News Service | |||
| Friday, 04 April 2008 17:00 | |||
Evanston, IL, USA. Confidence affects decision-making and ultimately a company's earnings. But giving employees positive feedback in the hopes of promoting better decisions sometimes can backfire, suggests new research. Some types of positive feedback actually escalate perceived threats to the ego and increase the need to prove a questionable decision was correct. The research is published in the journal Organizational Behavior and Human Decision Processes. The research examines how boosting self-esteem — whether contemplating one's own accomplishments or receiving positive feedback from others — affects the face-saving impulse to justify and recommit to decisions whose outcomes seem dubious at best.
The promise and peril of self-affirmation in de-escalation of commitment. Niro Sivanathan, Daniel C. Molden, Adam D. Galinsky and Gillian Ku. Organizational Behavior and Human Decision Processes. 1 April 2008. doi:10.1016/j.obhdp.2007.12.004 In one study, participants, acting as senior managers of a large investment bank, received positive feedback that emphasized how rational they were. Despite being positive, this feedback also closely related to a decision they made to hire someone who was not performing well. Those "senior managers" overwhelmingly recommitted themselves to the initial hiring decision and recommended spending additional time and money training that person, rather than simply acknowledging the poor decision and cutting their losses.
The esteem-boosting feedback backfired, the research suggests, because it was so closely linked to the particular skills that should have prevented the questionable decision in the first place.
"The more that people's feelings of self-worth are wrapped up in a poor decision they've made, the greater their impulse will be to justify it in some way," said Daniel C. Molden, assistant professor of psychology at Northwestern and one of the researchers. In contrast to the outcome of decision-relevant feedback, study participants who received praise for skills unrelated to the questionable decision (e.g., creativity or innovation) or more global affirmation of positive qualities were less likely to recommit to the decision.
In another study, participants acting as chief financial officers had to revisit an earlier decision in which they had allocated $10 million of research and development (R&D) funding to a division of the corporation that they had determined would bring the greatest benefit to the company.
After learning that their chosen division had performed poorly, they were then given an additional $20 million in R&D money that could be distributed between multiple divisions in any proportion they deemed fit. Those who tended to already possess a global sense of high self-esteem, compared to those with low self-esteem, decided to not throw good money after bad and did not reinvest as much in the poorly performing division.
In contemporary organizational life, many people feel threatened by their poor decisions and end up escalating their commitment to them, wasting additional time and resources and creating even worse outcomes, the studies suggest. The research provides a framework for how organizations might most effectively bolster their employees' self-esteem as well as the bottom line.
"Our research indicates that a supervisor could make a problem even worse when he or she tries to restore the confidence of, say, the finance division by reminding everyone that they are skilled analysts at the same time the current allocation strategy is bleeding money and is in need of reassessment," said Kellogg's Adam Galinsky, Professor of Ethics and Decision in Management at Kellogg. Such employees are likely to only feel more threatened by the feedback and recommit to the failing strategy in the hope they could prove that they were right all along.
"But positive feedback that generally affirms how valuable the employees are to the company could go a long way in alleviating costs to individuals and organizations that result from throwing good time and money after bad," Galinsky added.
With the present volatility of the stock market, findings of the research have broad implications. "There always are some people who will continue to hang on to stocks that are tanking in the belief that their judgment will be vindicated in the end," Molden said. "Our research suggests that these are more likely to be the people who take pride in being expert analysts or who have received lots of accolades for past investment success."
The challenge is to instill confidence in people so they can change, rather than justify, the course of a failing strategy, concluded lead author Niro Sivanathan, a doctoral candidate in management and organizations at Kellogg. "Our work offers organizations a framework for systematically leveraging self-affirmation processes so that people will be less likely to recommit to decisions not producing optimal results."
This research was supported by the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University. A Doctoral Fellowship to Niro Sivanathan from the Social Sciences and Humanities Research Council of Canada (SSHRC/CRSH) also assisted in this collaboration. The promise and peril of self-affirmation in de-escalation of commitment. Niro Sivanathan, Daniel C. Molden, Adam D. Galinsky and Gillian Ku. Organizational Behavior and Human Decision Processes. 1 April 2008. doi:10.1016/j.obhdp.2007.12.004 Abstract. Drawing on the motivated cognition literature, we examine how self-affirmation processes influence self-justification needs and escalation decisions. Study 1 found that individuals with a larger pool of affirmational resources (high self-esteem) reduced their escalation compared to those with fewer affirmational resources (low self-esteem). Study 2 extended these findings by demonstrating that individuals also de-escalated their commitments when they were provided an opportunity to affirm on an important value. Finally, Study 3 found that affirming on traits that were of low relevance (e.g., creativity) to an initial decision reduced escalation, but affirming on decision-relevant traits (e.g., decision-making ability) ironically increased escalation. Across three studies, using three instantiations of self-affirmations and two measures of escalation, the results highlight the potential benefits and costs of using self-affirmation as a vehicle to de-escalate commitment.
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| Last Updated on Friday, 04 April 2008 17:19 |






"The more that people's feelings of self-worth are wrapped up in a poor decision they've made, the greater their impulse will be to justify it in some way," said Daniel C. Molden, assistant professor of psychology at Northwestern and one of the researchers.
"Our research indicates that a supervisor could make a problem even worse when he or she tries to restore the confidence of, say, the finance division by reminding everyone that they are skilled analysts at the same time the current allocation strategy is bleeding money and is in need of reassessment," said Kellogg's Adam Galinsky, Professor of Ethics and Decision in Management at Kellogg.
The challenge is to instill confidence in people so they can change, rather than justify, the course of a failing strategy, concluded lead author Niro Sivanathan, a doctoral candidate in management and organizations at
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The TS-Si News Service is a collaboration of TS-Si staff, contributors, and corresponding institutions. Contents do not necessarily convey official positions of TS-Si, its partners, or affiliates